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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 18, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
CBT GROUP PUBLIC LIMITED COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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REPUBLIC OF IRELAND NOT APPLICABLE
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
1005 HAMILTON COURT
MENLO PARK, CA 94025
(650) 614-5900
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------
GREGORY M. PRIEST
VICE PRESIDENT, FINANCE AND CHIEF FINANCIAL OFFICER
CBT GROUP PLC
1005 HAMILTON COURT
MENLO PARK, CA 94025
(650) 614-5900
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
--------------
COPY TO:
ALAN K. AUSTIN
STEVEN V. BERNARD
CRAIG A. SHELBURNE
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304-1050
(650) 493-9300
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of the Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) FEE
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<S> <C> <C> <C> <C>
Ordinary Shares, IR37.5p
par value............. 9,408 shares $68.31 $1,285,321 $390
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(1) Estimated pursuant to Rule 457(c) of the Securities Act solely for
purposes of calculation of the registration fee based on the average of
the high and low prices of the Registrant's American Depositary Shares on
the Nasdaq National Market on September 11, 1997.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED SEPTEMBER 18, 1997
18,816 AMERICAN DEPOSITARY SHARES
REPRESENTING 9,408 ORDINARY SHARES
CBT GROUP PLC
-----------
Each American Depositary Share ("ADS") offered hereby represents one-half of
one Ordinary Share, par value IR37.5p (the "Ordinary Shares"), of CBT Group
PLC, a public limited company organized under the laws of the Republic of
Ireland ("CBT" or the "Company"). The ADSs are evidenced by American Depositary
Receipts ("ADRs"). See "Description of Share Capital" and "Description of
American Depositary Receipts." The ADSs may be offered by a certain shareholder
of the Company (the "Selling Shareholder") from time to time in transactions on
one or more exchanges, including the Nasdaq National Market or in the over-the
counter market or otherwise, at prices and at terms then prevailing or at
prices related to then current market prices or in negotiated transactions. The
Ordinary Shares represented by the ADSs were issued in a transaction exempt
from the registration requirements of the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to Section 4(2) and Regulation S thereof. See
"Selling Shareholder" and "Plan of Distribution."
The Company will receive no part of the proceeds of sales made hereunder. All
expenses of registration incurred in connection with this offering are being
borne by the Company, but all selling and other expenses, including transfer
taxes, incurred by the Selling Shareholder will be borne by such Selling
Shareholder.
The ADSs are traded on the Nasdaq National Market under the symbol "CBTSY."
On September 16, 1997, the closing price of the ADSs on the Nasdaq National
Market was $77.75.
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE ADSS OFFERED HEREBY.
The Selling Shareholder and any broker executing selling orders on behalf of
the Selling Shareholder may be deemed to be an "underwriter" within the meaning
of the Securities Act. Commissions received by any such broker may be deemed to
be underwriting commissions under the Securities Act.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------
THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE>
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY SELLING SHAREHOLDER. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN
THE REGISTERED SECURITIES TO WHICH IT RELATES, NOR SHALL THERE BE ANY SALE OF
THE SECURITIES BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR
SUCH PERSON TO MAKE SUCH OFFER, SOLICITATION OR SALE. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE AN IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF.
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TABLE OF CONTENTS
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PAGE
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Enforcement of Civil Liabilities Under United States Federal Securities
Laws..................................................................... 2
Available Information..................................................... 3
Incorporation of Certain Documents By Reference........................... 3
Currency of Presentation.................................................. 4
The Company............................................................... 5
Risk Factors.............................................................. 6
Selling Shareholder....................................................... 11
Description of Share Capital.............................................. 12
Taxation.................................................................. 16
Description of American Depositary Receipts............................... 20
Plan of Distribution...................................................... 28
Legal Matters............................................................. 28
Experts................................................................... 28
Irish Exchange Control Regulations........................................ 29
</TABLE>
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ENFORCEMENT OF CIVIL LIABILITIