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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition period from ________ to ________
Commission File Number: 0-25674
CBT GROUP PUBLIC LIMITED COMPANY
(Exact name of registrant as specified in its charter)
Republic of Ireland Not Applicable
- -------------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
BEECH HILL
CLONSKEAGH
DUBLIN 4, IRELAND
(Address of principal executive offices, including zip code)
(011) 353-1-283-0077
(Registrant's telephone number, including area code)
Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes [X] No [ ]
The number of American Depositary Shares (issued or issuable in exchange for
Registrant's issued and outstanding Ordinary Shares) outstanding as of July 31,
1996 was 17,522,388. The number of Ordinary Shares outstanding as of July 31,
1996 was 8,761,194.
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CBT GROUP PUBLIC LIMITED COMPANY
TABLE OF CONTENTS
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
December 31, 1995 and as of June 30, 1996....................... 3
Condensed Consolidated Statements of Operations
for the three and six month periods ended
June 30, 1995 and 1996.......................................... 4
Condensed Consolidated Statements of Cash Flows
for the six month periods ended June 30, 1995 and 1996.......... 5
Notes to Condensed Consolidated Financial Statements............ 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................... 7
PART II. OTHER INFORMATION
Item 2. Changes in Securities........................................... 13
Item 4. Matters Submitted to a Vote of the Security Holders............. 13
Item 6. Exhibits and Reports on Form 8-K................................ 14
2
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CBT GROUP PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
------------ -----------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 6,501 $ 5,943
Short-term investments 40,669 41,259
Accounts receivable, net 13,713 13,569
Inventories 254 370
Deferred tax assets, net 398 398
Prepaid expenses 479 2,213
-------- -------
Total current assets 62,014 63,752
Property and equipment, net 2,132 3,765
Other assets 1,872 2,338
-------- -------
Total assets 66,018 69,855
======== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Borrowings under bank overdraft
facility and overdrafts 1,346 72
Note payable 79 24
Accounts payable 2,199 2,736
Accrued payroll and related expenses 2,312 2,137
Other accrued liabilities 8,548 8,710
Deferred revenues 3,457 3,350
-------- --------
Total current liabilities 17,941 17,029
SHAREHOLDERS' EQUITY
Ordinary Shares, IR37.5p par value: 30,000,000 5,198 5,334
shares authorized at December 31, 1995 and
June 30, 1996; issued and outstanding:
8,508,984 shares at December 31, 1995 and
8,735,672 at June 30, 1996
Additional paid-in capital 50,941 51,615
Accumulated deficit (7,865) (3,930)
Receivable from shareholders (190) (179)
Minority interest 16 16
Cumulative translation adjustment (23) (30)
-------- -------
Total shareholders' equity 48,077 52,826
-------- -------
Total liabilities and shareholders' equity 66,018 69,855
======== =======
</TABLE>
Note: The balance sheet at December 31, 1995 has been derived from the audited
financial statements at that date and has been restated to reflect the
acquisitions of CLS and NTT. In addition, the balance sheet does not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements.
3
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CBT GROUP PLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
------------------------- -------------------------
1995 1996 1995 1996
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues $ 8,801 $14,567 $16,135 $27,579
Cost of revenues 1,747 2,349 3,166 4,417
------- ------- ------- -------
Gross profit 7,054 12,218 12,969 23,162
Operating expenses:
Research and development 1,327 2,488 2,552 4,695
Sales and marketing 3,832 6,203 7,134 12,192
General and administrative 856 1,087 1,587 2,073
Costs of acquisitions 0 596 0 596
------- ------- ------- -------
Total operating expenses 6,015 10,374 11,273 19,556
------- ------- ------- -------
Income from operations 1,039 1,844 1,696 3,606
Other income, net 156 542 108 1,079
------- ------- ------- -------
Income before provision for income taxes 1,195 2,386 1,804 4,685
Provision for income taxes 259 382 385 750
------- ------- ------- -------
Net income 936 2,004 1,419 3,935
======= ======= ======= =======
Net income per equivalent ADS(1) $ 0.06 $ 0.10 $ 0.09 $ 0.20
======= ======= ======= =======
Shares used in computing net
income per equivalent ADS(1) 16,776 19,720 16,170 19,521
======= ======= ======= =======
</TABLE>
- ------------------------------------------
(1) Net income per equivalent ADS gives effect to the two-for-one share split of
CBT's ADSs effected in May 1996. Net income per Ordinary Share was $0.11 and
$0.20 for three months ended June 30, 1995 and 1996, respectively, and $0.18 and
$0.40 for the six months ended June 30, 1995 and 1996, respectively. Shares used
in computing net income per Ordinary Share was 8.388 million and 9.860 million
for three months ended June 30, 1995 and 1996, respectively, and 8.085 million
and 9.761 million for the six months ended June 30, 1995 and 1996, respectively.
4
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CBT GROUP PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
(dollars in thousands)
<TABLE>
<CAPTION>
Six months ended
June 30,
1995 1996
----------- ------------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $1,419 $ 3,935
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 168 578
Overlap in accounting for PTS' net
income, excluding depreciation (108) 0
Accrued interest on short-term investments 0 19
Changes in operating assets and liabilities:
Accounts receivable (1,277) 128
Inventories 314 (116)
Deferred tax assets (54) 0
Prepaid expenses and other assets (624) (2,199)
Accounts payable 224 532
Accrued payroll and related expenses
and other accrued liabilities (93) (11)
Deferred revenues 480 (107)
------- -------
Net cash provided by operating activities 449 2,759
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (425) (2,211)
Payments to acquire investments 0 (609)
------- -------
Net cash used in investing activities (425) (2,820)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of notes payable (326) (55)
Redemption of Series A shares (1,350) 0
Proceeds (repayments) under bank overdraft facility 65 (1,267)
Payment of receivables from shareholders 0 11
Proceeds from issuance of ordinary shares, net 14,510 810
------- -------
Net cash provided (used in) financing activities 12,899 (501)
------- -------
Effect of exchange rate changes on cash 9 4
------- -------
Net increase in cash 12,932 (558)
Cash at beginning of period 4,360 6,501
------- -------
Cash at end of period $17,292 $ 5,943
======= =======
</TABLE>
5
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CBT GROUP PLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 INTERIM CONSOLIDATED FINANCIAL STATEMENTS
These interim consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q.
Accordingly, they do not include all the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals), considered necessary for a
fair presentation of financial position, results of operations and cash
flows at the dates and for the periods presented have been included. The
interim financial information herein is not necessarily indicative of
results for any future period.
NOTE 2 ACQUISITIONS OF CLS AND NTT
On May 31, 1996, the Company acquired CLS Consult, Gesellschaft fur
Beratung, Management und Beteiligung mbH ("CLS"), a German limited
liability company, and New Technology Training Ltd., an Ontario
corporation ("NTT"). CLS is a developer and marketer of interactive
education software for SAP client/server applications, and NTT's primary
business has been to act as CBT's exclusive distributor in Canada. The
Company issued a total of 145,854 of its ADSs to the former shareholders
of CLS and NTT in connection with the acquisitions. Each transaction was
accounted for as a "pooling of interests" in accordance with U.S.
generally accepted accounting principles. In compliance with such
principles, the Company's operating results have been restated to
include the results of CLS and NTT as if the acquisitions had occurred
at the beginning of the first period presented.
NOTE 3 AMERICAN DEPOSITARY SHARE SPLIT
On May 15, 1996, the Company effected a two-for-one split of its issued
and outstanding American Depositary Shares ("ADSs"), whereby each issued
and outstanding ADS is now represented by one-half of one Ordinary Share
and each issued and outstanding Ordinary Share that is deposited with
The Bank of New York, as Depositary, will be represented by two ADSs.
American Depositary Receipts (ADRs) reflecting the additional ADSs were
distributed on May 20, 1996 to holders of record on May 15, 1996.
6
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
IMPORTANT NOTE ABOUT FORWARD LOOKING STATEMENTS
The following discussion contains forward looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Predictions of future events are
inherently uncertain. Actual events could differ materially from those
predicted in the forward looking statements as a result of the risks set forth
in the following discussion, and in particular, the risks discussed below under
the caption "Additional Risk Factors that Could Affect Operating Results."
OVERVIEW
CBT Group PLC ("CBT" or, the "Company") is a leading provider of interactive
software designed to meet businesses' information technology education and
training needs. The Company develops, publishes and markets a broad library of
over 235 software titles focused on client/server technologies and delivered on
networked and standalone PCs.
The Company derives revenues primarily from license agreements under which
customers license the Company's titles for periods of one, two or three years.
The license agreement format generally allows the customer to exchange titles
for other titles in the Company's library on an annual basis if the agreement is
for more than one year. The initial annual license fee is generally recognized
as revenue at the time of delivery of products, and subsequent annual license
fees are generally recognized on the anniversary of each delivery date.
Although the Company's license agreements are noncancellable by their terms,
there can be no assurance that any customer will fulfill the contractual
obligations under its agreement. Cancellation, reduction or delay in orders by
or shipments to any of these customers could have a material adverse effect on
the Company's business and results of operations. In addition, the Company
derives revenues from sales of its courses, primarily through its telesales
organization and resellers.
In recent years, the Company has entered into several development and marketing
alliances with key vendors of client/server software under which the Company
develops titles for training on specific products. Under certain of its
development and marketing alliances, the Company's partners have agreed to fund
certain product development costs. The Company recognizes such funding as
revenues on a percentage of completion basis, and the costs associated with such
revenues are reflected as cost of revenues. These agreements have the effect of
shifting expenses associated with developing certain new products from research
and development to cost of revenues. The Company expects that cost of revenues
may fluctuate from period to period in the future based upon many factors,
including, but not limited to, the timing of expenses associated with
development and marketing alliances.
7
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RESULTS OF OPERATIONS
The following table sets forth certain restated consolidated statements of
operations data as a percentage of revenues:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
-------------- -------------
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues 100% 100% 100% 100%
Cost of revenues 19.9 16.1 19.6 16.0
---- ---- ---- ----
Gross profit 80.1 83.9 80.4 84.0
Operating expenses:
Research and development 15.1 17.1 15.8 17.0
Sales and marketing 43.5 42.6 44.2 44.2
General and administrative 9.7 7.5 9.8 7.5
Costs of acquisitions 0 4.1 0 2.2
---- ---- ---- ----
Total operating expenses 68.3 71.3 69.8 70.9
---- ---- ---- ----
Income from operations 11.8 12.6 10.6 13.1
Other income, net 1.8 3.7 0.7 3.9
---- ---- ---- ----
Income before provision for income taxes 13.6 16.3 11.3 17.0
Provision for income taxes 2.9 2.6 2.4 2.7
---- ---- ---- ----
Net income 10.7 13.7 8.9 14.3
==== ==== ==== ====
</TABLE>
Revenues
Revenues increased 66% to $14.6 million in the three months ended June 30, 1996
from $8.8 million in the three months ended June 30, 1995, and 71% to $27.6
million in the six months ended June 30, 1996 from $16.1 million in the six
months ended June 30, 1995. The increases in revenues during these periods were
primarily attributable to an increase in the number of available courses, strong
customer contract renewals and upgrades and expanded marketing and distribution
efforts in the United States.
Revenues in the United States for the three and six month periods ended June 30,
1996 increased to $11.0 million (or 75% of revenues) and $21.3 million (or 77%
of revenues), respectively, from $5.8 million (or 66% of revenues) and $11.1
million (or 69% of revenues) for the three and six month periods ended June 30,
1995, respectively. The increases were primarily the result of a significant
increase in the number of sales and related support personnel employed in the
United States, an increase in the number of available courses and an expansion
of the Company's customer base.
Revenues in Europe for the three and six month periods ended June 30, 1996 were
$2.7 million (or 18% of revenues) and $5.3 million (or 19% of revenues),
respectively, and revenues from outside the United States and Europe
(principally from Canada and South Africa) were 7% and 4%, respectively. Because
a significant portion of the Company's business is conducted outside the United
States, the Company is subject to numerous risks of doing business in other
countries, including risks related to currency fluctuations.
8
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Cost of Revenues
Cost of revenues includes the cost of materials (such as diskettes, packaging
and documentation), royalties to third parties, the portion of development costs
associated with funded development projects and fulfillment costs.
Gross margins increased to 83.9% and 84.0% in the three and six month periods
ended June 30, 1996, respectively, from 80.1% and 80.4% in the three and six
month periods ended June 30, 1995, respectively. The increase in gross margins
in the three and six month periods ended June 30, 1996 are primarily due to the
inclusion in cost of revenues for the earlier periods of certain costs CLS had
incurred in developing its SAP interactive training software. CLS, which was in
an earlier stage of development in the first half of 1995, outsourced a
substantial portion of its product development to third parties and the
associated expenses (which were paid as royalties to such third parties) have
been included in cost of revenues for the three and six month periods ended June
30, 1995. During the comparable periods of 1996, these activities were conducted
at CLS, and no royalties with respect to them were therefore payable.
Accordingly, these expenses are included in research and development expense for
the 1996 periods. The Company expects that cost of revenues may fluctuate from
period to period in the future based upon many factors, including the mix of
titles licensed (between titles developed exclusively by CBT and royalty-bearing
titles developed pursuant to development and marketing alliances) and the timing
of expenses associated with development and marketing alliances.
Research and Development Expenses
Research and development expenses consist primarily of salaries and benefits,
occupancy expenses, travel expenses and fees paid to outside consultants.
Research and development expenses increased in the three and six month periods
ended June 30, 1996 to $2.5 million (or 17.1% of revenues) and $4.7 million (or
17.0% of revenues), respectively, from $1.3 million (or 15.1% of revenues) and
$2.6 million (or 15.8% of revenues) in the comparable periods of the prior year.
The increases are primarily the result of the hiring of additional research and
development personnel required to expand and enhance the Company's library of
software products. The Company believes that significant investment in research
and development is required to remain competitive in the information technology
education and training market, and the Company therefore expects research and
development expenses to continue to increase in absolute terms in future
periods.
Software development costs are accounted for in accordance with Financial
Accounting Standards Board Statement No. 86, under which the Company is required
to capitalize software development costs after technological feasibility has
been established. To date, development costs after establishment of
technological feasibility have been immaterial, and all software development
costs have been expensed.
Sales and Marketing Expenses
Sales and marketing expenses consist primarily of salaries and commissions,
advertising and promotional expenses and related overhead costs. These expenses
increased in absolute terms in the three and six month periods ended June 30,
1996 to $6.2 million (or 42.6% of revenues) and $12.2 million (or 44.2% of
revenues), respectively, from $3.8 million (or 43.5% of revenues) and $7.1
million (or 44.2% of revenues) for the comparable periods of the prior year. The
increases in absolute terms were primarily attributable to increases in the
number of sales and sales support personnel in the United States and, to a
lesser extent, outside the United States. Commission costs have also increased
in absolute terms along with the increases in revenues during these periods. The
Company also expects to increase sales and marketing expenses in the future to
support expansion of its sales and marketing efforts.
9
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General and Administrative Expenses
General and administrative expenses increased in absolute terms and declined as
a percentage of revenues in the three and six month periods ended June 30, 1996
to $1.1 million (or 7.5% of revenues) and $2.1 million (or 7.5% of revenues),
respectively, from $856,000 (or 9.7% of revenues) and $1.6 million (or 9.8% of
revenues) for the comparable periods of the prior year. The increases in
absolute terms were primarily the result of increased staffing to support
expanding operations, expenses associated with being a public company and
compliance with Irish reporting and other requirements. The decreases in these
expenses as a percentage of revenues were principally due to more rapid
increases in revenues than in associated expenses. The Company anticipates that
absolute levels of general and administrative expenses will increase in future
periods due to increases in staffing as well as the expenses associated with
being a publicly traded company and with complying with Irish reporting and
other requirements.
Other Income, Net
Other income, net, comprises interest expense, interest income and foreign
currency exchange gains and losses. The Company recognized other income, net, of
$542,000 and $1.1 million in the three and six month periods ended June 30,
1996, respectively, as compared to other income, net, of $156,000 and $108,000
for the comparable periods of the prior year. The increases in other income,
net, were primarily the result of interest received on proceeds deposited from
the Company's initial and secondary public offerings in 1995.
The Company's consolidated financial statements are prepared in dollars,
although four of the Company's direct subsidiaries have functional currencies
other than the dollar, and a significant portion of the Company's and its
subsidiaries' revenues, costs and assets are denominated in currencies other
than their respective functional currencies. Fluctuations in exchange rates may
have a material adverse effect on the Company's results of operations,
particularly its operating margins, and could result in exchange losses. The
impact of future exchange rate fluctuations on the Company's results of
operations cannot be accurately predicted. To date, the Company has not sought
to hedge the risks associated with fluctuations in the exchange rate, but may
undertake such transactions in the future. There can be no assurance that any
hedging techniques implemented by the Company would be successful in eliminating
the effects of currency fluctuations.
Provision for Income Taxes
CBT Group PLC operates as a holding company with operating subsidiaries in
several countries, and each subsidiary is taxed based on the laws of the
jurisdiction in which it operates. Because taxes are incurred at the subsidiary
level, and one subsidiary's tax losses cannot be used to offset the taxable
income of subsidiaries in other tax jurisdictions, the Company's consolidated
effective tax rate may increase to the extent that the Company reports tax
losses in some subsidiaries and taxable income in others.
The Company has significant operations and generates a majority of its taxable
income in the Republic of Ireland, and certain of the Company's Irish operating
subsidiaries are taxed at rates substantially lower than U.S. tax rates. One
Irish subsidiary currently qualifies for a 10% tax rate which, under current
legislation, is in force until 2010, and another Irish subsidiary is income tax
exempt. If such subsidiaries were no longer to qualify for such tax rates or if
the tax laws were rescinded or changed, the Company's operating results could be
materially adversely affected. Moreover, because the Company incurs income tax
in several countries, an increase in the profitability of the Company in one or
more of these countries could result in a higher overall tax
10
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rate. In addition, if tax authorities were to challenge successfully the manner
in which profits are recognized among the Company's subsidiaries, the Company's
taxes could increase and its cash flow and net income could be materially
adversely affected.
The effective tax rates for the three and six month periods ended June 30, 1996
were 16.0% and 16.0%, compared to 21.7% and 21.3% for the same periods in 1995.
The decreases in the effective tax rates during these periods were primarily the
result of losses incurred by CLS and NTT in 1995 which were not available to
offset taxable income earned in other jurisdictions.
LIQUIDITY AND CAPITAL RESOURCES
Cash and short-term investments of $47.2 million for the six month period ended
June 30, 1996 was unchanged from December 31, 1995. Working capital increased to
$46.7 million at June 30, 1996 from $44.1 million at December 31, 1995. This
increase is primarily the result of increased cash flow from operating
activities during the period.
Net cash provided by operating activities was $2.8 million in the six months
ended June 30, 1996 compared to net cash provided by operating activities of
$449,000 for the comparable period of the prior year. The increase in cash flow
from operations was primarily attributable to a $2.5 million increase in net
income.
Capital expenditures were $2.2 million in the six months ended June 30, 1996
compared to $425,000 for the comparable period of the prior year. The increase
was primarily attributable to system upgrades, establishment of a new
fulfillment center and fixed asset requirements resulting from increases in
staff. Although the Company currently has no material capital commitments, it
expects that it will spend more in 1996 than in previous years, primarily as a
result of improvements to its information systems and capital expenditures
associated with new headquarters and other facilities.
The Company believes that its existing cash and short-term investments will be
sufficient to meet its cash requirements for at least the next twelve months.
The Company may from time to time consider the acquisition of complementary
businesses, products or technologies, which may require additional financing.
ADDITIONAL RISK FACTORS THAT COULD AFFECT OPERATING RESULTS
The following risk factors could materially and adversely affect the Company's
future operating results and could cause actual events to differ materially from
those predicted in the Company's forward looking statements relating to its
business.
Fluctuations in Operating Results. The Company has in the past experienced
fluctuations in its quarterly operating results and anticipates that such
fluctuations will continue and could intensify in the future. Fluctuations in
operating results may result in volatility in the price of the Company's ADSs.
Although the Company was profitable in each of the last ten quarters, there can
be no assurance that such profitability will continue in the future or that the
levels of profitability will not vary significantly among quarterly periods.
The Company's operating results may fluctuate as a result of many factors,
including size and timing of orders and shipments, mix of sales between products
developed solely by the Company and products developed through development and
marketing alliances, royalty rates, the announcement, introduction and
acceptance of new products and product enhancements by the Company and its
competitors, mix of sales between the Company's direct sales channel and
indirect sales channels, competitive conditions in the industry, loss of
significant customers, delays in availability of existing or new products,
spending patterns of the Company's customers, currency fluctuations and general
economic conditions.
11
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The Company's expense levels are based in significant part on its expectations
regarding future revenues and are fixed to a large extent in the short term.
Accordingly, the Company may be unable to adjust spending in a timely manner to
compensate for any unexpected revenue shortfall. Any significant revenue
shortfall would therefore have a material adverse effect on the Company's
results of operations. In addition, the Company hired additional employees in
the first half of 1996. This increase in employee expense could have a negative
impact on the Company's operating margins during 1996.
Competition. The information technology education and training market is highly
fragmented and competitive, and the Company expects this competition to
increase. The Company expects that because of the lack of significant barriers
to entry into this market, new competitors may enter the market in the future.
In addition, companies are competing with the Company in the information
technology education and training through the acquisition of the Company's
competitors, and the Company expects this trend to continue. Such competitors
may also include publishing companies and vendors of application software,
including those vendors with whom the Company has formed development and
marketing alliances.
The Company competes primarily with third-party suppliers of instructor-led
information technology education and training and internal training departments
and with other suppliers of information technology education and training,
including several other companies that produce interactive software training. To
a lesser extent, the Company also competes with consultants, value-added
resellers and network integrators. Certain of these value-added resellers also
market products competitive with those of the Company. The Company expects that
as organizations increase their dependance on outside suppliers of training, the
Company will face increasing competition from these other suppliers as
information technology education and training managers more frequently compare
training products provided by outside suppliers.
Many of the Company's current and potential competitors have substantially
greater financial, technical, sales, marketing and other resources, as well as
greater name recognition, than the Company. In addition, the information
technology education and training market is characterized by significant price
competition, and the Company expects that it will face increasing price
pressures from competitors as MIS managers demand more value for their training
budgets. Accordingly, there can be no assurance that the Company will be able to
provide products that compare favorably with new instructor-led techniques or
other interactive training software or that competitive pressures will not
require the Company to reduce its prices significantly.
Seasonality. The software industry generally, and the Company in particular,
are subject to seasonal revenue fluctuations, based in part on customers' annual
budgetary cycles and in part on the annual nature of sales quotas. These
seasonal trends have in the past caused, and in the future are expected to
cause, revenues and net income in the first quarter of a year to be less than
revenues and net income for the immediately preceding fourth quarter. Many
software companies also experience a seasonal downturn in demand during the
summer months. There can be no assurance that these or other seasonal trends
will not have a material adverse effect on the Company's results of operations.
Management of Expanding Operations and Acquisitions. The Company has recently
experienced rapid expansion of its operations, which has placed, and is expected
to continue to place, significant demands on the Company's administrative,
operational and financial personnel and systems. The Company's future operating
results will substantially depend on the ability of its officers and key
employees to manage changing business conditions and to implement and improve
its operational, financial control and reporting systems. If the Company is
unable to respond to and manage changing business conditions, its business and
results of operations could be materially adversely affected.
As a result of the consummation of the acquisitions of Personal Training
Systems, Inc. ("PTS") in late 1995, and CLS and NTT in May 1996, the Company's
operating expenses have increased. There can be no assurance that the
integration of the businesses can be successfully completed in a timely fashion,
or at all, or that the revenues from the acquired businesses will be sufficient
to support the costs associated with those businesses, without deteriorating the
Company's operating margins. Any failure to successfully complete the
integration in a timely fashion or to generate sufficient revenues from the
acquired businesses could have a material adverse effect on the Company's
business and results of operations.
The Company regularly evaluates acquisition opportunities and is likely to make
acquisitions in the future. Future acquisitions by the Company could result in
potentially dilutive issuances of equity securities, the incurrence of debt and
contingent liabilities and amortization expenses related to goodwill and other
intangible assets, which could materially adversely affect the Company's results
of operations. Product and technology acquisitions entail numerous risks,
including difficulties in the assimilation of acquired operations, technologies
and products, diversion of management's attention to other business concerns,
risks of entering markets in which the Company has no or limited prior
experience and potential loss of key employees of acquired companies. The
Company's management has had limited experience in assimilating acquired
organizations and products into the Company's operations. No assurance can be
given as to the ability of the Company to integrate successfully any operations,
personnel or products that have been acquired or that might be acquired in the
future, and the failure of the Company to do so could have a material adverse
effect on the Company's results of operations.
Risk of Increasing Taxes. Certain of the Company's subsidiaries have
significant operations and generate significant taxable income in Ireland, and
certain of the Company's Irish subsidiaries are taxed at rates substantially
lower than U.S. tax rates. The extent of the tax benefit could vary
12
<PAGE>
from period to period, and there can be no assurance that the Company's tax
situation will not change.
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
On May 15, 1996, the Company effected a two-for-one split of its issued
and outstanding American Depositary Shares ("ADSs"), whereby each issued
and outstanding ADS is now represented by one-half of one Ordinary Share
and each issued and outstanding Ordinary Share that is deposited with The
Bank of New York, as Depositary, will be represented by two ADSs.
American Depositary Receipts (ADRs) reflecting the additional ADSs were
distributed on May 20, 1996 to holders of record on May 15, 1996.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS
The Company held its annual general meeting of shareholders on June 12,
1996 (the "AGM"). Voting was conducted by a show of hands in accordance
with Irish law. Six shareholders or their representatives were present
for the vote. There were no abstentions, broker non-votes or votes
withheld with respect to any matter. The following is a brief description
of each matter submitted to a vote of the security holders at the AGM and
a summary of the votes tabulated with respect to each such matter:
The shareholders re-elected Mr. John Fortune to serve as a director of
the Company.
Votes "FOR" Votes "AGAINST"
----------- ---------------
6 0
The shareholders elected Mr. Gregory M. Priest to serve as a director of
the Company.
Votes "FOR" Votes "AGAINST"
----------- ---------------
6 0
The shareholders authorized the Company's Board of Directors to fix the
remuneration of the Company's auditors.
Votes "FOR" Votes "AGAINST"
----------- ---------------
6 0
The shareholders authorized and approved an amendment to the Company's
1994 Share Option Plan (the "1994 Plan") increasing the total number of
Ordinary Shares reserved for issuance thereunder by 430,188 (which will
be represented by 860,376 ADSs).
Votes "FOR" Votes "AGAINST"
----------- ---------------
6 0
The shareholders adopted and approved the Trust Deed and Rules relating
to the CBT Group PLC 1996 Approved Sharing Scheme (the "1996 Ireland
Scheme").
Votes "FOR" Votes "AGAINST"
----------- ---------------
6 0
13
<PAGE>
The shareholders adopted and approved the Trust Deed and Rules of the
CBT Group PLC 1996 Profit Sharing Scheme (the "1996 UK Scheme").
Votes "FOR" Votes "AGAINST"
----------- ---------------
6 0
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
--------
4.1(1) Amended and Restated Deposit Agreement (including the form of
American Depositary Receipt), dated as of April 13, 1995 and
amended and restated as of April 11, 1996, among the Company,
The Bank of New York, as Depositary, and each Owner and
Beneficial Owner from time to time of American Depositary
Receipts issued thereunder.
4.2 Amended and Restated Restricted Deposit Agreement (including
the form of American Depositary Receipt), dated as of November
30, 1995 and amended and restated as of April 11, 1996, among
the Company, The Bank of New York, as Depositary, and each
Owner and Beneficial Owner from time to time of American
Depositary Receipts issued thereunder.
10.1* Employment Agreement effective as of January 2, 1996 between
CBT Group PLC, CBT Systems USA, Ltd. and Gregory M. Priest.
11.1 Statement Regarding Computation of Net Income Per Share.
27.1 Financial Data Schedule.
____________________________________
(1) Incorporated by reference to exhibit contained in the
Registration Statement on Form F-6 (File No. 33-90380) filed
with the Securities and Exchange Commission on April 15, 1996.
* Denotes management compensatory plan or arrangement.
(b) Reports on Form 8-K
-------------------
Not applicable.
14
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
CBT GROUP PLC
Date: August 14, 1996 By: /s/ William G. McCabe
--------------------------
William G. McCabe
Chairman and Chief Executive Officer
Date: August 14, 1996 By: /s/ Gregory M. Priest
--------------------------
Gregory M. Priest
VP, Finance and Chief Financial Officer
15
<PAGE>
INDEX TO EXHIBITS
Exhibit
- -------
4.2 Amended and Restated Restricted Deposit Agreement (including the form
of American Depositary Receipt), dated as of November 30, 1995 and
amended and restated as of April 11, 1996, among the Company, The Bank
of New York, as Depositary, and each Owner and Beneficial Owner from
time to time of American Depositary Receipts issued thereunder.
10.1 Employment Agreement effective as of January 2, 1996 between CBT Group
PLC, CBT Systems USA, Ltd. and Gregory M. Priest.
11.1 Statement Regarding Computation of Net Income Per Share.
27.1 Financial Data Schedule.
16
<PAGE>
EXHIBIT 4.2
================================================================================
CBT GROUP PLC
AND
THE BANK OF NEW YORK
As Depositary
AND
OWNERS AND BENEFICIAL OWNERS OF RESTRICTED
AMERICAN DEPOSITARY RECEIPTS
Amended and Restated Restricted Deposit Agreement
Dated as of November 30, 1995
(as amended and restated as of April 11, 1996)
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
PARTIES...................................................................... 1
RECITALS.................................................................... 1
ARTICLE 1
DEFINITIONS................................. 1
SECTION 1.01. ADR Deposit Agreement.................................... 1
SECTION 1.02. ADSs; ADRs............................................... 1
SECTION 1.03. Beneficial Owner......................................... 2
SECTION 1.04. Commission............................................... 2
SECTION 1.05. Company.................................................. 2
SECTION 1.06. Custodian................................................ 2
SECTION 1.07. Depositary; Corporate Trust Office....................... 2
SECTION 1.08. Deposited Securities..................................... 2
SECTION 1.09. Dollars; Pounds.......................................... 2
SECTION 1.10. Exchange................................................. 3
SECTION 1.11. Foreign Registrar........................................ 3
SECTION 1.12. Owner.................................................... 3
SECTION 1.13. Receipts................................................. 3
SECTION 1.14. Registrar................................................ 3
SECTION 1.15. Restricted American Depositary Shares.................... 3
SECTION 1.16. Restricted Deposit Agreement............................. 3
SECTION 1.17. Rule 144................................................. 3
SECTION 1.18. Rule 145................................................. 4
SECTION 1.19. Securities Act........................................... 4
SECTION 1.20. Securities Exchange Act.................................. 4
SECTION 1.21. Shares................................................... 4
SECTION 1.22. United States............................................ 4
ARTICLE 2
FORM OF RECEIPTS, DEPOSIT OF SHARES, EXECUTION AND
DELIVERY, TRANSFER AND SURRENDER OF RECEIPTS................. 4
SECTION 2.01. Form and Transferability of
Receipts................................................ 4
SECTION 2.02. Deposit of Shares........................................ 7
SECTION 2.03. Execution and Delivery of Receipts....................... 8
SECTION 2.04. Transfer of Receipts; Combination
and Split-up of Receipts................................ 9
SECTION 2.05. Surrender of Receipts and
Withdrawal of Shares.................................... 10
SECTION 2.06. Limitations on Execution and
-i-
<PAGE>
Delivery, Transfer and Surrender
of Receipts............................................. 12
SECTION 2.07. Lost Receipts, etc....................................... 12
SECTION 2.08. Cancellation and Destruction of
Surrendered Receipts.................................... 13
SECTION 2.09. Exchange of Restricted American
Depositary Shares for ADSs.............................. 13
ARTICLE 3
CERTAIN OBLIGATIONS OF OWNERS AND BENEFICIAL
OWNERS OF RECEIPTS............................. 14
SECTION 3.01. Filing Proofs, Certificates and
Other Information....................................... 14
SECTION 3.02. Liability of Owner or Beneficial
Owner for Taxes......................................... 14
SECTION 3.03. Warranties on Deposit of Shares.......................... 15
ARTICLE 4
THE DEPOSITED SECURITIES.......................... 15
SECTION 4.01. Cash Distributions....................................... 15
SECTION 4.02. Distributions Other Than Cash,
Shares or Rights........................................ 16
SECTION 4.03. Distributions in Shares.................................. 16
SECTION 4.04. Rights................................................... 17
SECTION 4.05. Conversion of Foreign Currency........................... 19
SECTION 4.06. Fixing of Record Date.................................... 20
SECTION 4.07. Voting of Deposited Securities........................... 21
SECTION 4.08. Changes Affecting Deposited
Securities.............................................. 24
SECTION 4.09. Reports.................................................. 25
SECTION 4.10. Lists of Owners.......................................... 25
SECTION 4.11. Withholding.............................................. 25
ARTICLE 5
THE DEPOSITARY, THE CUSTODIANS AND THE COMPANY............... 25
SECTION 5.01. Maintenance of Office and Transfer
Books by the Depositary................................. 25
SECTION 5.02. Prevention or Delay in Performance
by the Depositary or the Company........................ 26
SECTION 5.03. Obligations of the Depositary, the
Custodian and the Company............................... 27
SECTION 5.04. Resignation and Removal of the
Depositary.............................................. 28
-ii-
<PAGE>
SECTION 5.05. The Custodians........................................... 29
SECTION 5.06. Notices and Reports...................................... 29
SECTION 5.07. Distribution of Additional Shares,
Rights, etc............................................. 30
SECTION 5.08. Indemnification.......................................... 30
SECTION 5.09. Charges of Depositary.................................... 31
SECTION 5.10. Retention of Depositary Documents........................ 32
SECTION 5.11. Exclusivity.............................................. 32
ARTICLE 6
AMENDMENT AND TERMINATION......................... 32
SECTION 6.01. Amendment................................................ 32
SECTION 6.02. Termination.............................................. 33
ARTICLE 7
MISCELLANEOUS................................ 34
SECTION 7.01. Counterparts............................................. 34
SECTION 7.02. No Third Party Beneficiaries............................. 34
SECTION 7.03. Severability............................................. 34
SECTION 7.04. Owners and Beneficial Owners as
Parties; Binding Effect................................. 34
SECTION 7.05. Notices.................................................. 35
SECTION 7.06. Governing Law............................................ 35
ANNEX I
Certification and Agreement of Acquirors of
Receipts Upon Deposit of Shares Pursuant to
Section 2.02 of the Restricted Deposit Agreement
ANNEX II
Certification and Agreement of Certain Persons
Transferring Receipts Pursuant to
Sections 2.01 and 2.04 of
the Restricted Deposit Agreement
-iii-
<PAGE>
ANNEX III
Certification and Agreement of Persons Receiving
Deposited Securities Upon Withdrawal
Pursuant to Section 2.05 of
the Restricted Deposit Agreement
EXHIBIT A
FORM OF RESTRICTED AMERICAN DEPOSITARY RECEIPT
-iv-
<PAGE>
AMENDED AND RESTATED RESTRICTED DEPOSIT AGREEMENT
AMENDED AND RESTATED RESTRICTED DEPOSIT AGREEMENT dated as of November
30, 1995 as amended and restated as of April 11, 1996 among CBT GROUP PLC,
incorporated under the laws of The Republic of Ireland (herein called the
Company), THE BANK OF NEW YORK, a New York banking corporation (herein called
the Depositary), and all Owners and Beneficial Owners from time to time of
Restricted American Depositary Receipts issued hereunder.
W I T N E S S E T H :
WHEREAS, the Company desires to provide, as hereinafter set forth in
this Restricted Deposit Agreement, for the deposit of Shares (as hereinafter
defined) of the Company from time to time with the Depositary or with the
Custodian (as hereinafter defined) as agent of the Depositary for the purposes
set forth in this Restricted Deposit Agreement, for the creation of Restricted
American Depositary Shares representing the Shares so deposited, subject to the
terms and conditions of this Restricted Deposit Agreement, and for the execution
and delivery of Restricted American Depositary Receipts evidencing the
Restricted American Depositary Shares; and
WHEREAS, the Restricted American Depositary Receipts are to be
substantially in the form of Exhibit A annexed hereto, with appropriate
insertions, modifications and omissions, as hereinafter provided in this
Restricted Deposit Agreement;
NOW, THEREFORE, in consideration of the premises, it is agreed by and
between the parties hereto as follows:
ARTICLE 1
DEFINITIONS
The following definitions shall for all purposes, unless otherwise
clearly indicated, apply to the respective terms used in this Restricted Deposit
Agreement:
SECTION 1.01. ADR Deposit Agreement. The term "ADR Deposit
---------------------
Agreement" shall mean the unrestricted deposit agreement, dated as of April 13,
1995, among The Bank of New York, as depositary thereunder, the Company and the
owners and beneficial owners of ADRs issued thereunder, as the same may be
amended from time to time.
<PAGE>
SECTION 1.02. ADSs; ADRs. The term "ADSs" shall mean the
----------
unrestricted American Depositary Shares issued pursuant to the ADR Deposit
Agreement. The term "ADRs" shall mean the unrestricted American Depositary
Receipts evidencing the ADSs.
SECTION 1.03. Beneficial Owner. The term "Beneficial Owner" shall
----------------
mean each person owning from time to time any beneficial interest in the
Restricted American Depositary Shares evidenced by any Receipt.
SECTION 1.04. Commission. The term "Commission" shall mean the
----------
Securities and Exchange Commission of the United States or any successor
governmental agency in the United States.
SECTION 1.05. Company. The term "Company" shall mean CBT Group PLC,
-------
incorporated under the laws of The Republic of Ireland, and its successors.
SECTION 1.06. Custodian. The term "Custodian" shall mean AIB
---------
Custodial Services, currently located at Carrisbrook House, Ballsbridge, Dublin
4, Ireland, as agent of the Depositary for the purposes of this Restricted
Deposit Agreement, and any other firm or corporation which may hereafter be
appointed by the Depositary pursuant to the terms of Section 5.05, as substitute
or additional custodian or custodians hereunder, as the context shall require
and shall also mean all of them collectively.
SECTION 1.07. Depositary; Corporate Trust Office. The term
----------------------------------
"Depositary" shall mean The Bank of New York, a New York banking corporation,
and any successor as depositary hereunder. The term "Corporate Trust Office",
when used with respect to the Depositary, shall mean the office of the
Depositary which at the date of this Agreement is 101 Barclay Street, New York,
New York 10286.
SECTION 1.08. Deposited Securities. The term "Deposited Securities"
--------------------
as of any time shall mean Shares at such time deposited or deemed to be
deposited under this Restricted Deposit Agreement and any and all other
securities, property and cash received by the Depositary or the Custodian in
respect thereof and at such time held hereunder, subject as to cash to the
provisions of Section 4.05.
SECTION 1.09. Dollars; Pounds. The term "Dollars" shall mean United
---------------
States dollars. The term "Pounds" or "(Pounds) shall mean Irish pounds and the
------ --------
term "p" or "pence" shall mean Irish pence.
- -----
-2-
<PAGE>
SECTION 1.10. Exchange. The term "Exchange" shall mean an exchange
--------
of Restricted American Depositary Shares for ADSs, in accordance with Section
2.10 hereof.
SECTION 1.11. Foreign Registrar. The term "Foreign Registrar" shall
-----------------
mean Allied Irish Banks, p.l.c., Registrars & New Issues Department or any
successor entity carries out the duties of registrar for the Shares or any other
appointed agent of the Company for the transfer and registration of Shares.
SECTION 1.12. Owner. The term "Owner" shall mean the person in whose
-----
name a Receipt is registered on the books of the Depositary maintained for such
purpose.
SECTION 1.13. Receipts. The term "Receipts" shall mean the
--------
Restricted American Depositary Receipts issued hereunder evidencing Restricted
American Depositary Shares.
SECTION 1.14. Registrar. The term "Registrar" shall mean any bank or
---------
trust company having an office in the Borough of Manhattan, The City of New
York, which shall be appointed to register Receipts and transfers of Receipts as
herein provided.
SECTION 1.15. Restricted American Depositary Shares. The term
-------------------------------------
"Restricted American Depositary Shares" shall mean the restricted securities
representing the interests in the Deposited Securities and evidenced by the
Receipts issued hereunder. Each Restricted American Depositary Share shall
represent one-half of one Share or the right to receive one Share, until there
shall occur a distribution upon Deposited Securities covered by Section 4.03 or
a change in Deposited Securities covered by Section 4.08 with respect to which
additional Receipts are not executed and delivered, and thereafter Restricted
American Depositary Shares shall evidence the amount of Shares or Deposited
Securities specified in such Sections.
SECTION 1.16. Restricted Deposit Agreement. The term "Restricted
----------------------------
Deposit Agreement" shall mean this Restricted Deposit Agreement, including the
Annexes hereto, as the same may be amended from time to time in accordance with
the provisions hereof.
SECTION 1.17. Rule 144. The term "Rule 144" shall mean Rule 144, as
--------
from time to time amended, under the Securities Act.
-3-
<PAGE>
SECTION 1.18. Rule 145. The term "Rule 145" shall mean Rule 145, as
--------
from time to time amended, under the Securities Act.
SECTION 1.19. Securities Act. The term "Securities Act" shall mean
--------------
the United States Securities Act of 1933, as from time to time amended.
SECTION 1.20. Securities Exchange Act. The term "Securities Exchange
-----------------------
Act" shall mean the United States Securities Exchange Act of 1934, as from time
to time amended.
SECTION 1.21. Shares. The term "Shares" shall mean ordinary shares
------
in registered form of the Company, nominal value 37.50 pence each, heretofore
validly issued and outstanding and fully paid, nonassessable and free of any
pre-emptive rights of the holders of outstanding Shares or hereafter validly
issued and outstanding and fully paid, nonassessable and free of any pre-emptive
rights of the holders of outstanding Shares or interim certificates representing
such Shares.
SECTION 1.22. United States. The term "United States" shall, except
-------------
as otherwise provided in this Restricted Deposit Agreement or the Receipts, mean
the United States of America, its territories and possessions, any State of the
United States, and the District of Columbia.
ARTICLE 2
FORM OF RECEIPTS, DEPOSIT OF SHARES, EXECUTION AND
DELIVERY, TRANSFER AND SURRENDER OF RECEIPTS
SECTION 2.01. Form and Transferability of Receipts. (a) Definitive
------------------------------------
Receipts shall be entitled "Restricted American Depositary Receipts" and shall
be substantially in the form set forth in Exhibit A annexed to this Restricted
Deposit Agreement, with appropriate insertions, modifications and omissions, as
hereinafter provided. The Depositary shall maintain books on which each Receipt
so executed and delivered as hereinafter provided and the transfer of each such
Receipt shall be registered. Each Receipt (i) shall be in physical form and
legended, (ii) shall be registered in the name of the beneficial owner
furnishing a Depositor Certificate, in substantially the form attached as Annex
I hereto, pursuant to Section 2.02 of this Restricted Deposit Agreement, (iii)
shall not be eligible for acceptance in any book-entry settlement system,
-4-
<PAGE>
and (iv) may only be transferred in accordance with Section 2.04 of this
Restricted Deposit Agreement.
No Receipt shall be entitled to any benefits under this Restricted
Deposit Agreement or be valid or obligatory for any purpose, unless such Receipt
shall have been executed by the Depositary by the manual signature of a duly
authorized signatory of the Depositary; provided, however, that such signature
-------- -------
may be a facsimile if a Registrar for the Receipts shall have been appointed and
such Receipts are countersigned by the manual signature of a duly authorized
officer of the Registrar. Receipts bearing the manual or facsimile signature of
a duly authorized signatory of the Depositary who was at any time a proper
signatory of the Depositary shall bind the Depositary, notwithstanding that such
signatory has ceased to hold such office prior to the execution and delivery of
such Receipts by the Registrar or did not hold such office on the date of
issuance of such Receipts.
Each Receipt shall bear the following legend:
THIS RESTRICTED AMERICAN DEPOSITARY RECEIPT, THE RESTRICTED AMERICAN
DEPOSITARY SHARES EVIDENCED HEREBY AND THE ORDINARY SHARES OF CBT GROUP PLC
(THE "ORDINARY SHARES") WHICH MAY BE RECEIVED UPON SURRENDER OF THIS
RESTRICTED AMERICAN DEPOSITARY RECEIPT OR CANCELLATION OF THE RESTRICTED
AMERICAN DEPOSITARY SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED
UNDER THE SECURITIES ACT OR UNLESS AN EXEMPTION FROM REGISTRATION IS
AVAILABLE. EACH PERSON DEPOSITING ORDINARY SHARES AGREES THAT THIS
RESTRICTED AMERICAN DEPOSITARY RECEIPT, THE RESTRICTED AMERICAN DEPOSITARY
SHARES EVIDENCED HEREBY AND THE ORDINARY SHARES REPRESENTED THEREBY MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE
WITH PARAGRAPHS (c), (e), (f), (g) AND, IF APPLICABLE, (h) OF RULE 144
UNDER THE SECURITIES ACT, PURSUANT TO EITHER RULE 144 OR RULE 145 UNDER THE
SECURITIES ACT, WITHOUT REGARD TO ANY TERMINATION OF CERTAIN RESTRICTIONS
BY OPERATION OF PARAGRAPH (K) OF RULE 144 UNDER THE SECURITIES ACT, (A) IN
EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE UNITED
STATES AND ANY STATE OF THE UNITED STATES, (B) IN EACH CASE, UPON THE
DELIVERY OF A SATISFACTORY WRITTEN OPINION FROM U.S. COUNSEL, AND (C) IN
EACH
-5-
<PAGE>
CASE UPON THE DELIVERY OF A TRANSFER CERTIFICATE SUBSTANTIALLY IN THE FORM
ATTACHED TO THE RESTRICTED DEPOSIT AGREEMENT AS ANNEX II DULY EXECUTED AND
COMPLETED BY THE TRANSFEROR. THE BENEFICIAL OWNER OF ORDINARY SHARES
RECEIVED UPON CANCELLATION OF ANY RESTRICTED AMERICAN DEPOSITARY RECEIPTS
MAY NOT DEPOSIT OR CAUSE TO BE DEPOSITED SUCH ORDINARY SHARES INTO ANY
DEPOSITARY RECEIPT FACILITY ESTABLISHED OR MAINTAINED BY A DEPOSITARY BANK
(INCLUDING ANY SUCH FACILITY MAINTAINED BY THE DEPOSITARY FOR THE
RESTRICTED AMERICAN DEPOSITARY RECEIPTS), OTHER THAN A RESTRICTED
DEPOSITARY RECEIPT FACILITY, SO LONG AS SUCH ORDINARY SHARES ARE
"RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144(a)(3) UNDER THE
SECURITIES ACT OR ARE OTHERWISE SUBJECT TO THE TRANSFER RESTRICTIONS OF
RULE 144 OR RULE 145 UNDER THE SECURITIES ACT. EACH OWNER AND BENEFICIAL
OWNER, BY ITS ACCEPTANCE OF THIS RESTRICTED AMERICAN DEPOSITARY RECEIPT,
REPRESENTS AND AGREES THAT IT UNDERSTANDS AND WILL COMPLY WITH THE
FOREGOING RESTRICTIONS.
In addition to the foregoing, the Receipts may be endorsed with or
have incorporated in the text thereof such legends or recitals or modifications
not inconsistent with the provisions of this Restricted Deposit Agreement as may
be required by the Depositary or required to comply with any applicable law or
regulations thereunder or with the rules and regulations of any securities
exchange upon which Restricted American Depositary Shares may be listed or to
conform with any usage with respect thereto, or to indicate any special
limitations or restrictions to which any particular Receipts are subject by
reason of the date of issuance of the underlying Deposited Securities or
otherwise.
The Receipts shall bear a CUSIP number that is different from any
CUSIP number that is or may be assigned any other depositary receipt facility
relating to the Shares.
(b) Title to a Receipt (and to the Restricted American Depositary
Shares evidenced thereby), when properly endorsed or accompanied by proper
instruments of transfer, and transferred in accordance with the terms of this
Restricted Deposit Agreement, including without limitation Sections 2.04, 2.06
and 2.09, shall be transferable by delivery with the same effect as in the case
of a negotiable instrument under the laws of New York; provided, however, that
-------- -------
the Depositary, notwithstanding any notice to the
-6-
<PAGE>
contrary, may treat the Owner thereof as the absolute owner thereof for the
purpose of determining the person entitled to distribution of dividends or other
distributions or to any notice provided for in this Restricted Deposit Agreement
and for all other purposes.
SECTION 2.02. Deposit of Shares. (a) Subject to the terms and
-----------------
conditions of this Restricted Deposit Agreement, Shares may be deposited under
this Restricted Deposit Agreement by delivery thereof to any Custodian
hereunder, accompanied by any appropriate instrument or instruments of transfer,
or endorsement, in form satisfactory to the Custodian, together with a duly
executed and completed written certification and agreement ("Depositor
Certificate"), in substantially the form attached as Annex I hereto, by the
beneficial owner of the Restricted American Depositary Shares to be issued upon
deposit of such Shares, and all such certifications or opinions of counsel as
may be required by the Depositary or the Custodian in accordance with the
provisions of this Restricted Deposit Agreement, and, if the Depositary
requires, together with a written order directing the Depositary to execute and
deliver to, or upon the written order of, the person or persons stated in such
order (which shall be the beneficial owner furnishing the Depositor
Certificate), a Receipt or Receipts for the number of Restricted American
Depositary Shares representing such deposit.
No Share shall be accepted for deposit unless accompanied by evidence
satisfactory to the Depositary that any necessary approval has been granted by
any governmental body in The Republic of Ireland which is then performing the
function of the regulation of currency exchange. If required by the Depositary,
Shares presented for deposit at any time, whether or not the transfer books of
the Company or the Foreign Registrar, if applicable, are closed, shall also be
accompanied by an agreement or assignment, or other instrument satisfactory to
the Depositary, which will provide for the prompt transfer to the Custodian of
any dividend, or right to subscribe for additional Shares or to receive other
property which any person in whose name the Shares are or have been recorded may
thereafter receive upon or in respect of such deposited Shares, or in lieu
thereof, such agreement of indemnity or other agreement as shall be satisfactory
to the Depositary.
At the request and risk and expense of any person proposing to deposit
Shares, and for the account of such person, the Depositary may receive
certificates for Shares to be deposited, together with the other instruments
herein
-7-
<PAGE>
specified, for the purpose of forwarding such Share certificates to the
Custodian for deposit hereunder.
Upon each delivery to a Custodian of a certificate or certificates for
Shares to be deposited hereunder, together with the other documents above
specified, such Custodian shall, as soon as transfer and recordation can be
accomplished, present such certificate or certificates to the Company or the
Foreign Registrar, if applicable, for transfer and recordation of the Shares
being deposited in the name of the Depositary or its nominee or such Custodian
or its nominee.
(b) Deposited Securities shall be held by the Depositary or by a
Custodian for the account and to the order of the Depositary or at such other
place or places as the Depositary shall determine. The Depositary agrees to
instruct the Custodian to place all Shares accepted for deposit under this
Restricted Deposit Agreement into segregated accounts separate from any Shares
of the Company that may be held by such Custodian under any other depositary
receipt facility relating to the Shares.
SECTION 2.03. Execution and Delivery of Receipts. Upon receipt by
----------------------------------
any Custodian of any deposit pursuant to Section 2.02 hereunder (and in
addition, if the transfer books of the Company or the Foreign Registrar, if
applicable, are open, the Depositary may in its sole discretion require a proper
acknowledgment or other evidence from the Company that any Deposited Securities
have been recorded upon the books of the Company or the Foreign Registrar, if
applicable, in the name of the Depositary or its nominee or such Custodian or
its nominee), together with the other documents required as above specified,
such Custodian shall notify the Depositary of such deposit and the person or
persons to whom or upon whose written order a Receipt or Receipts are
deliverable in respect thereof and the number of Restricted American Depositary
Shares to be evidenced thereby. Such notification shall be made by letter or,
at the request, risk and expense of the person making the deposit, by cable,
telex or facsimile transmission. Upon receiving such notice from such
Custodian, or upon the receipt of Shares by the Depositary, in either case
together with a duly executed and completed Depositor Certificate in
substantially the form attached hereto as Annex I, the Depositary, subject to
the terms and conditions of this Restricted Deposit Agreement, shall execute and
deliver at its Corporate Trust Office, to or upon the order of the person or
persons named in the notice delivered to the Depositary (which shall be the
beneficial owner furnishing the Depositor Certificate), a Receipt or
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<PAGE>
Receipts, registered in the name or names and evidencing any authorized number
of Restricted American Depositary Shares requested by such person or persons,
but only upon payment to the Depositary of the fees and expenses of the
Depositary for the execution and delivery of such Receipt or Receipts as
provided in Section 5.09, and of all taxes and governmental charges and fees
payable in connection with such deposit and the transfer of the Deposited
Securities.
SECTION 2.04. Transfer of Receipts; Combination and Split-up of
-------------------------------------------------
Receipts. Upon receipt by the Depositary of (a) a written opinion of U.S.
- --------
counsel satisfactory to the Depositary in connection with a transfer in
accordance with paragraphs (c), (e), (f), (g) and, if applicable, (h) of Rule
144 under the Securities Act, pursuant to either Rule 144 or Rule 145 under the
Securities Act, without regard to any termination of certain restrictions by
operation of paragraph (k) of that rule, and (b) a duly executed and completed
written certification and agreement ("Transfer Certificate"), in substantially
the form attached as Annex II hereto and as hereinafter described, in connection
with a transfer in accordance with paragraphs (c), (e), (f), (g) and, if
applicable, (h) of Rule 144 under the Securities Act, without regard to any
termination of certain restrictions by operation of paragraph (k) of that rule,
the Depositary, subject to the terms and conditions of this Restricted Deposit
Agreement, including payment of the fees of the Depositary as provided in
Section 5.09, shall exchange, upon any surrender of a Receipt, by the Owner in
person or by a duly authorized attorney, properly endorsed or accompanied by
proper instruments of transfer, and duly stamped as may be required by the laws
of the State of New York and of the United States of America, the Receipts
evidencing Restricted American Depositary Shares for ADRs evidencing ADSs issued
pursuant to the ADR Deposit Agreement, subject to the provisions of Section 2.09
of this Restricted Deposit Agreement. The Depositary shall not be required to
register any transfer of a Receipt unless it shall have received from the
Beneficial Owner a duly executed and completed Transfer Certificate, in form and
substance satisfactory to the Depositary.
The Depositary, subject to the terms and conditions of this Restricted
Deposit Agreement, including, if the Depositary shall so require, delivery of a
written opinion of U.S. counsel and a duly executed and completed Transfer
Certificate substantially in the form of Annex II hereto, shall upon surrender
of a Receipt or Receipts for the purpose of effecting a split-up or combination
of such Receipt or Receipts, execute and deliver a new Receipt or Receipts for
any authorized number of Restricted American
-9-
<PAGE>
Depositary Shares requested, evidencing the same aggregate number of Restricted
American Depositary Shares as the Receipt or Receipts surrendered.
The representations and warranties included within the Transfer
Certificate in the form of Annex II to be delivered shall survive such transfer,
surrender and with drawal, split-up or combination of the Shares or Receipts.
The Depositary may appoint one or more co-transfer agents for the
purpose of effecting transfers, combinations and split-ups of Receipts at
designated transfer offices on behalf of the Depositary. In carrying out its
functions, a co-transfer agent may require evidence of authority and compliance
with applicable laws and other requirements by Owners or persons entitled to
Receipts and will be entitled to protection and indemnity to the same extent as
the Depositary.
SECTION 2.05. Surrender of Receipts and Withdrawal of Shares. Upon
----------------------------------------------
surrender of a Receipt at the Corporate Trust Office of the Depositary for the
purpose of withdrawal of the Deposited Securities represented by the Restricted
American Depositary Shares evidenced by such Receipt, and upon payment of the
fee of the Depositary for the surrender of Receipts as provided in Section 5.09
and payment of all taxes and governmental charges payable in connection with
such surrender and withdrawal of the Deposited Securities, and subject to the
terms and conditions of this Restricted Deposit Agreement, the Owner of such
Receipt shall be entitled to delivery, to him or upon his order, of the amount
of Deposited Securities at the time represented by the Restricted American
Depositary Shares evidenced by such Receipt; provided, however, that the
-------- -------
Depositary will not accept for surrender a Receipt or Receipts representing
fewer than two Restricted American Depositary Shares or integral multiples
thereof. Delivery of such Deposited Securities may be made by the delivery of
(a) certificates in the name of such Owner or as ordered by him or certificates
properly endorsed or accompanied by proper instruments of transfer to such Owner
or as ordered by him and (b) any other securities, property and cash to which
such Owner is then entitled in respect of such Receipts to such Owner or as
ordered by him. Such delivery shall be made, as hereinafter provided, without
unreasonable delay.
Notwithstanding the foregoing, no Deposited Securities may be
withdrawn upon the surrender of a Receipt unless at or prior to the time of
surrender, the Depositary shall have received (a) a written opinion of U.S.
counsel
-10-
<PAGE>
satisfactory to the Depositary, and (b) a duly executed and completed written
certificate and agreement ("Withdrawal Certificate"), in substantially the form
attached as Annex III hereto, by or on behalf of the person surrendering such
Receipt who after such withdrawal will be the beneficial owner of such Deposited
Securities; provided, however, that no Withdrawal Certificate shall be required
-------- -------
for a withdrawal in connection with a transfer in accordance with paragraphs
(c), (e), (f), (g) and, if applicable, (h) of Rule 144 under the Securities Act,
pursuant to either Rule 144 or Rule 145 under the Securities Act, without regard
to any termination of certain restrictions by operation of paragraph (k) of that
Rule, in which case the terms and provisions of Section 2.09 of this Restricted
Deposit Agreement shall apply.
A Receipt surrendered for such purposes may be required by the
Depositary to be properly endorsed in blank or accompanied by proper instruments
of transfer in blank, and if the Depositary so requires, the Owner thereof shall
execute and deliver to the Depositary a written order directing the Depositary
to cause the Deposited Securities being withdrawn to be delivered to or upon the
written order of a person or persons designated in such order. Thereupon the
Depositary shall direct the Custodian to deliver at the Dublin, Ireland office
of such Custodian, subject to Sections 2.06, 3.01 and 3.02 and to the other
terms and conditions of this Restricted Deposit Agreement, to or upon the
written order of the person or persons designated in the order delivered to the
Depositary as above provided, the amount of Deposited Securities represented by
the Restricted American Depositary Shares evidenced by such Receipt, except that
the Depositary may make delivery to such person or persons at the Corporate
Trust Office of the Depositary of any dividends or distributions with respect to
the Deposited Securities represented by the Restricted American Depositary
Shares evidenced by such Receipt, or of any proceeds of sale of any dividends,
distributions or rights, which may at the time be held by the Depositary.
At the request, risk and expense of any Owner so surrendering a
Receipt, and for the account of such Owner, the Depositary shall direct the
Custodian to forward any cash or other property (other than rights) comprising,
and forward a certificate or certificates and other proper documents of title
for, the Deposited Securities represented by the Restricted American Depositary
Shares evidenced by such Receipt to the Depositary for delivery at the Corporate
Trust Office of the Depositary. Such direction shall be given by letter or, at
the request, risk and expense of such Owner, by cable, telex or facsimile
transmission.
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<PAGE>
Notwithstanding the foregoing, each Owner acknowledges that, and each
of the Depositary and Custodian agrees that, neither the Custodian nor the
Depositary will make any actual delivery of Shares to any Owner at an address
within the United States.
SECTION 2.06. Limitations on Execution and Delivery, Transfer and
---------------------------------------------------
Surrender of Receipts. As a condition precedent to the execution and delivery,
- ---------------------
registration of transfer, split-up, combination or surrender of any Receipt or
withdrawal of any Deposited Securities, the Depositary, Custodian or Registrar
may require payment from the depositor of Shares or the presenter of the Receipt
of a sum sufficient to reimburse it for any tax or other governmental charge and
any stock transfer or registration fee with respect thereto (including any such
tax or charge and fee with respect to Shares being deposited or withdrawn) and
payment of any applicable fees as herein provided, may require the production of
proof satisfactory to it as to the identity and genuineness of any signature and
may also require compliance with any regulations the Depositary may establish
consistent with the provisions of this Restricted Deposit Agreement, including,
without limitation, this Section 2.06.
The delivery of Receipts against deposit of Shares generally or
against deposit of particular Shares may be suspended, or the transfer of
Receipts in particular instances may be refused, or the registration of transfer
of outstanding Receipts generally may be suspended, during any period when the
transfer books of the Depositary are closed, or if any such action is deemed
necessary or advisable by the Depositary or the Company at any time or from time
to time because of any requirement of law or of any government or governmental
body or commission, or under any provision of this Restricted Deposit Agreement,
or for any other reason.
SECTION 2.07. Lost Receipts, etc. In case any Receipt shall be
-------------------
mutilated, destroyed, lost or stolen, the Depositary shall execute and deliver a
new Receipt of like tenor in exchange and substitution for such mutilated
Receipt upon cancellation thereof, or in lieu of and in substitution for such
destroyed, lost or stolen Receipt. Before the Depositary shall execute and
deliver a new Receipt in substitution for a destroyed, lost or stolen Receipt,
the Owner thereof shall have (a) filed with the Depositary (i) a request for
such execution and delivery before the Depositary has notice that the Receipt
has been acquired by a bona fide purchaser and (ii) a sufficient
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<PAGE>
indemnity bond and (b) satisfied any other reasonable requirements imposed by
the Depositary.
SECTION 2.08. Cancellation and Destruction of Surrendered Receipts.
----------------------------------------------------
All Receipts surrendered to the Depositary shall be cancelled by the Depositary.
The Depositary is authorized to destroy Receipts so cancelled.
SECTION 2.09. Exchange of Restricted American Depositary Shares for
-----------------------------------------------------
ADSs.
- ----
(a) Subject to applicable law and the terms and conditions of this
Restricted Deposit Agreement, upon receipt by the Depositary of a written
opinion of U.S. counsel satisfactory to the Depositary and a duly executed and
completed Transfer Certificate pursuant to Section 2.04 of this Restricted
Deposit Agreement, Restricted American Depositary Shares sold or otherwise
transferred in accordance with paragraphs (c), (e), (f), (g) and, if applicable,
(h) of Rule 144 under the Securities Act, pursuant to either Rule 144 or Rule
145 under the Securities Act, without regard to any termination of certain
restrictions by operation of paragraph (k) of that Rule, shall be exchanged for
ADSs issued pursuant to the ADR Deposit Agreement. In connection therewith, the
Depositary shall (i) cancel such Restricted American Depositary Shares issued
hereunder and issue a corresponding number of ADSs pursuant to the ADR Deposit
Agreement to the Owners entitled thereto and (ii) make arrangements to transfer
any position held under the CUSIP number relating to the Restricted American
Depositary Shares issued hereunder to the CUSIP number relating to such ADSs
issued under the ADR Deposit Agreement. The Depositary shall further instruct
the Custodian to deliver all such Deposited Securities held by it hereunder to
the custodian under the ADR Deposit Agreement for deposit thereunder. The
transferees of interests of Owners and Beneficial Owners of Receipts hereunder
shall thereafter be owners and beneficial owners of ADRs issued pursuant to the
ADR Deposit Agreement and shall have all of the rights and obligations set forth
under the ADR Deposit Agreement and the ADRs. In connection with an Exchange,
all Owners and Beneficial Owners of Receipts issued hereunder shall be deemed to
have made the representations and warranties set forth in Section 3.03 of the
ADR Deposit Agreement.
(b) Each Owner and Beneficial Owner acknowledges and agrees that
there can be no assurance that applicable laws will permit the Depositary to
effect an Exchange as described in paragraph (a) above. In the event that the
Depositary determines in its sole discretion that an
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<PAGE>
Exchange cannot be so effected, the Depositary and the Company shall negotiate
in good faith to amend the Restricted Deposit Agreement as they deem necessary
to either (i) permit an Exchange on such terms as they may agree in accordance
with applicable law or (ii) make such other arrangements as they deem desirable.
ARTICLE 3
CERTAIN OBLIGATIONS OF OWNERS AND BENEFICIAL
OWNERS OF RECEIPTS
SECTION 3.01. Filing Proofs, Certificates and Other Information. Any
-------------------------------------------------
person presenting Shares for deposit or any Owner or Beneficial Owner of a
Receipt may be required from time to time to file with the Depositary or the
Custodian such proof of citizenship or residence, exchange control approval, or
such information relating to the registration on the books of the Company or the
Foreign Registrar, if applicable, to execute such certificates and to make such
representations and warranties, as the Depositary may deem necessary or proper.
The Depositary may withhold the delivery or registration of transfer of any
Receipt or the distribution of any dividend or sale or distribution of rights or
of the proceeds thereof or the delivery of any Deposited Securities until such
proof or other information is filed or such certificates are executed or such
representations and warranties made. The Depositary shall, at the request of
the Company, advise the Company of the availability of any such proofs,
certificates or other information and shall provide copies thereof to the
Company as promptly as practicable upon request by the Company, unless such
disclosure is prohibited by law.
SECTION 3.02. Liability of Owner or Beneficial Owner for Taxes. If
------------------------------------------------
any tax or other governmental charge shall become payable by the Custodian or
the Depositary with respect to any Receipt or any Deposited Securities
represented by any Receipt, such tax or other governmental charge shall be
payable by the Owner or Beneficial Owner of such Receipt to the Depositary. The
Depositary may refuse to effect any transfer of such Receipt or any withdrawal
of Deposited Securities represented by Restricted American Depositary Shares
evidenced by such Receipt until such payment is made, and may withhold any
dividends or other distributions, or may sell for the account of the Owner or
Beneficial Owner thereof any part or all of the Deposited Securities represented
by the Restricted American Depositary Shares evidenced by such Receipt, and may
apply such dividends or other distributions or the proceeds of any such
-14-
<PAGE>
sale in payment of such tax or other governmental charge and the Owner or
Beneficial Owner of such Receipt shall remain liable for any deficiency.
SECTION 3.03. Warranties on Deposit of Shares. Every person
-------------------------------
depositing Shares under this Restricted Deposit Agreement shall be deemed
thereby to represent and warrant, in addition to such representations and
warranties as are set forth in the Depositor Certificate, that such Shares and
each certificate therefor are validly issued, fully paid, nonassessable and free
of any preemptive rights of the holders of outstanding Shares and that the
person making such deposit is duly authorized so to do. Such representations
and warranties shall survive the deposit of Shares and issuance of Receipts.
ARTICLE 4
THE DEPOSITED SECURITIES
SECTION 4.01. Cash Distributions. Whenever the Depositary shall
------------------
receive any cash dividend or other cash distribution on any Deposited
Securities, the Depositary shall, subject to the provisions of Section 4.05,
convert such dividend or distribution into Dollars and shall distribute the
amount thus received (net of the fees and expenses of the Depositary as provided
in Section 5.09) to the Owners entitled thereto, in proportion to the number of
Restricted American Depositary Shares representing such Deposited Securities
held by them respectively; provided, however, that in the event that the Company
-------- -------
or the Depositary shall be required to withhold and does withhold from such cash
dividend or such other cash distribution an amount on account of taxes, the
amount distributed to the Owner of the Receipts evidencing Restricted American
Depositary Shares representing such Deposited Securities shall be reduced
accordingly. The Depositary shall distribute only such amount, however, as can
be distributed without attributing to any Owner a fraction of one cent. Any
such fractional amounts shall be rounded to the nearest whole cent and so
distributed to Owners entitled thereto. The Company or its agent will remit to
the appropriate governmental agency in The Republic of Ireland all amounts
withheld and owing to such agency. The Depositary will forward to the Company
or its agent such information from its records as the Company may reasonably
request to enable the Company or its agent to file necessary reports with
governmental agencies, and the Depositary or the Company or its agent may file
any such reports necessary to obtain
-15-
<PAGE>
benefits under the applicable tax treaties for the Owners of Receipts.
SECTION 4.02. Distributions Other Than Cash, Shares or Rights.
-----------------------------------------------
Subject to the provisions of Sections 4.11 and 5.09, whenever the Depositary
shall receive any distribution other than a distribution described in Section
4.01, 4.03 or 4.04, the Depositary shall cause the securities or property
received by it to be distributed to the Owners entitled thereto, after deduction
or upon payment of any fees and expenses of the Depositary or any taxes or other
governmental charges, in proportion to the number of Restricted American
Depositary Shares representing such Deposited Securities held by them
respectively, in any manner that the Depositary may deem equitable and
practicable for accomplishing such distribution; provided, however, that if in
-------- -------
the opinion of the Depositary such distribution cannot be made proportionately
among the Owners entitled thereto, or if for any other reason (including, but
not limited to, any requirement that the Company or the Depositary withhold an
amount on account of taxes or other governmental charges or that such securities
must be registered under the Securities Act in order to be distributed to Owners
or Beneficial Owners) the Depositary deems such distribution not to be feasible,
the Depositary may adopt such method as it may deem equitable and practicable
for the purpose of effecting such distribution, including, but not limited to,
the public or private sale of the securities or property thus received, or any
part thereof, and the net proceeds of any such sale (net of the fees and
expenses of the Depositary as provided in Section 5.09) shall be distributed by
the Depositary to the Owners entitled thereto, all in the manner and subject to
the conditions described in Section 4.01. Each beneficial owner of Receipts or
Shares so distributed shall be deemed to have acknowledged that the Shares have
not been registered under the Securities Act and to have agreed to comply with
the restrictions on transfer described in the form of legend set forth in
Section 2.01 hereof.
SECTION 4.03. Distributions in Shares. If any distribution upon any
-----------------------
Deposited Securities consists of a dividend in, or free distribution of, Shares,
the Depositary may distribute to the Owners of outstanding Receipts entitled
thereto, in proportion to the number of Restricted American Depositary Shares
representing such Deposited Securities held by them respectively, additional
Receipts evidencing an aggregate number of Restricted American Depositary Shares
representing the amount of Shares received as such dividend or free
distribution, subject to the terms and conditions of the Restricted Deposit
Agreement with
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<PAGE>
respect to the deposit of Shares and the issuance of Restricted American
Depositary Shares evidenced by Receipts, including the withholding of any tax or
other governmental charge as provided in Section 4.11 and the payment of the
fees and expenses of the Depositary as provided in Section 5.09. The Depositary
may withhold any such distribution of Receipts if it has not received
satisfactory assurances from the Company that such distribution does not require
registration under the Securities Act or is exempt from registration under the
provisions of such Act. In lieu of delivering Receipts for fractional
Restricted American Depositary Shares in any such case, the Depositary shall
sell the amount of Shares represented by the aggregate of such fractions and
distribute the net proceeds, all in the manner and subject to the conditions
described in Section 4.01. If additional Receipts are not so distributed, each
Restricted American Depositary Share shall thenceforth also represent the
additional Shares distributed upon the Deposited Securities represented thereby.
Each beneficial owner of Receipts or Shares so distributed shall be deemed to
have acknowledged that the Shares have not been registered under the Securities
Act and to have agreed to comply with the restrictions on transfer described in
the form of legend set forth in Section 2.01 hereof.
SECTION 4.04. Rights. In the event that the Company shall offer or
------
cause to be offered to the holders of any Deposited Securities any rights to
subscribe for additional Shares or any rights of any other nature, the
Depositary shall have discretion as to the procedure to be followed in making
such rights available to any Owners or in disposing of such rights on behalf of
any Owners and making the net proceeds available to such Owners or, if by the
terms of such rights offering or for any other reason, the Depositary may not
either make such rights available to any Owners or dispose of such rights and
make the net proceeds available to such Owners, then the Depositary shall allow
the rights to lapse. If at the time of the offering of any rights the
Depositary determines in its discretion that it is lawful and feasible to make
such rights available to all or certain Owners but not to other Owners, the
Depositary may distribute to any Owner to whom it determines the distribution to
be lawful and feasible, in proportion to the number of Restricted American
Depositary Shares held by such Owner, warrants or other instruments therefor in
such form as it deems appropriate.
In circumstances in which rights would otherwise not be distributed,
if an Owner of Receipts requests the distribution of warrants or other
instruments in order to exercise the rights allocable to the Restricted American
-17-
<PAGE>
Depositary Shares of such Owner hereunder, the Depositary will make such rights
available to such Owner upon written notice from the Company to the Depositary
that (a) the Company has elected in its sole discretion to permit such rights to
be exercised and (b) such Owner has executed such documents as the Company has
determined in its sole discretion are reasonably required under applicable law.
If the Depositary has distributed warrants or other instruments for
rights to all or certain Owners, then upon instruction from such an Owner
pursuant to such warrants or other instruments to the Depositary from such Owner
to exercise such rights, upon payment by such Owner to the Depositary for the
account of such Owner of an amount equal to the purchase price of the Shares to
be received upon the exercise of the rights, and upon payment of the fees and
expenses of the Depositary and any other charges as set forth in such warrants
or other instruments, the Depositary shall, on behalf of such Owner, exercise
the rights and purchase the Shares, and the Company shall cause the Shares so
purchased to be delivered to the Depositary on behalf of such Owner. As agent
for such Owner, the Depositary will cause the Shares so purchased to be
deposited pursuant to Section 2.02 of this Restricted Deposit Agreement, and
shall, pursuant to Section 2.03 of this Restricted Deposit Agreement, execute
and deliver Receipts to such Owner. In the case of a distribution pursuant to
the second paragraph of this section, such Receipts shall be legended in
accordance with applicable U.S. laws, and shall be subject to the appropriate
restrictions on sale, deposit, cancellation, and transfer under such laws.
If the Depositary determines in its discretion that it is not lawful
and feasible to make such rights available to all or certain Owners, it may sell
the rights, warrants or other instruments in proportion to the number of
Restricted American Depositary Shares held by the Owners to whom it has
determined it may not lawfully or feasibly make such rights available, and
allocate the net proceeds of such sales (net of the fees and expenses of the
Depositary as provided in Section 5.09 and all taxes and governmental charges
payable in connection with such rights and subject to the terms and conditions
of this Restricted Deposit Agreement) for the account of such Owners otherwise
entitled to such rights, warrants or other instruments, upon an averaged or
other practical basis without regard to any distinctions among such Owners
because of exchange restrictions or the date of delivery of any Receipt or
otherwise.
-18-
<PAGE>
The Depositary will not offer rights to Owners unless both the rights
and the securities to which such rights relate are either exempt from
registration under the Securities Act with respect to a distribution to all
Owners or are registered under the provisions of such Act; provided, that
--------
nothing in this Restricted Deposit Agreement shall create, any obligation on the
part of the Company to file a registration statement with respect to such rights
or underlying securities or to endeavor to have such a registration statement
declared effective. If an Owner of Receipts requests the distribution of
warrants or other instruments, notwithstanding that there has been no such
registration under such Act, the Depositary shall not effect such distribution
unless it has received an opinion from recognized counsel in the United States
for the Company upon which the Depositary may rely that such distribution to
such Owner is exempt from such registration.
The Depositary shall not be responsible for any failure to determine
that it may be lawful or feasible to make such rights available to Owners in
general or any Owner in particular.
SECTION 4.05. Conversion of Foreign Currency. Whenever the
------------------------------
Depositary or the Custodian shall receive foreign currency, by way of dividends
or other distributions or the net proceeds from the sale of securities, property
or rights, and if at the time of the receipt thereof the foreign currency so
received can in the judgment of the Depositary be converted on a reasonable
basis into Dollars and the resulting Dollars transferred to the United States,
the Depositary shall convert or cause to be converted, by sale or in any other
manner that it may determine, such foreign currency into Dollars, and such
Dollars shall be distributed to the Owners entitled thereto or, if the
Depositary shall have distributed any warrants or other instruments which
entitle the holders thereof to such Dollars, then to the holders of such
warrants and/or instruments upon surrender thereof for cancellation. Such
distribution may be made upon an averaged or other practicable basis without
regard to any distinctions among Owners on account of exchange restrictions, the
date of delivery of any Receipt or otherwise and shall be net of any expenses of
conversion into Dollars incurred by the Depositary as provided in Section 5.09.
If such conversion or distribution can be effected only with the
approval or license of any government or agency thereof, the Depositary shall
file such application for approval or license, if any, as it may deem desirable.
-19-
<PAGE>
If at any time the Depositary shall determine that in its judgment any
foreign currency received by the Depositary or the Custodian is not convertible
on a reasonable basis into Dollars transferable to the United States, or if any
approval or license of any government or agency thereof which is required for
such conversion is denied or in the opinion of the Depositary is not obtainable,
or if any such approval or license is not obtained within a reasonable period as
determined by the Depositary, the Depositary may distribute the foreign currency
(or an appropriate document evidencing the right to receive such foreign
currency) received by the Depositary to, or in its discretion may hold such
foreign currency uninvested and without liability for interest thereon for the
respective accounts of, the Owners entitled to receive the same.
If any such conversion of foreign currency, in whole or in part,
cannot be effected for distribution to some of the Owners entitled thereto, the
Depositary may in its discretion make such conversion and distribution in
Dollars to the extent permissible to the Owners entitled thereto and may
distribute the balance of the foreign currency received by the Depositary to, or
hold such balance uninvested and without liability for interest thereon for the
respective accounts of, the Owners entitled thereto.
SECTION 4.06. Fixing of Record Date. Whenever any cash dividend or
---------------------
other cash distribution shall become payable or any distribution other than cash
shall be made, or whenever rights shall be issued with respect to the Deposited
Securities, or whenever the Depositary shall receive notice of any meeting of
holders of Shares or other Deposited Securities, or whenever for any reason the
Depositary causes a change in the number of Shares that are represented by each
Restricted American Depositary Share, or whenever the Depositary shall find it
necessary or convenient, the Depositary shall fix a record date, which shall be
the record date, if any, established by the Company for such purpose or, if
different, as close thereto as practicable, (a) for the determination of the
Owners who shall be (i) entitled to receive such dividend, distribution or
rights or the net proceeds of the sale thereof or (ii) entitled to give
instructions for the exercise of voting rights at any such meeting, or (b) on or
after which each Restricted American Depositary Share will represent the changed
number of Shares. Subject to the provisions of Sections 4.01 through 4.05 and
to the other terms and condi tions of this Restricted Deposit Agreement, the
Owners on such record date shall be entitled, as the case may be, to receive the
amount distributable by the Depositary with
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<PAGE>
respect to such dividend or other distribution or such rights or the net
proceeds of sale thereof in proportion to the number of Restricted American
Depositary Shares held by them respectively and to give voting instructions and
to act in respect of any other such matter.
SECTION 4.07. Voting of Deposited Securities. Upon receipt of notice
------------------------------
of any meeting of holders of Shares or other Deposited Securities, if requested
in writing by the Company, the Depositary shall, as soon as practicable
thereafter, mail to the Owners a notice, the form of which notice shall be in
the sole discretion of the Depositary, which shall contain (a) all of the
information contained in such notice of meeting received by the Depositary from
the Company, (b) a statement that the Owners as of the close of business on a
specified record date will be entitled, subject to any applicable provision of
Irish law and of the Memorandum and Articles of Association of the Company, to
instruct the Depositary as to the exercise of the voting rights, if any,
pertaining to the amount of Shares or other Deposited Securities represented by
their respective Restricted American Depositary Shares, (c) a statement that
Owners who instruct the Depositary as to the exercise of their voting rights
will be deemed to have instructed the Depositary or its authorized
representative to call for a poll with respect to each matter for which such
instructions are given, subject to any applicable provisions of Irish law and of
the Memorandum and Articles of Association of the Company and (d) if applicable,
a statement as to the manner in which such instructions may be given, including
an express indication that instructions may be given or deemed given in
accordance with the last sentence of this paragraph if no instruction is
received, to the Depositary to give a discretionary proxy to a person designated
by the Company. Upon the written request of an Owner on such record date,
received on or before the date established by the Depositary for such purpose,
the Depositary shall endeavor, in so far as practicable, to vote or cause to be
voted the amount of Shares or other Deposited Securities represented by the
American Depositary Shares evidenced by such Receipt in accordance with the
instructions set forth in such request. Accordingly, pursuant to the Company's
Memorandum and Articles of Association and applicable Irish law, the Depositary
will cause its authorized representative to attend each meeting of holders of
Shares and call for a poll as instructed in accordance with clause (c) above for
the purpose of effecting such vote. The Depositary shall not vote or attempt to
exercise the right to vote that attaches to the Shares or other Deposited
Securities, other than in accordance with such instructions or deemed
instructions. If no instructions are received by the Depositary from any
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<PAGE>
Owner with respect to any of the Deposited Securities represented by the
American Depositary Shares evidenced by such Owner's Receipts on or before the
date established by the Depositary for such purpose, the Depositary will deem
such Owner to have instructed the Depositary to give a discretionary proxy to a
person designated by the Company with respect to such Deposited Securities and
the Depositary will give a discretionary proxy to a person designated by the
Company to vote such Deposited Securities; provided, that no such instructions
--------
will be deemed given and no such discretionary proxy will be given when the
Company notifies the Depositary (and the Company agrees to provide such notice
as promptly as practicable in writing) that the matter to be voted upon is one
of the following:
1. is a matter not submitted to shareholders by means of a proxy
statement comparable to that specified in Schedule 14-A of the
Commission;
2. is the subject of a counter-solicitation, or is part of a proposal
made by a shareholder which is being opposed by management (i.e., a
- -
contest);
3. relates to a merger or consolidation (except when the Company's
proposal is to merge with its own wholly-owned subsidiary, provided
its shareholders dissenting thereto do not have rights of appraisal);
4. involves right of appraisal;
5. authorizes mortgaging of property;
6. authorizes or creates indebtedness or increases the authorized
amount of indebtedness;
7. authorizes or creates preferred shares or increases the authorized
amount of existing preferred shares;
8. alters the terms or conditions of any shares of the Company's
stock then outstanding or existing indebtedness;
9. involves waiver or modification of preemptive rights (except when
the Company's proposal is to waive such rights with respect to
ordinary shares being offered pursuant to stock option or purchase
plans involving the additional issuance of not more than 5% of the
Company's outstanding ordinary shares (see Item 12 below));
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<PAGE>
10. alters voting provisions or the proportionate voting power of a
class of shares, or the number of its votes per share (except where
cumulative voting provisions govern the number of votes per share for
election of directors and the Company's proposal involves a change in
the number of its directors by not more than 10% or not more than
one);
11. changes existing quorum requirements with respect to shareholder
meetings;
12. authorizes issuance of ordinary shares, or options to purchase
ordinary shares, to directors, officers, or employees in an amount
which exceeds 5% of the total amount of the class outstanding (when no
plan is amended to extend its duration, the Company shall factor into
the calculation the number of ordinary shares that remain available
for issuance, the number of ordinary shares subject to outstanding
options and any ordinary shares being added; should there be more than
one plan being considered at the same meeting, all ordinary shares are
aggregated);
13. authorizes
(a) a new profit-sharing or special remuneration plan, or a new
retirement plan, the annual cost of which will amount to more
than 10% of average annual income before taxes for the preceding
five years; or
(b) the amendment of an existing plan which would bring its costs
above 10% of such average annual income before taxes (should
there be more than one plan being considered at the same meeting,
all costs are aggregated; exceptions may be made in cases of (a)
retirement plans based on agreement or negotiations with labor
unions (or which have been or are to be approved by such unions);
and (b) any related retirement plan for benefit of non-union
employees having terms substantially equivalent to the terms of
such union-negotiated plan, which is submitted for action of
stockholders concurrently with such union-negotiated plan);
14. changes the purposes or powers of the Company to an extent which
would permit it to change a
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materially different line of business and it is the Company's stated
intention to make such a change;
15. authorizes the acquisition of property, assets, or a company,
where the consideration to be given has a fair value of 20% or more of
the market value of the previously outstanding shares;
16. authorizes the sale or other disposition of assets or earning
power of 20% or more of those existing prior to the transaction;
17. authorizes a transaction not in the ordinary course of business
in which an officer, director or substantial security holder has a
direct or indirect interest;
18. reduces earned surplus by 51% or more, or reduces earned surplus
to an amount less than the aggregate of three years' ordinary share
dividends computed at the current dividend rate.
SECTION 4.08. Changes Affecting Deposited Securities. In
--------------------------------------
circumstances where the provisions of Section 4.03 do not apply, upon any change
in nominal value, change in par value, split-up, consolidation or any other
reclassification of Deposited Securities, or upon any recapitalization,
reorganization, merger or consolidation or sale of assets affecting the Company
or to which it is a party, any securities which shall be received by the
Depositary or a Custodian in exchange for or in conversion of or in respect of
Deposited Securities, shall be treated as new Deposited Securities under this
Restricted Deposit Agreement, and Restricted American Depositary Shares shall
thenceforth represent, in addition to the existing Deposited Securities, the
right to receive the new Deposited Securities so received in exchange or
conversion, unless additional Receipts are delivered pursuant to the following
sentence. In any such case the Depositary may execute and deliver additional
Receipts as in the case of a dividend in Shares, or call for the surrender of
outstanding Receipts to be exchanged for new Receipts specifically describing
such new Deposited Securities.
SECTION 4.09. Reports. The Depositary shall make available for
-------
inspection by Owners at its Corporate Trust Office any reports and
communications, including any proxy soliciting material, received from the
Company which are both (a) received by the Depositary as the holder of the
Deposited Securities and (b) made generally available to the
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<PAGE>
holders of such Deposited Securities by the Company. The Depositary shall also
send to the Owners copies of such reports when furnished by the Company pursuant
to Sec tion 5.06. Any such reports and communications, including any such proxy
soliciting material, furnished to the Depositary by the Company shall be
furnished in English, to the extent such materials are required to be translated
into English pursuant to any regulations of the Commission.
SECTION 4.10. Lists of Owners. Promptly upon request by the Company,
---------------
the Depositary shall, at the expense of the Company, furnish to it a list, as of
a recent date, of the names, addresses and holdings of Restricted American
Depositary Shares by all persons in whose names Receipts are registered on the
books of the Depositary.
SECTION 4.11. Withholding. In the event that the Depositary
-----------
determines that any distribution in property (including Shares and rights to
subscribe therefor) is subject to any tax or other governmental charge which the
Depositary is obligated to withhold, the Depositary may by public or private
sale dispose of all or a portion of such property (including Shares and rights
to subscribe therefor) in such amounts and in such manner as the Depositary
deems necessary and practicable to pay such taxes or charges and the Depositary
shall distribute the net proceeds of any such sale after deduction of such taxes
or charges to the Owners entitled thereto in proportion to the number of
Restricted American Depositary Shares held by them respectively.
ARTICLE 5
THE DEPOSITARY, THE CUSTODIANS AND THE COMPANY
SECTION 5.01. Maintenance of Office and Transfer Books by the
-----------------------------------------------
Depositary. Until termination of this Restricted Deposit Agreement in
- ----------
accordance with its terms, the Depositary shall maintain in the Borough of
Manhattan, The City of New York, facilities for the execution and delivery,
registration, registration of transfers and surrender of Receipts in accordance
with the provisions of this Restricted Deposit Agreement.
The Depositary shall keep books, at its Corporate Trust Office, for
the registration of Receipts and transfers of Receipts which at all reasonable
times shall be open for inspection by the Owners, provided that such inspection
shall not be for the purpose of communicating with Owners in the interest of a
business or object other than the business
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<PAGE>
of the Company or a matter related to this Restricted Deposit Agreement or the
Receipts.
The Depositary may close the transfer books, at any time or from time
to time, when deemed expedient by it in connection with the performance of its
duties hereunder.
If any Receipts or the Restricted American Depositary Shares evidenced
thereby are listed on one or more stock exchanges in the United States, the
Depositary shall act as Registrar or appoint a Registrar or one or more co-
registrars for registry of such Receipts in accordance with any requirements of
such exchange or exchanges.
SECTION 5.02. Prevention or Delay in Performance by the Depositary or
-------------------------------------------------------
the Company. Neither the Depositary nor the Company nor any of their respective
- -----------
directors, employees, agents or affiliates shall incur any liability to any
Owner or Beneficial Owner of any Receipt, if by reason of any provision of any
present or future law or regulation of the United States or any other country,
or of any governmental or regulatory authority or stock exchange, or by reason
of any provision, present or future, of the Memorandum and Articles of
Association of the Company, or by reason of any provision of any securities
issued or distributed by the Company, or any offering or distribution thereof,
or by reason of any act of God or war or other circumstances beyond its control,
the Depositary or the Company shall be prevented, delayed or forbidden from, or
be subject to any civil or criminal penalty on account of, doing or performing
any act or thing which by the terms of this Restricted Deposit Agreement or
Deposited Securities it is provided shall be done or performed; nor shall the
Depositary or the Company or any of their respective directors, employees,
agents or affiliates incur any liability to any Owner or Beneficial Owner of any
Receipt by reason of any nonperformance or delay, caused as aforesaid, in the
performance of any act or thing which by the terms of this Restricted Deposit
Agreement it is provided shall or may be done or performed, or by reason of any
exercise of, or failure to exercise, any discretion provided for in this
Restricted Deposit Agreement. Where, by the terms of a distribution pursuant to
Section 4.01, 4.02, or 4.03 of the Restricted Deposit Agreement, or an offering
or distribution pursuant to Section 4.04 of the Restricted Deposit Agreement, or
for any other reason, such distribution or offering may not be made available to
Owners, and the Depositary may not dispose of such distribution or offering on
behalf of such Owners and make the net proceeds available to such Owners, then
the Depositary shall not make such
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<PAGE>
distribution or offering, and shall allow any rights, if applicable, to lapse.
SECTION 5.03. Obligations of the Depositary, the Custodian and the
----------------------------------------------------
Company. The Company assumes no obliga tion nor shall it be subject to any
- -------
liability under this Restricted Deposit Agreement to Owners or Beneficial
Owners, except that it agrees to perform its obligations specifically set forth
in this Restricted Deposit Agreement without negligence or bad faith.
The Depositary assumes no obligation nor shall it be subject to any
liability under this Restricted Deposit Agreement to any Owner or Beneficial
Owner (including, without limitation, liability with respect to the validity or
worth of the Deposited Securities), except that it agrees to perform its
obligations specifically set forth in this Restricted Deposit Agreement without
negligence or bad faith.
Neither the Depositary nor the Company shall be under any obligation
to appear in, prosecute or defend any action, suit or other proceeding in
respect of any Deposited Securities or in respect of the Receipts, which in its
opinion may involve it in expense or liability, unless indemnity satisfactory to
it against all expense and liabil ity shall be furnished as often as may be
required, and the Custodian shall not be under any obligation whatsoever with
respect to such proceedings, the responsibility of the Custodian being solely to
the Depositary.
Neither the Depositary nor the Company shall be liable for any action
or nonaction by it in reliance upon the advice of or information from legal
counsel, accountants, any person presenting Shares for deposit, any Owner or any
other person believed by it in good faith to be competent to give such advice or
information.
The Depositary shall not be liable for any acts or omissions made by a
successor depositary whether in connec tion with a previous act or omission of
the Depositary or in connection with any matter arising wholly after the
removal or resignation of the Depositary, provided that in connection with the
issue out of which such potential liability arises the Depositary performed its
obligations without negligence or bad faith while it acted as Depositary.
The Depositary shall not be responsible for any failure to carry out
any instructions to vote any of the Deposited Securities, or for the manner in
which any such
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<PAGE>
vote is cast or the effect of any such vote, provided that any such action or
nonaction is in good faith.
No disclaimer of liability under the Securities Act is intended by any
provision of this Restricted Deposit Agreement.
SECTION 5.04. Resignation and Removal of the Depositary. The
-----------------------------------------
Depositary may at any time resign as Depositary hereunder by written notice of
its election so to do delivered to the Company, such resignation to take effect
upon the appointment of a successor depositary and its acceptance of such
appointment as hereinafter provided.
The Depositary may at any time be removed by the Company by written
notice of such removal effective upon the appointment of a successor depositary
and its acceptance of such appointment as hereinafter provided.
In case at any time the Depositary acting here under shall resign or
be removed, the Company shall use its best efforts to appoint a successor
depositary, which shall be a bank or trust company having an office in the
Borough of Manhattan, The City of New York. Every successor depositary shall
execute and deliver to its predecessor and to the Company an instrument in
writing accepting its appointment hereunder, and thereupon such successor
depositary, without any further act or deed, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor; but such
predecessor, nevertheless, upon payment of all sums due it and on the written
request of the Company shall execute and deliver an instrument transferring to
such successor all rights and powers of such predecessor hereunder, shall duly
assign, transfer and deliver all right, title and interest in the Deposited
Securities to such successor, and shall deliver to such successor a list of the
Owners of all outstanding Receipts. Any such successor depositary shall
promptly mail notice of its appointment to the Owners.
Any corporation into or with which the Depositary may be merged or
consolidated shall be the successor of the Depositary without the execution or
filing of any document or any further act.
SECTION 5.05. The Custodians. The Custodian shall be subject at all
--------------
times and in all respects to the directions of the Depositary and shall be
responsible solely to it. Any Custodian may resign and be discharged from its
duties hereunder by written notice of such resignation delivered to the
Depositary at least 30 days prior to the
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<PAGE>
date on which such resignation is to become effective. If upon such resignation
there shall be no Custodian acting hereunder, the Depositary shall, promptly
after receiving such notice, appoint a substitute custodian or custodians, each
of which shall thereafter be a Custodian hereunder. Whenever the Depositary in
its discretion determines that it is in the best interest of the Owners to do
so, it may appoint a substitute or additional custodian or custodians, each of
which shall thereafter be one of the Custodians hereunder. Upon demand of the
Depositary any Custodian shall deliver such of the Deposited Securities held by
it as are requested of it to any other Custodian or such substitute or
additional custodian or custodians. Each such substitute or additional
custodian shall deliver to the Depositary, forthwith upon its appointment, an
acceptance of such appointment satisfactory in form and substance to the
Depositary.
Upon the appointment of any successor depositary hereunder, each
Custodian then acting hereunder shall forthwith become, without any further act
or writing, the agent hereunder of such successor depositary and the appointment
of such successor depositary shall in no way impair the authority of each
Custodian hereunder; but the successor depositary so appointed shall,
nevertheless, on the written request of any Custodian, execute and deliver to
such Custodian all such instruments as may be proper to give to such Custodian
full and complete power and authority as agent hereunder of such successor
depositary.
SECTION 5.06. Notices and Reports. On or before the first date on
-------------------
which the Company gives notice, by publication or otherwise, of any meeting of
holders of Shares or other Deposited Securities, or of any adjourned meeting of
such holders, or of the taking of any action in respect of any cash or other
distributions or the offering of any rights, the Company agrees to transmit to
the Depositary and the Custodian a copy of the notice thereof in the form given
or to be given to holders of Shares or other Deposited Securities.
The Company will arrange for the translation into English, if not
already in English, to the extent required pursuant to any regulations of the
Commission, and the prompt transmittal by the Company to the Depositary and the
Custodian of such notices and any other reports and communi cations which are
made generally available by the Company to holders of its Shares. If requested
in writing by the Company, the Depositary will arrange for the mailing, at the
Company's expense, of copies of such notices, reports and communications to all
Owners. The Company will timely
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<PAGE>
provide the Depositary with the quantity of such notices, reports, and
communications, as requested by the Depositary from time to time, in order for
the Depositary to effect such mailings.
SECTION 5.07. Distribution of Additional Shares, Rights, etc. The
-----------------------------------------------
Company agrees that in the event of any issuance or distribution of (1)
additional Shares, (2) rights to subscribe for Shares, (3) securities
convertible into Shares, or (4) rights to subscribe for such securities (each a
"Distribution"), the Company will promptly furnish to the Depositary a written
opinion from U.S. counsel for the Company, which counsel shall be satisfactory
to the Depositary, stating whether or not the Distribution requires a
Registration Statement under the Securities Act to be in effect prior to making
such Distribution available to Owners entitled thereto. If in the opinion of
such counsel a Registration Statement is required, such counsel shall furnish to
the Depositary a written opinion as to whether or not there is a Registration
Statement in effect which will cover such Distribution.
The Company agrees with the Depositary that neither the Company nor
any person controlled by, control ling or under common control with the Company
will at any time deposit any Shares, either originally issued or pre viously
issued and reacquired by the Company or any such affiliate, unless a
Registration Statement is in effect as to such Shares under the Securities Act.
SECTION 5.08. Indemnification. The Company agrees to indemnify the
---------------
Depositary, its directors, employees, agents and affiliates and any Custodian
against, and hold each of them harmless from, any liability or expense
(including, but not limited to, the fees and expenses of counsel) which may
arise out of acts performed or omitted, in accordance with the provisions of
this Restricted Deposit Agreement and of the Receipts, as the same may be
amended, modified or supplemented from time to time, (i) by either the
Depositary or a Custodian or their respective directors, employees, agents and
affiliates, except for any liability or expense arising out of the negligence or
bad faith of either of them, or (ii) by the Company or any of its directors,
employees, agents and affiliates.
The Depositary agrees to indemnify the Company, its directors,
employees, agents and affiliates and hold them harmless from any liability or
expense which may arise out of acts performed or omitted by the Depositary or
its
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<PAGE>
Custodian or their respective directors, employees, agents and affiliates due to
their negligence or bad faith.
SECTION 5.09. Charges of Depositary. The Company agrees to pay the
---------------------
fees, reasonable expenses and out-of-pocket charges of the Depositary and those
of any Registrar only in accordance with agreements in writing entered into
between the Depositary and the Company from time to time. The Depositary shall
present its statement for such charges and expenses to the Company once every
three months. The charges and expenses of the Custodian are for the sole
account of the Depositary.
The following charges shall be incurred by any party depositing or
withdrawing Shares or by any party surrendering Receipts or to whom Receipts are
issued (including, without limitation, issuance pursuant to a stock dividend or
stock split declared by the Company or an exchange of stock regarding the
Receipts or Deposited Securities or a distribution of Receipts pursuant to
Section 4.03), whichever applicable: (1) taxes and other governmental charges,
(2) such registration fees as may from time to time be in effect for the
registration of transfers of Shares generally on the Share register of the
Company or Foreign Registrar and applicable to transfers of Shares to the name
of the Depositary or its nominee or the Custodian or its nominee on the making
of deposits or withdrawals hereunder, (3) such cable, telex and facsimile
transmission expenses as are expressly provided in this Restricted De posit
Agreement, (4) such expenses as are incurred by the Depositary in the conversion
of foreign currency pursuant to Section 4.05, (5) a fee of $5.00 or less per 100
Restricted American Depositary Shares (or portion thereof) for the execution and
delivery of Receipts pursuant to Section 2.03, 4.03 or 4.04 and the surrender of
Receipts pursuant to Section 2.05 or 6.02, (6) a fee of $.02 or less per
Restricted American Depositary Share (or portion thereof) for any cash
distribution made pursuant to the Restricted Deposit Agreement, including, but
not limited to Sections 4.01 through 4.04 hereof, (7) a fee for the distribution
of securities pursuant to Section 4.02, such fee being in an amount equal to the
fee for the execution and delivery of Restricted American Depositary Shares
referred to above which would have been charged as a result of the deposit of
such securities (for purposes of this clause 7 treating all such securities as
if they were Shares) but which securities are instead distributed by the
Depositary to Owners and (8) a fee not in excess of $1.50 per certificate for a
Receipt or Receipts for transfers made pursuant to the terms of the Restricted
Deposit Agreement.
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<PAGE>
The Depositary, subject to Section 2.09 hereof, may own and deal in
any class of securities of the Company and its affiliates and in Receipts.
SECTION 5.10. Retention of Depositary Documents. The Depositary is
---------------------------------
authorized to destroy those documents, records, bills and other data compiled
during the term of this Restricted Deposit Agreement at the times permitted by
the laws or regulations governing the Depositary unless the Company requests
that such papers be retained for a longer period or turned over to the Company
or to a successor depositary.
SECTION 5.11. Exclusivity. The Company agrees not to appoint any
-----------
other depositary for issuance of Restricted American Depositary Receipts so long
as The Bank of New York is acting as Depositary hereunder.
ARTICLE 6
AMENDMENT AND TERMINATION
SECTION 6.01. Amendment. The form of the Receipts and any provisions
---------
of this Restricted Deposit Agreement may at any time and from time to time be
amended by agreement between the Company and the Depositary without the consent
of Owners or Beneficial Owners of Receipts in any respect which they may deem
necessary or desirable, including, without limitation, amendments agreed upon
pursuant to Section 2.09(b) hereof. Any amendment which shall impose or
increase any fees or charges (other than taxes and other governmental charges,
registration fees, cable, telex or facsimile transmission costs, delivery costs
or other such expenses), or which shall otherwise prejudice any substantial
existing right of Owners, shall, however, not become effective as to outstanding
Receipts until the expiration of thirty days after notice of such amendment
shall have been given to the Owners of outstanding Receipts. Every Owner, at
the time any amendment so becomes effective, shall be deemed, by continuing to
hold such Receipt, to consent and agree to such amendment and to be bound by the
Restricted Deposit Agreement as amended thereby. In no event shall any
amendment impair the right of the Owner of any Receipt to surrender such Receipt
and receive therefor the Deposited Securities represented thereby, except in
order to comply with mandatory provisions of applicable law.
SECTION 6.02. Termination. The Depositary shall, at any time at the
-----------
direction of the Company, terminate this Restricted Deposit Agreement by mailing
notice of such
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<PAGE>
termination to the Owners of all Receipts then outstanding at least 90 days
prior to the date fixed in such notice for such termination. The Depositary may
likewise terminate this Restricted Deposit Agreement by mailing notice of such
termination to the Company and the Owners of all Receipts then outstanding, if
at any time 90 days shall have expired after the Depositary shall have delivered
to the Company a written notice of its election to resign and a successor
depositary shall not have been appointed and accepted its appointment as
provided in Section 5.04. On and after the date of termination, the Owner of a
Receipt will, upon (a) surrender of such Receipt at the Corporate Trust Office
of the Depositary, (b) payment of the fee of the Depositary for the surrender of
Receipts referred to in Section 2.05, and (c) payment of any applicable taxes or
governmental charges, be entitled to delivery, to him or upon his order, of the
amount of Deposited Securities represented by the American Depositary Shares
evidenced by such Receipt. If any Receipts shall remain outstanding after the
date of termination, the Depositary thereafter shall discontinue the
registration of transfers of Receipts, shall suspend the distribution of
dividends to the Owners thereof, and shall not give any further notices or
perform any further acts under this Restricted Deposit Agreement, except that
the Depositary shall continue to collect dividends and other distributions
pertaining to Deposited Securities, shall sell rights and other property as
provided in this Restricted Deposit Agreement, and shall continue to deliver
Deposited Securities, together with any dividends or other distributions
received with respect thereto and the net proceeds of the sale of any rights or
other property, in exchange for Receipts surrendered to the Depositary (after
deducting, in each case, the fee of the Depositary for the surrender of a
Receipt, any expenses for the account of the Owner of such Receipt in accordance
with the terms and conditions of this Restricted Deposit Agreement, and any
applicable taxes or governmental charges). At any time after the expiration of
one year from the date of termination, the Depositary may sell the Deposited
Securities then held hereunder and may thereafter hold uninvested the net
proceeds of any such sale, together with any other cash then held by it
hereunder, unsegregated and without liability for interest, for the pro rata
benefit of the Owners of Receipts which have not theretofore been surrendered,
such Owners thereupon becoming general creditors of the Depositary with respect
to such net proceeds. After making such sale, the Depositary shall be
discharged from all obligations under this Restricted Deposit Agreement, except
to account for such net proceeds and other cash (after deducting, in each case,
the fee of the Depositary for the surrender of a Receipt, any expenses
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<PAGE>
for the account of the Owner of such Receipt in accordance with the terms and
conditions of this Restricted Deposit Agreement, and any applicable taxes or
governmental charges). Upon the termination of this Restricted Deposit
Agreement, the Company shall be discharged from all obligations under this
Restricted Deposit Agreement except for its obligations to the Depositary under
Sections 5.08 and 5.09 hereof.
ARTICLE 7
MISCELLANEOUS
SECTION 7.01. Counterparts. This Restricted Deposit Agreement may be
------------
executed in any number of counterparts, each of which shall be deemed an
original and all of such counterparts shall constitute one and the same
instrument. Copies of this Restricted Deposit Agreement shall be filed with the
Depositary and the Custodians and shall be open to inspection by any Owner or
Beneficial Owner of a Receipt during business hours.
SECTION 7.02. No Third Party Beneficiaries. This Restricted Deposit
----------------------------
Agreement is for the exclusive benefit of the parties hereto and shall not be
deemed to give any legal or equitable right, remedy or claim whatsoever to any
other person.
SECTION 7.03. Severability. In case any one or more of the
------------
provisions contained in this Restricted Deposit Agreement or in the Receipts
should be or become invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein or therein shall in no way be affected, prejudiced or disturbed thereby.
SECTION 7.04. Owners and Beneficial Owners as Parties; Binding
------------------------------------------------
Effect. The Owners and Beneficial Owners of Receipts from time to time shall be
parties to this Restricted Deposit Agreement and shall be bound by all of the
terms and conditions hereof and of the Receipts by acceptance thereof.
SECTION 7.05. Notices. Any and all notices to be given to the
-------
Company shall be deemed to have been duly given if personally delivered or sent
by mail or cable, telex or facsimile transmission confirmed by letter, addressed
to CBT Group PLC, 2(c) Clonskeagh Square, Dublin 14, The Republic of Ireland,
Attention: President, or any other place to which the Company may have
transferred its principal office.
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<PAGE>
Any and all notices to be given to the Depositary shall be deemed to
have been duly given if in English and personally delivered or sent by mail or
cable, telex or facsimile transmission confirmed by letter, addressed to The
Bank of New York, 101 Barclay Street, New York, New York 10286, Attention:
Restricted American Depositary Receipt Administration, or any other place to
which the Depositary may have transferred its Corporate Trust Office.
Any and all notices to be given to any Owner shall be deemed to have
been duly given if personally delivered or sent by mail or cable, telex or
facsimile transmission confirmed by letter, addressed to such Owner at the
address of such Owner as it appears on the transfer books for Receipts of the
Depositary, or, if such Owner shall have filed with the Depositary a written
request that notices intended for such Owner be mailed to some other address, at
the address designated in such request.
Delivery of a notice sent by mail or cable, telex or facsimile
transmission shall be deemed to be effective at the time when a duly addressed
letter containing the same (or a confirmation thereof in the case of a cable,
telex or facsimile transmission) is deposited, postage prepaid, in a post-office
letter box. The Depositary or the Company may, however, act upon any cable,
telex or facsimile transmission received by it, notwithstanding that such cable,
telex or facsimile transmission shall not subsequently be confirmed by letter as
aforesaid.
SECTION 7.06. Governing Law. This Restricted Deposit Agreement and
-------------
the Receipts shall be interpreted and all rights hereunder and thereunder and
provisions hereof and thereof shall be governed by the laws of the State of New
York.
-35-
<PAGE>
IN WITNESS WHEREOF, CBT GROUP PLC and THE BANK OF NEW YORK have duly
executed this Restricted Deposit Agreement as of the day and year first set
forth above and all Owners and Beneficial Owners shall become parties hereto
upon acceptance by them of Receipts issued in accordance with the terms hereof.
CBT GROUP PLC
By:______________________
Name:
Title:
THE BANK OF NEW YORK,
as Depositary
By:______________________
Kenneth A. Lopian
Senior Vice President
-36-
<PAGE>
Annex I
-------
Certification and Agreement of Acquirors of
Receipts Upon Deposit of Shares Pursuant to
Section 2.02 of the Restricted Deposit Agreement
We refer to the Restricted Deposit Agreement, dated as of November 30,
1995 and amended and restated as of April 11, 1996 (the "Restricted Deposit
Agreement"), among CBT GROUP PLC (the "Company"), THE BANK OF NEW YORK, as
Depositary, and Owners and Beneficial Owners of Restricted American Depositary
Receipts (the "Receipts") issued thereunder. Capitalized terms used but not
defined herein shall have the meanings given them in the Restricted Deposit
Agreement.
1. This certification and agreement is furnished in connection with
the deposit of Shares and issuance of Restricted American Depositary Shares to
be evidenced by one or more Receipts pursuant to Section 2.02 of the Restricted
Deposit Agreement.
2. We represent that, if the Shares being deposited were not
registered under the Securities Act of 1933, as amended (the "Act"), we acquired
the Shares in a transaction exempt from registration under the Act.
3. We acknowledge that the offer and sale of the Receipts, the
Restricted American Depositary Shares evidenced thereby and the Shares which may
be received upon surrender of Receipts or cancellation of American Depositary
Shares have not been and will not be registered under the Securities Act of
1933, as amended (the "Act") and may not be offered, sold, pledged or otherwise
transferred unless registered under the Act or unless an exemption from
registration is available.
4. We acknowledge that each Receipt (i) will be in physical form and
legended, (ii) will be registered in the name of the beneficial owner furnishing
this Deposit Certificate, (iii) will not be eligible for acceptance in any book-
entry settlement system, and (iv) may only be transferred in accordance with
Section 2.04 of the Restricted Deposit Agreement.
5. We acknowledge that the Receipts, the Restricted American
Depositary Shares evidenced thereby, and the Shares which may be received upon
surrender of Receipts or cancellation of American Depositary Shares may be
subject to different and less favorable restrictions on transfer than those
applicable to the Shares hereby being deposited,
Annex I-1
<PAGE>
including, without limitation, the unavailability of transfer based on the
satisfaction of a holding period pursuant to paragraphs (d) or (k) of Rule 144
under the Securities Act.
6. We certify that either:
[CHECK ONE]
[_] A. the Shares are not "restricted securities" within the meaning of Rule
144 under the Securities Act, we are an affiliate of the Company
within the meaning of Rule 144, and the Shares were not acquired by us
in a transaction specified in paragraph (a) of Rule 145 under the
Securities Act;
OR
--
[_] B. the Shares were acquired by us in a transaction specified in paragraph
(a) of Rule 145 under the Securities Act and we are not an affiliate
of the Company within the meaning of Rule 144 or Rule 145 under the
Securities Act.
OR
--
[_] C. the Shares have been or are subject to restrictions on transfer by us
pursuant to the holding period requirements of Rule 144(d) under the
Securities Act; we have held the Shares for a period satisfying such
holding period; and we have attached an opinion of counsel
satisfactory to the Depositary stating that after deposit of the
Shares, all of the Receipts, the American Depositary Shares, and all
other deposited Shares may after the deposit of our Shares still be
withdrawn, transferred or resold pursuant to only the restrictions
described by paragraphs (c), (e), (f), (g), and (h) of Rule 144 under
the Securities Act, without any need to satisfy any further holding
period.
7. We certify that we are or at the time the Shares are deposited and
at the time the Receipts are issued will be, the beneficial owner of the Shares
and of the Restricted American Depositary Shares evidenced by such Receipt or
Receipts and (i) if the Shares were acquired in a transaction exempt from the
registration requirements of the Act under Regulation S of the Act, we are not a
U.S. person (as defined in Regulation S) and we are located outside the
Annex I-2
<PAGE>
United States (within the meaning of Regulation S under the Act) and acquired,
or have agreed to acquire and will have acquired, the Shares to be deposited
outside the United States (within the meaning of Regulation S).
8. We agree that the Receipts, the Restricted American Depositary
Shares evidenced thereby and the Shares represented thereby may not be offered,
sold, pledged or otherwise transferred except in accordance with the transfer
restrictions imposed by paragraphs (c), (e), (f), (g) and, if applicable, (h) of
Rule 144 under the Act, without reliance on any termination of any such
restriction by operation of paragraph (k) of Rule 144, in each case (i) in
accordance with the applicable securities laws of any state of the United
States, (ii) upon the delivery of a satisfactory written opinion from U.S.
counsel and (iii) upon the delivery of a duly executed and completed Transfer
Certificate in the form attached to the Restricted Deposit Agreement as Annex II
in accordance with the provisions of Section 2.04 of the Restricted Deposit
Agreement.
Very truly yours,
______________________________
[NAME OF CERTIFYING ENTITY]
By:___________________________
Name:
Dated:
Annex I-3
<PAGE>
Annex II
--------
Certification and Agreement of Certain Persons
Transferring Receipts Pursuant to
Sections 2.01 and 2.04 of
the Restricted Deposit Agreement
We refer to the Restricted Deposit Agreement, dated as of November 30,
1995 and amended and restated as of April 11, 1996 (the "Restricted Deposit
Agreement"), among CBT GROUP PLC (the "Company"), THE BANK OF NEW YORK, as
Depositary thereunder (the "Depositary"), and Owners and Beneficial Owners of
Restricted American Depositary Receipts (the "Receipts") issued thereunder.
Capitalized terms used but not defined herein shall have the meanings given them
in the Restricted Deposit Agreement.
1. The undersigned Beneficial Owner is surrendering a Receipt or
Receipts in accordance with the terms of the Restricted Deposit Agreement for
the purpose of transferring its beneficial interest in Restricted American
Depositary Shares pursuant to Section 2.04 and 2.09 of the Restricted Deposit
Agreement.
2. The undersigned Beneficial Owner acknowledges that the Receipts,
the Restricted American Depositary Shares evidenced thereby and the ordinary
shares of the Company which may be received upon surrender of this Receipt or
cancellation of the Restricted American Depositary Shares have not been and will
not be registered under the Securities Act of 1933, as amended (the "Act") and
may not be offered, sold, pledged or otherwise transferred unless registered
under the Act or unless an exemption from registration is available.
3. The undersigned Beneficial Owner certifies that we have sold or
otherwise transferred, or agreed to sell or otherwise transfer, the Shares in
accordance with paragraphs (c), (e), (f), (g) and, if applicable, (h) of Rule
144 under the Act, without regard to any termination of any such restriction by
operation of paragraph (k) of Rule 144, in accordance with any applicable
securities laws of any state of the United States, and are surrendering a
Receipt or Receipts for the purpose of cancellation thereof. In connection
therewith and as a condition precedent thereto, we have delivered to the
Depositary a written opinion of U.S. counsel satisfactory to the Depositary.
The Depositary, subject to applicable law and the terms and conditions of the
Restricted Deposit Agreement, shall exchange Receipts evidencing Restricted
American Depositary
Annex II-1
<PAGE>
Shares surrendered hereunder in connection with a transfer in accordance with in
accordance with paragraphs (c), (e), (f), (g) and, if applicable, (h) of Rule
144 under the Act, for ADRs evidencing ADSs issued pursuant to the ADR
Agreement.
3. The undersigned Beneficial Owner certifies that we have no reason
to believe that the person to whom a beneficial interest in Restricted
Depositary Shares is hereby to be transferred is an affiliate of the Company,
within the meaning of Rule 144 under the Securities Act.
This certification and agreement may be signed in counterparts.
Very truly,
Date: __________________________________
Signature of Beneficial Owner
Print Name and Address of Owner:
__________________________________
__________________________________
__________________________________
Annex II-2
<PAGE>
Annex III
---------
Certification and Agreement of Persons Receiving
Deposited Securities Upon Withdrawal
Pursuant to Section 2.05 of
the Restricted Deposit Agreement
We refer to the Restricted Deposit Agreement, dated as of November 30,
1995 and amended and restated as of April 11, 1996 (the "Restricted Deposit
Agreement"), among CBT GROUP PLC (the "Company"), THE BANK OF NEW YORK, as
Depositary thereunder, and Owners and Beneficial Owners of Restricted American
Depositary Receipts (the "Receipts") issued thereunder. Capitalized terms used
but not defined herein shall have the meanings given them in the Restricted
Deposit Agreement.
1. We are surrendering a Receipt or Receipts in accordance with the
terms of the Restricted Deposit Agreement for the purpose of withdrawal of the
Deposited Securities represented by the Restricted American Depositary Shares
evidenced by such Receipt or Receipts (the "Shares") pursuant to Section 2.05 of
the Restricted Deposit Agreement.
2. We acknowledge that the Shares have not been and will not be
registered under the Securities Act of 1933, as amended (the "Act") and may not
be offered, sold, pledged or otherwise transferred unless registered under the
Act or unless an exemption from registration is available.
3. We certify, represent, acknowledge and agree that:
(i) We will be the beneficial owner of the Shares upon withdrawal,
and
(ii) The Shares (i) will be in physical form and legended, (ii) will
be registered in the name of the beneficial owner furnishing
this Withdrawal Certificate as an initial depositor, (iii) will
be subject to, and we will continue to be bound by, the
restrictions set forth in the Restricted Deposit Agreement and
in the Depositor Certificate, dated ____________, 1995,
executed by us, and
(iii) We agree that the Shares may not be offered, sold, pledged or
otherwise
Annex III-1
<PAGE>
transferred except in accordance with paragraphs (c), (e), (f),
(g), and, if applicable (h) of Rule 144 under the Act, without
regard to any termination of certain restrictions by operation
of paragraph (k) of Rule 144 under the Act, pursuant to either
Rule 144 or Rule 145 under the Act, in each case (x) in
accordance with any applicable securities laws of any state of
the United States, (y) above upon the delivery of a
satisfactory written opinion from U.S. counsel, and (z) upon
the delivery of a duly executed and completed Transfer
Certificate, substantially in the form attached to the
Restricted Deposit Agreement as Annex II, and
(iv) We will not deposit or cause to be deposited such Shares into
any depositary receipt facility established or maintained by a
depositary bank (including any such facility maintained by the
Depositary), other than a restricted depositary receipt
facility, so long as such Shares are "restricted securities"
within the meaning of Rule 144(a)(3) under the Act or are
otherwise subject to transfer restrictions pursuant to Rule 144
or Rule 145 under the Act.
Very truly,
[NAME OF CERTIFYING ENTITY]
By: _________________________
Name:
Dated:
Annex III-2
<PAGE>
EXHIBIT A
RESTRICTED AMERICAN
DEPOSITARY SHARES
(Each Restricted
American Depositary
Share represents
one-half of one
deposited Share)
THIS RESTRICTED AMERICAN DEPOSITARY RECEIPT, THE RESTRICTED AMERICAN
DEPOSITARY SHARES EVIDENCED HEREBY AND THE ORDINARY SHARES OF CBT GROUP PLC
(THE "ORDINARY SHARES") WHICH MAY BE RECEIVED UPON SURRENDER OF THIS
RESTRICTED AMERICAN DEPOSITARY RECEIPT OR CANCELLATION OF THE RESTRICTED
AMERICAN DEPOSITARY SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED
UNDER THE SECURITIES ACT OR UNLESS AN EXEMPTION FROM REGISTRATION IS
AVAILABLE. EACH PERSON DEPOSITING ORDINARY SHARES AGREES THAT THIS
RESTRICTED AMERICAN DEPOSITARY RECEIPT, THE RESTRICTED AMERICAN DEPOSITARY
SHARES EVIDENCED HEREBY AND THE ORDINARY SHARES REPRESENTED THEREBY MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE
WITH PARAGRAPHS (c), (e), (f), (g) AND, IF APPLICABLE, (h) OF RULE 144
UNDER THE SECURITIES ACT, PURSUANT TO EITHER RULE 144 OR RULE 145 UNDER THE
SECURITIES ACT, WITHOUT REGARD TO ANY TERMINATION OF CERTAIN RESTRICTIONS
BY OPERATION OF PARAGRAPH (k) OF RULE 144 UNDER THE SECURITIES ACT, (A) IN
EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE UNITED
STATES AND ANY STATE OF THE UNITED STATES, (B) IN EACH CASE, UPON THE
DELIVERY OF A SATISFACTORY WRITTEN OPINION FROM U.S. COUNSEL, AND (C) IN
EACH CASE UPON THE DELIVERY OF A TRANSFER CERTIFICATE SUBSTANTIALLY IN THE
FORM ATTACHED TO THE RESTRICTED DEPOSIT AGREEMENT AS ANNEX II DULY EXECUTED
AND COMPLETED BY THE TRANSFEROR. THE BENEFICIAL OWNER OF ORDINARY SHARES
RECEIVED UPON CANCELLATION OF ANY AMERICAN DEPOSITARY RECEIPTS MAY NOT
DEPOSIT OR CAUSE TO BE DEPOSITED SUCH ORDINARY SHARES INTO ANY DEPOSITARY
RECEIPT FACILITY ESTABLISHED OR MAINTAINED BY A DEPOSITARY
<PAGE>
BANK (INCLUDING ANY SUCH FACILITY MAINTAINED BY THE DEPOSITARY FOR THE
RESTRICTED AMERICAN DEPOSITARY RECEIPTS), OTHER THAN A RESTRICTED
DEPOSITARY RECEIPT FACILITY, SO LONG AS SUCH ORDINARY SHARES ARE
"RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144(a)(3) UNDER THE
SECURITIES ACT OR ARE OTHERWISE SUBJECT TO THE TRANSFER RESTRICTIONS OF
RULE 144 OR RULE 145 UNDER THE SECURITIES ACT. EACH OWNER AND BENEFICIAL
OWNER, BY ITS ACCEPTANCE OF THIS RESTRICTED AMERICAN DEPOSITARY RECEIPT,
REPRESENTS AND AGREES THAT IT UNDERSTANDS AND WILL COMPLY WITH THE
FOREGOING RESTRICTIONS.
A-2
<PAGE>
THE BANK OF NEW YORK
RESTRICTED AMERICAN DEPOSITARY RECEIPT
FOR ORDINARY SHARES OF
THE NOMINAL VALUE OF IR37.50p EACH OF
CBT GROUP PLC
(INCORPORATED UNDER THE LAWS OF THE REPUBLIC OF IRELAND)
The Bank of New York, as depositary (hereinafter called the
"Depositary"), hereby certifies that___________
____________________________________________, or registered assigns IS THE OWNER
OF _____________________________
RESTRICTED AMERICAN DEPOSITARY SHARES
representing deposited ordinary shares (herein called "Shares") of CBT Group
PLC, incorporated under the laws of The Republic of Ireland (herein called the
"Company"). At the date hereof, each Restricted American Depositary Share
represents one-half of one Share deposited or subject to deposit under the
Restricted Deposit Agreement (as such term is hereinafter defined) at the
Dublin, Ireland office of AIB Custodial Services (herein called the
"Custodian"). The Depositary's Corporate Trust Office is located at a different
address than its principal executive office. Its Corporate Trust Office is
located at 101 Barclay Street, New York, N.Y. 10286, and its principal executive
office is located at 48 Wall Street, New York, N.Y. 10286.
THE DEPOSITARY'S CORPORATE TRUST OFFICE ADDRESS IS
101 BARCLAY STREET, NEW YORK, N.Y. 10286
1. THE RESTRICTED DEPOSIT AGREEMENT.
This Restricted American Depositary Receipt is one of an issue (herein
called "Receipts"), all issued and to be issued upon the terms and conditions
set forth in the Restricted Deposit Agreement, dated as of November 30, 1995 and
amended and restated as of April 11, 1996 (herein called the "Restricted Deposit
Agreement"), by and among the Company, the Depositary, and all Owners and
Beneficial Owners from time to time of Receipts issued thereunder, each of whom
by accepting a Receipt agrees to become a party thereto and become bound by all
the terms and conditions thereof. The Restricted Deposit Agreement sets forth
the rights of Owners and Beneficial Owners of the Receipts and the rights and
duties of the Depositary in respect of the Shares deposited thereunder and any
and all other securities, property and cash from time to time received in
respect of such Shares and held thereunder (such Shares, securities, property,
and cash are herein called "Deposited Securities"). Copies of the Restricted
Deposit Agreement
A-3
<PAGE>
are on file at the Depositary's Corporate Trust Office in New York City and at
the office of the Custodian.
The statements made on the face and reverse of this Receipt are
summaries of certain provisions of the Restricted Deposit Agreement and are
qualified by and subject to the detailed provisions of the Restricted Deposit
Agreement, to which reference is hereby made. Capitalized terms defined in the
Restricted Deposit Agreement and not defined herein shall have the meanings set
forth in the Restricted Deposit Agreement.
2. SURRENDER OF RECEIPTS AND WITHDRAWAL OF SHARES.
Upon surrender at the Corporate Trust Office of the Depositary of this
Receipt, and upon payment of the fee of the Depositary provided in this Receipt,
and subject to the terms and conditions of the Restricted Deposit Agreement, the
Owner hereof is entitled to delivery, to him or upon his order, of the Deposited
Securities at the time represented by the Restricted American Depositary Shares
for which this Receipt is issued; provided, however, that the Depositary will
-------- -------
not accept for surrender a Receipt or Receipts representing fewer than two
Restricted American Depositary Shares or integral multiples thereof. Delivery
of such Deposited Securities may be made by the delivery of (a) certificates in
the name of the Owner hereof or as ordered by him or certificates properly
endorsed or accompanied by proper instruments of transfer and (b) any other
securities, property and cash to which such Owner is then entitled in respect of
this Receipt. Such delivery will be made at the option of the Owner hereof,
either at the office of the Custodian or at the Corporate Trust Office of the
Depositary, provided that the forwarding of certificates for Shares or other
Deposited Securities for such delivery at the Corporate Trust Office of the
Depositary shall be at the risk and expense of the Owner hereof.
Notwithstanding anything to the contrary in the Restricted Deposit Agreement, no
Deposited Securities may be withdrawn upon the surrender of this Receipt unless
the Depositary shall have received (a) a written opinion of U.S. counsel
satisfactory to the Depositary in connection with a withdrawal in accordance
with Rule 144 or Rule 145 under the Securities Act, and (b) a duly executed and
completed written certificate and agreement, in substantially the form annexed
to the Restricted Deposit Agreement as Annex III, by or on behalf of the person
surrendering such Receipt who after such withdrawal will be the beneficial owner
of such Deposited Securities; provided, however, that no such certificate and
-------- -------
agreement shall be required for a withdrawal
A-4
<PAGE>
in connection with a transfer in accordance with paragraphs (c), (e), (f), (g)
and, if applicable, (h) of Rule 144 under the Securities Act, without regard to
any termination of certain restrictions by operation of paragraph (k) of that
Rule, in which case the terms and provisions of Section 2.09 of the Restricted
Deposit Agreement and Article 4 hereof shall apply.
3. TRANSFERS, SPLIT-UPS, AND COMBINATIONS OF RECEIPTS.
Upon receipt by the Depositary of (a) a written opinion of U.S.
counsel satisfactory to the Depositary in connection with a transfer in
accordance with paragraphs (c), (e), (f), (g) and, if applicable, (h) of Rule
144 under the Securities Act, pursuant to either Rule 144 or Rule 145 under the
Securities Act, without regard to any termination of certain restrictions by
operation of paragraph (k) of that Rule, and (b) a duly executed and completed
written certification and agreement ("Transfer Certificate"), in substantially
the form attached as Annex II to the Restricted Deposit Agreement, upon
surrender of this Receipt properly endorsed for transfer or accompanied by
proper instruments of transfer and funds sufficient to pay any applicable
transfer taxes and the expenses of the Depositary as provided in Section 5.09 of
the Restricted Deposit Agreement and upon compliance with such regulations, if
any, as the Depositary may establish for such purpose the Depositary shall
effect an exchange of this Receipt in accordance with the terms and conditions
of the Restricted Deposit Agreement. This Receipt may be split into other such
Receipts, or may be combined with other such Receipts into one Receipt,
evidencing the same aggregate number of Restricted American Depositary Shares as
the Receipt or Receipts surrendered. As a condition precedent to the execution
and delivery, registration of transfer, split-up, combination, or surrender of
any Receipt or withdrawal of any Deposited Securities, the Depositary, the
Custodian, or Registrar may require payment from the depositor of the Shares or
the presenter of the Receipt of a sum sufficient to reimburse it for any tax or
other governmental charge and any stock transfer or registration fee with
respect thereto (including any such tax or charge and fee with respect to Shares
being deposited or withdrawn) and payment of any applicable fees as provided in
this Receipt, may require the production of proof satisfactory to it as to the
identity and genuineness of any signature and may also require compliance with
any regulations the Depositary may establish consistent with the provisions of
the Restricted Deposit Agreement or this Receipt, including, without limitation,
this Article 3.
A-5
<PAGE>
The representations and warranties included within the Transfer
Certificate in the form of Annex II to be delivered shall survive such transfer,
surrender and with drawal, split-up or combination of the Shares and Receipts.
The delivery of Receipts against deposit of Shares generally or
against deposit of particular Shares may be suspended, or the transfer of
Receipts in particular instances may be refused, or the registration of transfer
of outstanding Receipts generally may be suspended, during any period when the
transfer books of the Depositary are closed, or if any such action is deemed
necessary or advisable by the Depositary or the Company at any time or from time
to time because of any requirement of law or of any government or governmental
body or commission, or under any provision of the Restricted Deposit Agreement
or this Receipt, or for any other reason.
4. EXCHANGE OF RESTRICTED AMERICAN DEPOSITARY SHARES FOR ADSs.
Subject to applicable law and the terms and conditions of the
Restricted Deposit Agreement and this Receipt, upon receipt by the Depositary of
a written opinion of U.S. counsel satisfactory to the Depositary and a duly
executed and completed Transfer Certificate substantially in the form annexed to
the Restricted Deposit Agreement, Restricted American Depositary Shares sold or
otherwise transferred in accordance with paragraphs (c), (e), (f), (g) and, if
applicable (h) of Rule 144 under the Securities Act, pursuant to either Rule 144
or Rule 145 under the Securities Act, without regard to any termination of
certain restrictions by operation of paragraph (k) of that Rule, shall be
exchanged for ADSs issued pursuant to the ADR Deposit Agreement. The
transferees of the interests of Owners and Beneficial Owners of Receipts under
the Restricted Deposit Agreement shall thereafter be owners and beneficial
owners of ADRs issued pursuant to the ADR Deposit Agreement and shall have all
of the rights and obligations set forth under the ADR Deposit Agreement and the
ADRs. In connection with an Exchange, all Owners and Beneficial Owners of
Receipts issued under the Restricted Deposit Agreement shall be deemed to have
made the representations and warranties set forth in Section 3.03 of the ADR
Deposit Agreement. Each Owner and Beneficial Owner acknowledges and agrees that
there can be no assurance that applicable laws will permit the Depositary to
effect an Exchange as described herein and in the Restricted Deposit Agreement.
5. LIABILITY OF OWNER OR BENEFICIAL OWNER FOR TAXES.
A-6
<PAGE>
If any tax or other governmental charge shall become payable by the
Custodian or the Depositary with respect to any Receipt or any Deposited
Securities represented hereby, such tax or other governmental charge shall be
payable by the Owner or Beneficial Owner hereof to the Depositary. The
Depositary may refuse to effect any transfer of this Receipt or any withdrawal
of Deposited Securities represented by Restricted American Depositary Shares
evidenced by such Receipt until such payment is made, and may withhold any
dividends or other distributions, or may sell for the account of the Owner or
Beneficial Owner hereof any part or all of the Deposited Securities represented
by the Restricted American Depositary Shares evidenced by this Receipt, and may
apply such dividends or other distributions or the proceeds of any such sale in
payment of such tax or other governmental charge and the Owner or Beneficial
Owner hereof shall remain liable for any deficiency.
6. WARRANTIES ON DEPOSIT OF SHARES.
Every person depositing Shares under the Restricted Deposit Agreement
shall be deemed thereby to represent and warrant, in addition to such
representations and warranties as may be required pursuant to Section 2.02 of
the Restricted Deposit Agreement, that such Shares and each certificate therefor
are validly issued, fully paid, non-assessable, and free of any preemptive
rights of the holders of outstanding Shares and that the person making such
deposit is duly authorized so to do. Such representations and warranties shall
survive the deposit of Shares and issuance of Receipts.
7. FILING PROOFS, CERTIFICATES, AND OTHER INFORMATION.
Any person presenting Shares for deposit or any Owner or Beneficial
Owner of a Receipt may be required from time to time to file with the Depositary
or the Custodian such proof of citizenship or residence, exchange control
approval, or such information relating to the registration on the books of the
Company or the Foreign Registrar, if applicable, to execute such certificates
and to make such representations and warranties, as the Depositary may deem
necessary or proper. The Depositary may withhold the delivery or registration
of transfer of any Receipt or the distribution of any dividend or sale or
distribution of rights or of the proceeds thereof or the delivery of any
Deposited Securities until such proof or other information is filed or such
certificates are executed or such representations and warranties made. No Share
shall be
A-7
<PAGE>
accepted for deposit unless accompanied by evidence satisfactory to the
Depositary that any necessary approval has been granted by any governmental body
in The Republic of Ireland which is then performing the function of the
regulation of currency exchange.
8. CHARGES OF DEPOSITARY.
The Company agrees to pay the fees, reasonable expenses and out-of-
pocket charges of the Depositary and those of any Registrar only in accordance
with agreements in writing entered into between the Depositary and the Company
from time to time. The Depositary shall present its state ment for such charges
and expenses to the Company once every three months. The charges and expenses
of the Custodian are for the sole account of the Depositary.
The following charges shall be incurred by any party depositing or
withdrawing Shares or by any party surrendering Receipts or to whom Receipts are
issued (including, without limitation, issuance pursuant to a stock dividend or
stock split declared by the Company or an exchange of stock regarding the
Receipts or Deposited Securities or a distribution of Receipts pursuant to
Section 4.03 of the Restricted Deposit Agreement), whichever applicable: (1)
taxes and other governmental charges, (2) such registration fees as may from
time to time be in effect for the registration of transfers of Shares generally
on the Share register of the Company or Foreign Registrar and applicable to
transfers of Shares to the name of the Depositary or its nominee or the
Custodian or its nominee on the making of deposits or withdrawals under the
terms of the Restricted Deposit Agreement, (3) such cable, telex and facsimile
transmission expenses as are expressly provided in the Restricted Deposit
Agreement, (4) such expenses as are incurred by the Depositary in the conversion
of foreign currency pursuant to Section 4.05 of the Restricted Deposit
Agreement, (5) a fee of $5.00 or less per 100 Restricted American Depositary
Shares (or portion thereof) for the execution and delivery of Receipts pursuant
to Section 2.03, 4.03 or 4.04 of the Restricted Deposit Agreement and the
surrender of Receipts pursuant to Section 2.05 or 6.02 of the Restricted Deposit
Agreement, (6) a fee of $.02 or less per Restricted American Depositary Share
(or portion thereof) for any cash distribution made pursuant to Sections 4.01
through 4.04 of the Restricted Deposit Agreement and (7) a fee for the
distribution of securities pursuant to Section 4.02 of the Restricted Deposit
Agreement, such fee being in an amount equal to the fee for the execution and
delivery of Restricted American Depositary Shares referred to above which would
have been charged as a result of the
A-8
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deposit of such securities (for purposes of this clause 7 treating all such
securities as if they were Shares), but which securities are instead distributed
by the Depositary to Owners and (8) a fee not in excess of $1.50 per certificate
for a Receipt or Receipts for transfers made pursuant to the terms of the
Restricted Deposit Agreement.
The Depositary, subject to Article 8 hereof, may own and deal in any
class of securities of the Company and its affiliates and in Receipts.
9. TITLE TO RECEIPTS.
It is a condition of this Receipt and every successive Owner and
Beneficial Owner of this Receipt by accepting or holding the same consents and
agrees, that title to this Receipt when properly endorsed or accompanied by
proper instruments of transfer, including, without limitation, any
certifications and agreements and opinions of counsel as may be required
pursuant to the terms and conditions of certificates and opinions required under
the Restricted Deposit Agreement, is transferable by delivery with the same
effect as in the case of a negotiable instrument under the laws of New York;
provided, however, that the Depositary, notwithstanding any notice to the
- -------- -------
contrary, may treat the person in whose name this Receipt is registered on the
books of the Depositary as the absolute owner hereof for the purpose of
determining the person entitled to distribution of dividends or other
distributions or to any notice provided for in the Restricted Deposit Agreement
or for all other purposes.
10. VALIDITY OF RECEIPT.
This Receipt shall not be entitled to any benefits under the
Restricted Deposit Agreement or be valid or obligatory for any purpose, unless
this Receipt shall have been executed by the Depositary by the manual signature
of a duly authorized signatory of the Depositary; provided, however that such
-------- -------
signature may be a facsimile if a Registrar for the Receipts shall have been
appointed and such Receipts are countersigned by the manual or facsimile
signature of a duly authorized officer of the Registrar.
11. REPORTS; INSPECTION OF TRANSFER BOOKS.
The Depositary will make available for inspection by Owners of
Receipts at its Corporate Trust Office any reports and communications, including
any proxy soliciting material, received from the Company which are both (a)
received by the Depositary as the holder of the
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Deposited Securities and (b) made generally available to the holders of such
Deposited Securities by the Company. The Depositary will also send to Owners of
Receipts copies of such reports when furnished by the Company pursuant to the
Restricted Deposit Agreement. Any such reports and communications, including
any such proxy soliciting material, furnished to the Depositary by the Company
shall be furnished in English to the extent such materials are required to be
translated into English pursuant to any regulations of the Commission.
The Depositary will keep books, at its Corporate Trust Office, for the
registration of Receipts and transfers of Receipts which at all reasonable times
shall be open for inspection by the Owners of Receipts provided that such
inspection shall not be for the purpose of communicating with Owners of Receipts
in the interest of a business or object other than the business of the Company
or a matter related to the Restricted Deposit Agreement or the Receipts.
12. DIVIDENDS AND DISTRIBUTIONS.
Whenever the Depositary receives any cash dividend or other cash
distribution on any Deposited Securities, the Depositary will, if at the time of
receipt thereof any amounts received in a foreign currency can in the judgment
of the Depositary be converted on a reasonable basis into United States dollars
transferable to the United States, and subject to the Restricted Deposit
Agreement, convert such dividend or distribution into dollars and will
distribute the amount thus received (net of the fees and expenses of the
Depositary as provided in Article 7 hereof and Section 5.09 of the Restricted
Deposit Agreement) to the Owners of Receipts entitled thereto; provided,
--------
however, that in the event that the Company or the Depositary is required to
- -------
withhold and does withhold from any cash dividend or other cash distribution in
respect of any Deposited Securities an amount on account of taxes, the amount
distributed to the Owners of the Receipts evidencing Restricted American
Depositary Shares representing such Deposited Securities shall be reduced
accordingly.
Subject to the provisions of Section 4.11 and 5.09 of the Restricted
Deposit Agreement, whenever the Depositary receives any distribution other than
a distribution described in Section 4.01, 4.03 or 4.04 of the Restricted Deposit
Agreement, the Depositary will cause the securities or property received by it
to be distributed to the Owners entitled thereto, in any manner that the
Depositary may deem equitable and practicable for accomplishing such distri
bution; provided, however, that if in the opinion of the
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Depositary such distribution cannot be made proportionately among the Owners of
Receipts entitled thereto, or if for any other reason the Depositary deems such
distribution not to be feasible, the Depositary may adopt such method as it may
deem equitable and practicable for the purpose of effecting such distribution,
including, but not limited to, the public or private sale of the securities or
property thus received, or any part thereof, and the net proceeds of any such
sale (net of the fees and expenses of the Depositary as provided in Article 7
hereof and Section 5.09 of the Restricted Deposit Agreement) will be distributed
by the Depositary to the Owners of Receipts entitled thereto all in the manner
and subject to the conditions described in Section 4.01 of the Restricted
Deposit Agreement.
If any distribution consists of a dividend in, or free distribution
of, Shares, the Depositary may distribute to the Owners of outstanding Receipts
entitled thereto, additional Receipts evidencing an aggregate number of
Restricted American Depositary Shares representing the amount of Shares received
as such dividend or free distribution subject to the terms and conditions of the
Restricted Deposit Agreement with respect to the deposit of Shares and the
issuance of Restricted American Depositary Shares evidenced by Receipts,
including the withholding of any tax or other governmental charge as provided in
Section 4.11 of the Restricted Deposit Agreement and the payment of the fees and
expenses of the Depositary as provided in Article 7 hereof and Section 5.09 of
the Restricted Deposit Agreement. The Depositary may withhold any such
distribution of Receipts under Section 4.03 of the Restricted Deposit Agreement
if it has not received satisfactory assurances from the Company that such
distribution does not require registration under the Securities Act or is exempt
from registration under the provisions of such Act. In lieu of delivering
Receipts for fractional Restricted American Depositary Shares in any such case,
the Depositary will sell the amount of Shares represented by the aggregate of
such fractions and distribute the net proceeds, all in the manner and subject to
the conditions described in Section 4.01 of the Restricted Deposit Agreement.
If additional Receipts are not so distributed, each Restricted American
Depositary Share shall thenceforth also represent the additional Shares
distributed upon the Deposited Securities represented thereby. Each beneficial
owner of Receipts or Shares so distributed shall be deemed to have acknowledged
that the Receipts or Shares have not been registered under the Securities Act
and to have agreed to comply with the restrictions on transfer set forth on the
face of this Receipt.
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In the event that the Depositary determines that any distribution in
property (including Shares and rights to subscribe therefor) is subject to any
tax or other govern mental charge which the Depositary is obligated to withhold,
the Depositary may by public or private sale dispose of all or a portion of such
property (including Shares and rights to subscribe therefor) in such amounts and
in such manner as the Depositary deems necessary and practicable to pay any such
taxes or charges, and the Depositary shall distribute the net proceeds of any
such sale after deduction of such taxes or charges to the Owners of Receipts
entitled thereto.
13. RIGHTS.
In the event that the Company shall offer or cause to be offered to
the holders of any Deposited Securities any rights to subscribe for additional
Shares or any rights of any other nature, the Depositary shall have discretion
as to the procedure to be followed in making such rights available to any Owners
or in disposing of such rights on behalf of any Owners and making the net
proceeds available to such Owners or, if by the terms of such rights offering or
for any other reason, the Depositary may not either make such rights available
to any Owners or dispose of such rights and make the net proceeds available to
such Owners, then the Depositary shall allow the rights to lapse. If at the
time of the offering of any rights the Depositary determines in its discretion
that it is lawful and feasible to make such rights available to all or certain
Owners but not to other Owners, the Depositary may distribute to any Owner to
whom it determines the distribution to be lawful and feasible, in proportion to
the number of Restricted American Depositary Shares held by such Owner, warrants
or other instruments therefor in such form as it deems appropriate.
In circumstances in which rights would otherwise not be distributed,
if an Owner of Receipts requests the distribution of warrants or other
instruments in order to exercise the rights allocable to the Restricted American
Depositary Shares of such Owner hereunder, the Depositary will make such rights
available to such Owner upon written notice from the Company to the Depositary
that (a) the Company has elected in its sole discretion to permit such rights to
be exercised and (b) such Owner has executed such documents as the Company has
determined in its sole discretion are reasonably required under applicable law.
If the Depositary has distributed warrants or other instruments for
rights to all or certain Owners, then upon instruction from such an Owner
pursuant to such warrants or other instruments to the Depositary from such
A-12
<PAGE>
Owner to exercise such rights, upon payment by such Owner to the Depositary for
the account of such Owner of an amount equal to the purchase price of the Shares
to be received upon the exercise of the rights, and upon payment of the fees and
expenses of the Depositary and any other charges as set forth in such warrants
or other instruments, the Depositary shall, on behalf of such Owner, exercise
the rights and purchase the Shares, and the Company shall cause the Shares so
purchased to be delivered to the Depositary on behalf of such Owner. As agent
for such Owner, the Depositary will cause the Shares so purchased to be
deposited pursuant to Section 2.02 of the Restricted Deposit Agreement, and
shall, pursuant to Section 2.03 of the Restricted Deposit Agreement, execute and
deliver Receipts to such Owner. In the case of a distribution pursuant to the
second paragraph of this Article 13, such Receipts shall be legended in
accordance with applicable U.S. laws, and shall be subject to the appropriate
restrictions on sale, deposit, cancellation, and transfer under such laws.
If the Depositary determines in its discretion that it is not lawful
and feasible to make such rights available to all or certain Owners, it may sell
the rights, warrants or other instruments in proportion to the number of
Restricted American Depositary Shares held by the Owners to whom it has
determined it may not lawfully or feasibly make such rights available, and
allocate the net proceeds of such sales (net of the fees and expenses of the
Depositary as provided in Section 5.09 of the Restricted Deposit Agreement and
all taxes and governmental charges payable in connection with such rights and
subject to the terms and conditions of the Restricted Deposit Agreement) for the
account of such Owners otherwise entitled to such rights, warrants or other
instruments, upon an averaged or other practical basis without regard to any
distinctions among such Owners because of exchange restrictions or the date of
delivery of any Receipt or otherwise.
The Depositary will not offer rights to Owners unless both the rights
and the securities to which such rights relate are either exempt from
registration under the Securities Act with respect to a distribution to all
Owners or are registered under the provisions of such Act; provided, that
--------
nothing in this Restricted Deposit Agreement shall create, any obligation on the
part of the Company to file a registration statement with respect to such rights
or underlying securities or to endeavor to have such a registration statement
declared effective. If an Owner of Receipts requests the distribution of
warrants or other instruments, notwithstanding that there has been no such
registration under such Act, the Depositary shall not effect
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<PAGE>
such distribution unless it has received an opinion from recognized counsel in
the United States for the Company upon which the Depositary may rely that such
distribution to such Owner is exempt from such registration.
The Depositary shall not be responsible for any failure to determine
that it may be lawful or feasible to make such rights available to Owners in
general or any Owner in particular.
14. CONVERSION OF FOREIGN CURRENCY.
Whenever the Depositary or the Custodian shall receive foreign
currency, by way of dividends or other distributions or the net proceeds from
the sale of securities, property or rights, and if at the time of the receipt
thereof the foreign currency so received can in the judgment of the Depositary
be converted on a reasonable basis into Dollars and the resulting Dollars
transferred to the United States, the Depositary shall convert or cause to be
converted, by sale or in any other manner that it may determine, such foreign
currency into Dollars, and such Dollars shall be distributed to the Owners
entitled thereto or, if the Depositary shall have distributed any warrants or
other instruments which entitle the holders thereof to such Dollars, then to the
holders of such warrants and/or instruments upon surrender thereof for
cancellation. Such distribution may be made upon an averaged or other
practicable basis without regard to any distinctions among Owners on account of
exchange restrictions, the date of delivery of any Receipt or otherwise and
shall be net of any expenses of conversion into Dollars incurred by the
Depositary as provided in Section 5.09 of the Restricted Deposit Agreement.
If such conversion or distribution can be effected only with the
approval or license of any government or agency thereof, the Depositary shall
file such application for approval or license, if any, as it may deem desirable.
If at any time the Depositary shall determine that in its judgment any
foreign currency received by the Depositary or the Custodian is not convertible
on a reasonable basis into Dollars transferable to the United States, or if any
approval or license of any government or agency thereof which is required for
such conversion is denied or in the opinion of the Depositary is not obtainable,
or if any such approval or license is not obtained within a reasonable period as
determined by the Depositary, the Depositary may distribute the foreign currency
(or an appropriate document evidencing the right to
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<PAGE>
receive such foreign currency) received by the Depositary to, or in its
discretion may hold such foreign currency uninvested and without liability for
interest thereon for the respective accounts of, the Owners entitled to receive
the same.
If any such conversion of foreign currency, in whole or in part,
cannot be effected for distribution to some of the Owners entitled thereto, the
Depositary may in its discretion make such conversion and distribution in
Dollars to the extent permissible to the Owners entitled thereto and may
distribute the balance of the foreign currency received by the Depositary to, or
hold such balance uninvested and without liability for interest thereon for the
respective accounts of, the Owners entitled thereto.
15. RECORD DATES.
Whenever any cash dividend or other cash distrib ution shall become
payable or any distribution other than cash shall be made, or whenever rights
shall be issued with respect to the Deposited Securities, or whenever the
Depositary shall receive notice of any meeting of holders of Shares or other
Deposited Securities, or whenever for any reason the Depositary causes a change
in the number of Shares that are represented by each Restricted American
Depositary Share, or whenever the Depositary shall find it necessary or
convenient, the Depositary shall fix a record date, which shall be the record
date, if any, established by the Company for such purpose or, if different, as
close thereto as practicable, (a) for the determination of the Owners of
Receipts who shall be (i) entitled to receive such dividend, distribution or
rights or the net proceeds of the sale thereof or (ii) entitled to give
instructions for the exercise of voting rights at any such meeting, or (b) on or
after which each Restricted American Depositary Share will represent the changed
number of Shares, subject to the provisions of the Restricted Deposit Agreement.
16. VOTING OF DEPOSITED SECURITIES.
Upon receipt of notice of any meeting of holders of Shares or other
Deposited Securities, if requested in writing by the Company, the Depositary
shall, as soon as practicable thereafter, mail to the Owners of Receipts a
notice, the form of which notice shall be in the sole discretion of the
Depositary, which shall contain (a) all of the information contained in such
notice of meeting received by the Depositary from the Company, (b) a statement
that the Owners of Receipts as of the close of business on a specified record
date will be entitled, subject to any
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<PAGE>
applicable provision of law and of the Memorandum and Articles of Association of
the Company, to instruct the Depositary as to the exercise of the voting rights,
if any, pertaining to the amount of Shares or other Deposited Securities
represented by their respective Restricted American Depositary Shares, (c) a
statement that Owners who instruct the Depositary as to the exercise of their
voting rights will be deemed to have instructed the Depositary or its authorized
representative to call for a poll with respect to each matter for which such
instructions are given, subject to any applicable provisions of Irish law and of
the Memorandum and Articles of Association of the Company and (d) if applicable,
a statement as to the manner in which such instructions may be given, including
an express indication that instructions may be given or deemed given in
accordance with the last sentence of this paragraph if no instruction is
received, to the Depositary to give a discretionary proxy to a person designated
by the Company. Upon the written request of an Owner of a Receipt on such
record date, received on or before the date established by the Depositary for
such purpose, the Depositary shall endeavor insofar as practicable to vote or
cause to be voted the amount of Shares or other Deposited Securities represented
by such Restricted American Depositary Shares evidenced by such Receipt in
accordance with the instructions set forth in such request. Accordingly, the
Depositary will cause its authorized representative to attend each meeting of
holders of Shares and call for a poll as instructed in accordance with clause
(c) above for the purpose of effecting such vote. The Depositary shall not vote
or attempt to exercise the right to vote that attaches to the Shares or other
Deposited Securities, other than in accordance with such instructions. If no
instructions are received by the Depositary from any Owner with respect to any
of the Deposited Securities represented by the Restricted American Depositary
Shares evidenced by such Owner's Receipts on or before the date established by
the Depositary for such purpose, the Depositary will deem such Owner to have
instructed the Depositary to give a discretionary proxy to a person designated
by the Company with respect to such Deposited Securities and the Depositary will
give a discretionary proxy to a person designated by the Company to vote such
Deposited Securities; provided, that no such instructions will be deemed given
and no such discretionary proxy will be given when the Company notifies the
Depositary (and the Company agrees to provide such notice as promptly as
practicable in writing) that the matter to be voted upon is one of the
following:
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1. is a matter not submitted to shareholders by means of a proxy
statement comparable to that specified in Schedule 14-A of the
Commission;
2. is the subject of a counter-solicitation, or is part of a proposal
made by a shareholder which is being opposed by management (i.e., a
contest);
3. relates to a merger or consolidation (except when the Company's
proposal is to merge with its own wholly-owned subsidiary, provided
its shareholders dissenting thereto do not have rights of appraisal);
4. involves right of appraisal;
5. authorizes mortgaging of property;
6. authorizes or creates indebtedness or increases the authorized
amount of indebtedness;
7. authorizes or creates preferred shares or increases the authorized
amount of existing preferred shares;
8. alters the terms or conditions of any shares of the Company's
stock then outstanding or existing indebtedness;
9. involves waiver or modification of preemptive rights (except when
the Company's proposal is to waive such rights with respect to
ordinary shares being offered pursuant to stock option or purchase
plans involving the additional issuance of not more than 5% of the
Company's outstanding ordinary shares (see Item 12 below));
10. alters voting provisions or the proportionate voting power of a
class of shares, or the number of its votes per share (except where
cumulative voting provisions govern the number of votes per share for
election of directors and the Company's proposal involves a change in
the number of its directors by not more than 10% or not more than one)
11. changes existing quorum requirements with respect to shareholder
meetings;
12. authorizes issuance of ordinary shares, or options to purchase
ordinary shares, to directors,
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officers, or employees in an amount which exceeds 5% of the total
amount of the class outstanding (when no plan is amended to extend its
duration, the Company shall factor into the calculation the number of
ordinary shares that remain available for issuance, the number of
ordinary shares subject to outstanding options and any ordinary shares
being added; should there be more than one plan being considered at
the same meeting, all ordinary shares are aggregated).
13. authorizes
(a) a new profit-sharing or special remuneration plan, or a new
retirement plan, the annual cost of which will amount to more
than 10% of average annual income before taxes for the preceding
five years, or
(b) the amendment of an existing plan which would bring its costs
above 10% of such average annual income before taxes (should
there be more than one plan being considered at the same meeting,
all costs are aggregated; exceptions may be made in cases of (a)
retirement plans based on agreement or negotiations with labor
unions (or which have been or are to be approved by such unions);
and (b) any related retirement plan for benefit of non-union
employees having terms substantially equivalent to the terms of
such union-negotiated plan, which is submitted for action of
stockholders concurrently with such union-negotiated plan);
14. changes the purposes or powers of the Company to an extent which
would permit it to change a materially different line of business and
it is the Company's stated intention to make such a change;
15. authorizes the acquisition of property, assets, or a company,
where the consideration to be given has a fair value of 20% or more of
the market value of the previously outstanding shares;
16. authorizes the sale or other disposition of assets or earning
power of 20% or more of those existing prior to the transaction;
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17. authorizes a transaction not in the ordinary course of business in
which an officer, director or substantial security holder has a direct
or indirect interest;
18. reduces earned surplus by 51% or more, or reduces earned surplus
to an amount less than the aggregate of three years' ordinary share
dividends computed at the current dividend rate.
17. CHANGES AFFECTING DEPOSITED SECURITIES.
In circumstances where the provisions of Section 4.03 of the
Restricted Deposit Agreement do not apply, upon any change in nominal value,
change in par value, split-up, consolidation, or any other reclassification of
Deposited Securities, or upon any recapitalization, reorganization, merger or
consolidation, or sale of assets affecting the Company or to which it is a
party, any securities which shall be received by the Depositary or a Custodian
in exchange for or in conversion of or in respect of Deposited Securities shall
be treated as new Deposited Securities under the Restricted Deposit Agreement,
and Restricted American Depositary Shares shall thenceforth represent, in
addition to the existing Deposited Securities, the right to receive the new
Deposited Securities so received in exchange or conversion, unless additional
Receipts are delivered pursuant to the following sentence. In any such case the
Depositary may execute and deliver additional Receipts as in the case of a
dividend in Shares, or call for the surrender of outstanding Receipts to be
exchanged for new Receipts specifically describing such new Deposited
Securities.
18. LIABILITY OF THE COMPANY AND DEPOSITARY.
Neither the Depositary nor the Company nor any of their respective
directors, employees, agents or affiliates shall incur any liability to any
Owner or Beneficial Owner of any Receipt, if by reason of any provision of any
present or future law or regulation of the United States or any other country,
or of any other governmental or regulatory authority, or by reason of any
provision, present or future, of the Memorandum and Articles of Association of
the Company, or by reason of any provision of any securities issued or
distributed by the Company, or any offering or distribution thereof, or by
reason of any act of God or war or other circumstances beyond its control, the
Depositary or the Company shall be prevented, delayed or forbidden from or be
subject to any civil or criminal penalty on account of doing or performing any
act or thing which by the terms of
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the Restricted Deposit Agreement or Deposited Securities it is provided shall be
done or performed; nor shall the Depositary or the Company or any of their
respective directors, employees, agents or affiliates incur any liability to any
Owner or Beneficial Owner of a Receipt by reason of any non-performance or
delay, caused as aforesaid, in the performance of any act or thing which by the
terms of the Restricted Deposit Agreement it is provided shall or may be done or
performed, or by reason of any exercise of, or failure to exercise, any
discretion provided for in the Restricted Deposit Agreement. Where, by the
terms of a distribution pursuant to Section 4.01, 4.02 or 4.03 of the Restricted
Deposit Agreement, or an offering or distribution pursuant to Section 4.04 of
the Restricted Deposit Agreement, such distribution or offering may not be made
available to Owners of Receipts, and the Depositary may not dispose of such
distribution or offering on behalf of such Owners and make the net proceeds
available to such Owners, then the Depositary shall not make such distribution
or offering, and shall allow any rights, if applicable, to lapse. Neither the
Company nor the Depositary assumes any obligation or shall be subject to any
liability under the Restricted Deposit Agreement to Owners or Beneficial Owners
of Receipts, except that they agree to perform their obligations specifically
set forth in the Restricted Deposit Agreement without negligence or bad faith.
The Depositary shall not be subject to any liability with respect to the
validity or worth of the Deposited Securities. Neither the Depositary nor the
Company shall be under any obligation to appear in, prosecute or defend any
action, suit, or other proceeding in respect of any Deposited Securities or in
respect of the Receipts, which in its opinion may involve it in expense or
liability, unless indemnity satisfactory to it against all expense and liability
shall be furnished as often as may be required, and the Custodian shall not be
under any obligation whatsoever with respect to such proceedings, the
responsibility of the Custodian being solely to the Depositary. Neither the
Depositary nor the Company shall be liable for any action or nonaction by it in
reliance upon the advice of or information from legal counsel, accountants, any
person presenting Shares for deposit, any Owner or Beneficial Owner of a
Receipt, or any other person believed by it in good faith to be competent to
give such advice or information. The Depositary shall not be responsible for
any failure to carry out any instructions to vote any of the Deposited
Securities, or for the manner in which any such vote is cast or the effect of
any such vote, provided that any such action or nonaction is in good faith. The
Depositary shall not be liable for any acts or omissions made by a successor
depositary whether in connection with a previous act or omission of the
Depositary
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or in connection with a matter arising wholly after the removal or resignation
of the Depositary, provided that in connection with the issue out of which such
potential liability arises, the Depositary performed its obligations without
negligence or bad faith while it acted as Depositary. The Company agrees to
indemnify the Depositary, its directors, employees, agents and affiliates and
any Custodian against, and hold each of them harmless from, any liability or
expense (including, but not limited to, the expenses of counsel) which may arise
out of acts performed or omitted, in accordance with the provisions of the
Restricted Deposit Agreement and of the Receipts, as the same may be amended,
modified, or supplemented from time to time, (i) by either the Depositary or a
Custodian or their respective directors, employees, agents and affiliates,
except for any liability or expense arising out of the negligence or bad faith
of either of them, or (ii) by the Company or any of its directors, employees,
agents and affiliates. No disclaimer of liability under the Securities Act is
intended by any provision of the Restricted Deposit Agreement.
19. RESIGNATION AND REMOVAL OF THE DEPOSITARY; APPOINTMENT OF
SUCCESSOR CUSTODIAN.
The Depositary may at any time resign as Depositary hereunder by
written notice of its election so to do delivered to the Company, such
resignation to take effect upon the appointment of a successor depositary and
its acceptance of such appointment as provided in the Restricted Deposit
Agreement. The Depositary may at any time be removed by the Company by written
notice of such removal, effective upon the appointment of a successor depositary
and its acceptance of such appointment as provided in the Restricted Deposit
Agreement. Whenever the Depositary in its discretion determines that it is in
the best interest of the Owners of Receipts to do so, it may appoint a
substitute or additional custodian or custodians.
20. AMENDMENT.
The form of the Receipts and any provisions of the Restricted Deposit
Agreement may at any time and from time to time be amended by agreement between
the Company and the Depositary without the consent of Owners or Beneficial
Owners of Receipts in any respect which they may deem necessary or desirable,
including, without limitation, amendments agreed upon pursuant to Section 2.09
of the Restricted Deposit Agreement. Any amendment which shall impose or
increase any fees or charges (other than taxes and other governmental charges,
registration fees and cable,
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telex or facsimile transmission costs, delivery costs or other such expenses),
or which shall otherwise prejudice any substantial existing right of Owners of
Receipts, shall, however, not become effective as to outstanding Receipts until
the expiration of thirty days after notice of such amendment shall have been
given to the Owners of outstanding Receipts. Every Owner of a Receipt at the
time any amendment so becomes effective shall be deemed, by continuing to hold
such Receipt, to consent and agree to such amendment and to be bound by the
Restricted Deposit Agreement as amended thereby. In no event shall any
amendment impair the right of the Owner of any Receipt to surrender such Receipt
and receive therefor the Deposited Securities represented thereby except in
order to comply with mandatory provisions of applicable law.
21. TERMINATION OF RESTRICTED DEPOSIT AGREEMENT.
The Depositary at any time at the direction of the Company, shall
terminate the Restricted Deposit Agreement by mailing notice of such termination
to the Owners of all Receipts then outstanding at least 90 days prior to the
date fixed in such notice for such termination. The Depositary may likewise
terminate the Restricted Deposit Agreement by mailing notice of such termination
to the Company and the Owners of all Receipts then outstanding if at any time 90
days shall have expired after the Depositary shall have delivered to the Company
a written notice of its election to resign and a successor depositary shall not
have been appointed and accepted its appointment as provided in the Restricted
Deposit Agreement. On and after the date of termination, the Owner of a Receipt
will, upon (a) surrender of such Receipt at the Corporate Trust Office of the
Depositary, (b) payment of the fee of the Depositary for the surrender of
Receipts referred to in Section 2.05 of the Restricted Deposit Agreement, and
(c) payment of any applicable taxes or governmental charges, be entitled to
delivery, to him or upon his order, of the amount of Deposited Securities
represented by the Restricted American Depositary Shares evidenced by such
Receipt. If any Receipts shall remain outstanding after the date of
termination, the Depositary thereafter shall discontinue the registration of
transfers of Receipts, shall suspend the distribution of dividends to the Owners
thereof, and shall not give any further notices or perform any further acts
under the Restricted Deposit Agreement, except that the Depositary shall
continue to collect dividends and other distributions pertaining to Deposited
Securities, shall sell rights and other property as provided in the Restricted
Deposit Agreement, and shall continue to deliver Deposited Securities, together
with any dividends or other
A-22
<PAGE>
distributions received with respect thereto and the net proceeds of the sale of
any rights or other property, in exchange for Receipts surrendered to the
Depositary (after deducting, in each case, the fee of the Depositary for the
surrender of a Receipt, any expenses for the account of the Owner of such
Receipt in accordance with the terms and conditions of the Restricted Deposit
Agreement, and any applicable taxes or governmental charges). At any time after
the expiration of one year from the date of termination, the Depositary may sell
the Deposited Securities then held under the Restricted Deposit Agreement and
may thereafter hold uninvested the net proceeds of any such sale, together with
any other cash then held by it thereunder, unsegregated and without liability
for interest, for the pro rata benefit of the Owners of Receipts which have not
theretofore been surrendered, such Owners thereupon becoming general creditors
of the Depositary with respect to such net proceeds. After making such sale,
the Depositary shall be discharged from all obligations under the Restricted
Deposit Agreement, except to account for such net proceeds and other cash (after
deducting, in each case, the fee of the Depositary for the surrender of a
Receipt, any expenses for the account of the Owner of such Receipt in accordance
with the terms and conditions of the Restricted Deposit Agreement, and any
applicable taxes or governmental charges). Upon the termination of the
Restricted Deposit Agreement, the Company shall be discharged from all
obligations under the Restricted Deposit Agreement except for its obligations to
the Depositary with respect to indemnification, charges, and expenses.
22. DISCLOSURE OF INTERESTS.
Notwithstanding any other provision of this Receipt or the Deposit
Agreement, each Owner and Beneficial Owner agrees to be bound by and subject to
Irish law and the Memorandum and Articles of Association of the Company (to the
same extent as if such Restricted American Depositary Shares evidenced by such
Receipt were the Shares represented by such Restricted American Depositary
Shares evidenced by such Receipt, provided, however, that such provisions shall
apply to such persons only to the extent feasible), and to provide such
information to the Company relating to ownership of the Shares as may be
required thereunder. Under Irish law, as in effect on the date of the Deposit
Agreement, a person who acquires an interest in 5% or more of the Shares, must
notify the Company within five business days of its interest and of certain
circumstances affecting that interest. In addition, such person must give notice
of any change in its interest above the 5% level and any reduction thereof below
the 5% level. Failure of an Owner or
A-23
<PAGE>
Beneficial Owner to provide the required information within the prescribed time
period and in the prescribed manner is an offense under Irish law and will
result in no right or interest in respect of the relevant shares being
enforceable by action or legal proceedings under Irish law (including voting
rights and certain rights as to dividends in respect of the Shares represented
by such American Depositary Shares).
If the Company requests information from the Depositary or the
Custodian, as the registered owners of Shares, pursuant to Irish law or the
Memorandum and Articles of Association of the Company, the obligations of the
Depositary or the Custodian, as the case may be, shall be limited to disclosing
to the Company such information relating to the Shares in question as has in
each case been recorded by it pursuant to the terms of the Deposit Agreement.
A-24
<PAGE>
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Agreement among Gregory M. Priest (the "Executive") and CBT Group
PLC, a public company limited by shares formed under the laws of the Republic of
Ireland ("CBT Group") and its wholly-owned subsidiary, CBT Systems USA, Ltd., a
Delaware corporation ("CBT USA") is entered into as of January 2, 1996 (the
"Effective Date"). For purposes of this Agreement, the term "Company" shall be
used to refer to both CBT Group and CBT USA.
WHEREAS, the Company desires to employ the Executive and the Executive
desires to accept employment with the Company on the terms and conditions set
forth below;
NOW, THEREFORE, in consideration of the foregoing recital and the
respective covenants and agreements of the parties contained in this document,
the Company and the Executive agree as follows:
1. Employment and Duties. The Executive shall be employed as Vice
---------------------
President, Finance, Chief Financial Officer and General Counsel of the Company
effective as of January 2, 1996, reporting to the Chief Executive Officer of CBT
Group (the "CEO"), and assuming and discharging such responsibilities as are
mutually agreed upon by the Executive and the CEO commensurate with such office
and position. The Executive shall perform faithfully the executive duties
assigned to him to the best of his ability. After the Executive commences
employment with the Company but prior to June 1, 1996, the Executive shall be
nominated to serve as a director of the Company, and the Executive shall serve
in such capacity without additional compensation; provided, however, that the
Executive agrees, if so requested by the Board of Directors, to resign from the
Board of Directors of the Company in the event the Board of Directors of CBT
Group (the "Board") is restructured such that no members of management other
than the CEO are members of the Board.
2. Base Salary. In consideration of the Executive's services, the
-----------
Executive shall be paid a minimum base salary at the rate of $125,000 per year
during the period of employment, to be paid in installments in accordance with
the Company's standard payroll practices. This base compensation shall be
reviewed for increases at least annually by the Board on the same basis as the
Board shall review the compensation of other executive officers of the Company.
The base salary shall not be reduced.
3. Bonus.
-----
(a) Annual Bonus. In addition to base salary, the Executive shall
------------
participate in an annual bonus program beginning with the current fiscal year
under which the Executive shall be eligible to earn a minimum scheduled bonus of
$100,000 based upon satisfaction of certain CBT Group performance goals. The
minimum scheduled bonus shall be reviewed for increases at least annually by the
Board. The minimum annual bonus as may be increased from time to time as
provided herein shall not be reduced. To the extent a bonus accrues for a
fiscal year (as provided herein), it shall be paid to the Executive by January
31 of the year following the year to which the bonus relates. Bonus for a
fiscal year shall accrue as follows: each quarter, 1/16th of scheduled bonus
accrues if CBT Group's quarterly revenue plan (as approved by the Board, or if
no such approval is obtained, as approved by the CEO) is met and 1/16th of
scheduled bonus accrues if CBT Group's quarterly earnings per share plan (as
approved by the Board, or if no such approval is obtained, as approved by the
CEO) is met (not including extraordinary charges related to any acquisition).
At year-end, one-quarter of scheduled bonus
<PAGE>
accrues if CBT Group's annual revenue plan (as approved by the Board, or if no
such approval is obtained, as approved by the CEO) is met and one-quarter of
scheduled bonus accrues if CBT Group's annual earnings per share plan (as
approved by the Board, or if no such approval is obtained, as approved by the
CEO) is met (not including extraordinary charges related to any acquisition).
Notwithstanding the foregoing, the minimum bonus, net after-tax cash to the
Executive, amount payable to the Executive with respect to any fiscal year of
CBT Group during the period of employment shall be $30,000, provided the
Executive is employed by the Company as of September 30 of such fiscal year.
(b) Additional Bonus. The Executive shall also be entitled to receive
----------------
additional bonus amounts with respect to any fiscal year of CBT Group in which
CBT Group's high-end earnings per share plan (as approved by the Board, or if no
such approval is obtained, as approved by the CEO) is met (not including
extraordinary charges related to any acquisition). The amount of the additional
bonus opportunity shall be at least $25,000 per year, provided that it shall not
be less than any similar bonus paid to any other employee of CBT Group other
than the CEO.
(c) Termination of Employment. With respect to any fiscal year in
-------------------------
which the Executive is employed by the Company for only a part of such fiscal
year (other than as a result of a termination for Cause (as defined in paragraph
6(b) below)), the minimum amount of the scheduled bonus payable to the Executive
with respect to such fiscal year shall be (the greater of (i) the amount
determined by application of Section 3(a) above, or (ii) all quarterly bonuses
accrued while the Executive was employed by the Company. Subject to the
previous sentence, if the Executive's employment terminates (other than for
Cause) before September 30 of such fiscal year, only the quarterly bonus
accruals that accrued prior to termination of employment shall be payable with
respect to such fiscal year. If the Executive's employment terminates (other
than for Cause) on or after September 30 of such fiscal year, all of the
quarterly bonus accruals that accrued prior to termination of employment shall
be payable with respect to such fiscal year, and 100% of the scheduled annual
bonus with respect to the year in which employment is terminated shall also be
payable. Any bonus that becomes payable to the Executive pursuant to this
paragraph 3(c) shall be paid to the Executive within thirty (30) days of the
date of the Executive's termination of employment. In the event the Company
terminates the Executive's employment for Cause, no bonus shall be paid or
payable to the Executive for the fiscal year in which such termination occurs.
4. At-Will Employment. The Company and the Executive acknowledge that the
------------------
Executive's employment is and shall continue to be at-will, as defined under
applicable law. If the Executive's employment terminates for any reason, the
Executive shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company's established employee plans and
policies or other agreements with the Executive at the time of termination.
5. Benefits; Expenses. The Executive shall be permitted, to the extent
------------------
eligible, to participate in any group medical, dental, life insurance and
disability insurance plans, or similar benefit plans of the Company that are
available to other comparable executives. Participation in any such plan shall
be consistent with the Executive's rate of compensation to the extent that
compensation is a determinative factor with respect to coverage under any such
plan. The Executive shall also be entitled to four weeks' annual vacation.
Without limiting the generality of the foregoing, the Executive shall receive,
at the Company's expense and at no cost to the Executive (other than any
applicable taxes), life insurance with a death benefit in an amount that is not
less than four times the sum of Executive's base salary and scheduled bonus,
payable to
2
<PAGE>
the Executive's designated beneficiary. The Company shall reimburse the
Executive for all reasonable business and travel expenses actually incurred or
paid by the Executive in the performance of services on behalf of the Company,
in accordance with the Company's expense reimbursement policy as in effect from
time to time.
6. Termination.
-----------
(a) Options/Severance. If, at any time prior to November 2, 1996, the
-----------------
Executive's employment with the Company is Involuntarily Terminated by the
Company other than for Cause (as those terms are defined in paragraphs 6(b) and
(c) below) or the Company breaches any of the material terms of this Agreement
(either of the foregoing, an "Event"), the Company shall retain the Executive as
a part-time employee or consultant, and the Executive shall continue to vest in
the options granted pursuant to the option agreement dated November 1, 1995 (the
"Option") until 25% of the Option shall have vested. In addition, and without
limiting the generality of the foregoing, if at any time after the Effective
Date an Event shall occur, the Executive shall be retained as a part-time
employee or consultant, and the Option shall continue to vest as set forth
herein. Such retention and continuation of Option vesting shall continue until
a sufficient number of Options (over and above Options actually vested prior to
the Event) have been vested such that the Target Realizable Value (as defined in
paragraph 6(h) below) has been attained. At such time as a sufficient number of
Options have vested to provide such Target Realizable Value to the Executive,
the part-time employment or consulting arrangement shall terminate, and
additional vesting of Options shall cease. In the event that, as of any monthly
Option vesting date following an Event, the Realizable Value (as defined in
paragraph 6(f) below) attributable to the portion of the Option that vested on
such date does not at least equal Target Monthly Compensation (as defined in
paragraph 6(g) below), the Company shall make a cash payment to the Executive in
an amount so as to cause the combination of the Realizable Value attributable to
such continued vesting and such cash payment to equal Target Monthly
Compensation. Any such cash payment shall count toward the Target Realizable
Value and the Company's obligation to continue vesting of Executive's Option
after any such cash payment shall be reduced by the amount of any such cash
payment. The Executive may take other employment during the period that Options
are continuing to vest and cash is being paid, and any such other employment
shall not reduce such continuation of Option vesting and cash payments as set
forth herein. In addition, if prior to repayment in full of any loans made by
the Company to the Executive, (i) the Executive dies, (ii) the Company
terminates the Executive's employment as a result of the Executive's Disability,
or (iii) an Event occurs, then all remaining amounts due under any such loans
shall be forgiven.
(b) Termination for Cause; Voluntary Resignation. In the event that
--------------------------------------------
(i) the Company terminates the Executive's employment for "Cause" (as defined
herein), or (ii) the Executive terminates his employment with the Company
voluntarily, then the Executive shall not receive any compensation or benefits
under this Agreement on account of such termination. The Executive's rights
under the Company's benefit plans upon such a termination shall be determined
under the provisions of those plans. For purposes of this Agreement,
termination for "Cause" shall mean (i) a final judicial determination that the
Executive has willfully and knowingly committed any act of personal dishonesty
in connection with his responsibilities as an employee and that such act is
intended to result in substantial personal enrichment of the Borrower at the
direct expense of either CBT Group or CBT USA, (ii) the Executive's conviction
of any crime based upon any willful act directly and substantially involving the
property or business of either CBT Group or CBT USA or (iii) a final judicial
determination that the Executive has willfully and knowingly committed an act of
gross and intentional misconduct
3
<PAGE>
and that such misconduct is demonstrably and significantly injurious to CBT
Group and CBT USA considered as a single enterprise. No act will be considered
"willful" for purposes of this paragraph unless it is committed in bad faith and
with actual knowledge that the act was not in the best interests of the Company.
For purposes of the foregoing, forgiveness of amounts due pursuant to paragraph
6(a) shall not constitute a waiver of the Company's right to seek a judicial
determination as contemplated in clauses (i) and (iii) above or to otherwise
enforce its rights in connection with a termination for Cause.
(c) Involuntary Termination. For purposes of this Agreement, the term
-----------------------
"Involuntary Termination" shall mean (i) without the Executive's express written
consent, the assignment to the Executive of any duties, or the removal from or
reduction or limitation of the Executive's duties or responsibilities, which in
either case is a significant change in the Executive's position, title,
organization level, duties, responsibilities, compensation and status with the
Company; (ii) without the Executive's express written consent, a substantial
reduction of the facilities and perquisites (including office space and
location) available to the Executive immediately prior to such reduction; (iii)
a reduction by the Company in the base salary of the Executive as in effect
immediately prior to such reduction; (iv) a material reduction by the Company in
the kind or level of employee benefits to which the Executive is entitled
immediately prior to such reduction with the result that the Executive's overall
benefits package is significantly reduced; (v) the relocation of the Executive
to a facility or a location more than twenty (20) miles from the Executive's
then-present work location, without the Executive's express written consent;
(vi) any purported termination of the Executive by the Company other than for
Cause or by reason of the Executive's Disability; (vii) the failure of the
Company to obtain the assumption of this Agreement by any successor as required
by paragraph 9 below; or (viii) any material breach by the Company of any term
of this Agreement.
(d) Death. The Executive's employment shall terminate in the event of
-----
his death. Except as provided under paragraph 6(a) and except for such
obligations that have accrued prior to the Executive's death, the Company shall
have no obligation to pay or provide any compensation or benefits under this
Agreement on account of the Executive's death. The Executive's rights under the
Company's benefit plans in the event of the Executive's death shall be
determined under the provisions of those plans.
(e) Disability. The Company may terminate the Executive's employment
----------
for Disability by giving the Executive thirty (30) days' advance notice in
writing. For all purposes under this Agreement, "Disability" shall mean that
the Executive, at the time notice is given, has been unable to substantially
perform his duties under this Agreement for a period of not less than six (6)
consecutive months as the result of his incapacity due to physical or mental
illness. In the event that the Executive resumes the performance of
substantially all of his duties hereunder before the termination of his
employment under this paragraph (d) becomes effective, the notice of termination
shall automatically be deemed to have been revoked. Except as provided under
paragraph 6(a) and except for such obligations that have accrued prior to the
Executive's Disability, no compensation or benefits will be paid or provided to
the Executive under this Agreement on account of termination for Disability.
The Executive's rights under the Company's benefit plans shall be determined
under the provisions of those plans.
(f) Realizable Value. The term "Realizable Value" means the
----------------
difference between the aggregate fair market value of the Executive's vested
Option shares and the aggregate exercise price thereof, but only with respect to
shares that are (or, upon exercise would be) freely tradable by the Executive.
4
<PAGE>
(g) Target Monthly Compensation. "Target Monthly Compensation" means,
---------------------------
with respect to an Event (as defined in paragraph 6(a)), the sum of (i) one
month of the Executive's base salary as in effect immediately preceding the
Event (without giving effect to any reduction in base salary prior to the
Event), plus (ii) 5.42% of scheduled bonus (annual and all four quarterly) for
the fiscal year in which the Event occurs.
(h) Target Realizable Value. The term "Target Realizable Value" means
-----------------------
a dollar denominated value used to determine the Executive's severance benefit
under paragraph 6(a) upon the occurrence of an Event (as defined in paragraph
6(a)). The Target Realizable Value is calculated differently depending on the
date of the Event and the Executive's base salary and scheduled annual bonus at
that time as follows: (i) in the case of an Event occurring before November 2,
1996, the Target Realizable Value shall be an amount equal to the Executive's
annual base salary in effect immediately preceding the Event (without giving
effect to any reduction in base salary prior to the Event) plus sixty-five
percent (65%) of the scheduled bonus (annual and all four quarterly) for the
fiscal year in which the Event occurs, calculated on the basis of a period of
time equal to one year less the number of months from January 2, 1996 to the
date of the Event, and (ii) in the case of an Event occurring on or after
November 2, 1996, the Target Realizable Value shall be an amount equal to three
months of base salary as in effect immediately preceding the Event (without
giving effect to any reduction in base salary prior to the Event) plus thirty-
two and one-half percent (32.5%) of the scheduled bonus (annual and all four
quarterly) for the fiscal year in which the Event occurs.
7. Covenant Not To Solicit.
-----------------------
Beginning with the Executive's termination of employment with the
Company as described in paragraph 7(b) and for a period of one (1) year
thereafter, the Executive agrees that he will not
(i) solicit, encourage, or take any other action which is intended to
induce any other executive of the Company to terminate his employment with the
Company, or
(ii) interfere in any manner with the contractual or employment
relationship between the Company and any such executive of the Company.
The foregoing shall not prohibit the Executive or any entity with
which the Executive may be affiliated from hiring a former executive of the
Company, provided that such hiring results exclusively from such executive's
affirmative response to a general recruitment effort carried out through a
public solicitation or a general solicitation.
8. Proprietary Information Agreement. In connection with commencement of
---------------------------------
the Executive's employment with the Company, the Executive will sign the
Company's standard executive proprietary information agreement.
9. Successors. The Company shall require any successor or assignee, in
----------
connection with any sale, transfer or other disposition of all or substantially
all of the assets or business of CBT Group, whether by purchase, merger,
consolidation or otherwise, expressly to assume and agree to perform the
Company's obligations under this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such succession or
assignment had taken place. In such event, the term CBT Group as used in this
Agreement, shall mean CBT Group as defined above and any successor or assignee
to the business and assets which by reason hereof becomes bound by the terms and
provisions of this Agreement.
10. Confidentiality. Except as required by applicable laws, neither party
---------------
shall disclose the contents of this Agreement without first obtaining the prior
written consent of the
5
<PAGE>
other party, provided, however, that the Executive may disclose this Agreement
to his attorney, financial planner and tax advisor if such persons agree to keep
the terms hereof confidential.
11. Arbitration. Any claim, dispute or controversy arising out of this
-----------
Agreement, the interpretation, validity or enforceability of this Agreement or
the alleged breach thereof shall be submitted by the parties to binding
arbitration by the American Arbitration Association in San Francisco County,
California; provided, however, that this arbitration provision shall not
preclude the Company from seeking a judicial determination of Cause as provided
in paragraph 6(b) or from seeking injunctive relief from any court having
jurisdiction with respect to any disputes or claims relating to or arising out
of the misuse or misappropriation of the Company's trade secrets or confidential
and proprietary information. All costs and expenses of arbitration or
litigation, including but not limited to attorneys fees and other costs
reasonably incurred by the Executive, shall be paid by the party who shall not
have prevailed in the arbitration all as conclusively determined by the
arbitrators. Judgment may be entered on the award of the arbitration in any
court having jurisdiction.
12. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of California applicable to agreements
made and to be performed entirely within such state.
13. Integration. This Agreement, any written agreements or other
-----------
documents evidencing matters referred to herein and any written Company existing
plans that are referenced herein represent the entire agreement and
understanding between the parties as to the subject matter hereof and thereof
and supersede all prior or contemporaneous agreements as to the subject matter
hereof and thereof, whether written or oral. No waiver, alteration, or
modification, if any, of the provisions of this Agreement shall be binding
unless in writing and signed by duly authorized representatives of the parties
hereto.
14. Voluntary Execution; Conflict Waiver. The Executive has been advised
------------------------------------
to obtain independent legal counsel regarding this Agreement. The Executive is
signing this Agreement knowingly and voluntarily. The Company and the Executive
acknowledge that Wilson, Sonsini, Goodrich & Rosati ("WSGR") has acted as
counsel to the Company in negotiating this Agreement and will continue to serve
as the Company's general counsel in the future, acknowledge that each has
received full disclosure of any potential conflict of interest which may result
from such representation, and knowingly and voluntarily waive any such conflict
of interest.
15. Notices. Notices and all other communications contemplated by this
-------
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Executive, mailed
notices shall be addressed to him at the home address that he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.
16. No Mitigation. In the event the Executive's employment with the
-------------
Company terminates, the Executive shall not be required to mitigate damages or
the amount of any payment provided under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided under this
Agreement be reduced by any compensation earned by the Executive as a result of
employment by another employer or by retirement benefits after such termination,
or otherwise.
6
<PAGE>
17. Waiver. If either party should waive any breach of any provisions of
------
this Agreement, he or it shall not thereby be deemed to have waived any
proceeding or succeeding breach of the same or any other provision of this
Agreement.
18. Counterparts. This Agreement may be executed in counterparts, which
------------
together will constitute one instrument.
EXECUTIVE CBT GROUP PLC
_________________________________ By:___________________________________
Gregory M. Priest
Title:________________________________
CBT SYSTEMS USA, LTD.
By:___________________________________
Title:________________________________
7
<PAGE>
Consent of Spouse: I hereby consent to this Agreement for purposes of any
- -----------------
community property interest I may have in the foregoing arrangements. I have
had the opportunity to seek independent counsel with regard to this consent and
knowingly and voluntarily waive the right to such counsel.
______________________________________
Signature of Spouse
______________________________________
Printed Name of Spouse
______________________________________
Date Signed
8
<PAGE>
EXHIBIT 11.1
------------
STATEMENT RE: COMPUTATION OF NET INCOME PER ORDINARY SHARE(1)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
PRIMARY
Computation of ordinary and
ordinary equivalent shares
outstanding:
Weighted average shares
outstanding 7,470 8,699 6,645 8,655
Dilutive equivalent share
issuable upon exercise of options 881 1,124 868 1,069
Equivalent shares attributable
to redeemable convertible
preferred shares 0 0 535 0
Incremental shares per
applicable Staff Accounting
Bulletins 37 37 37 37
------ ------ ------ ------
Total weighted average ordinary
and ordinary equivalent shares
outstanding 8,388 9,860 8,085 9,761
====== ====== ====== ======
Net income 936 2,004 1,419 3,935
====== ====== ====== ======
Net income per Ordinary Share(1) $0.11 $0.20 $0.18 $0.40
====== ====== ====== ======
FULLY DILUTED
Computation of ordinary and
ordinary equivalent shares
outstanding:
Weighted average shares
outstanding 7,470 8,699 6,645 8,655
Dilutive equivalent share
issuable upon exercise of options 887 1,191 887 1,194
Equivalent shares attributable
to redeemable convertible
preferred shares 0 0 535 0
Incremental shares per
applicable Staff Accounting
Bulletins 37 37 37 37
------ ------ ------ ------
Total weighted average ordinary
and ordinary equivalent shares
outstanding 8,394 9,927 8,104 9,886
====== ====== ====== ======
Net income 936 2,004 1,419 3,935
====== ====== ====== ======
Net income per Ordinary Share(1) $0.11 $0.20 $0.18 $0.40
====== ====== ====== ======
</TABLE>
(1) Each Ordinary Share is represented by two American Depositary Shares
("ADSs"), which are the securities that are publicly traded. Net income per
Ordinary Share is therefore, within rounding, two times net income per
equivalent ADS.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 5,943
<SECURITIES> 41,259
<RECEIVABLES> 13,769
<ALLOWANCES> (200)
<INVENTORY> 370
<CURRENT-ASSETS> 63,752
<PP&E> 5,885
<DEPRECIATION> 2,120
<TOTAL-ASSETS> 69,855
<CURRENT-LIABILITIES> 17,029
<BONDS> 0
0
0
<COMMON> 5,334
<OTHER-SE> 47,492
<TOTAL-LIABILITY-AND-EQUITY> 69,855
<SALES> 27,579
<TOTAL-REVENUES> 27,579
<CGS> 4,417
<TOTAL-COSTS> 23,973
<OTHER-EXPENSES> (1,079)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,685
<INCOME-TAX> 750
<INCOME-CONTINUING> 3,935
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,935
<EPS-PRIMARY> .40
<EPS-DILUTED> .40
</TABLE>
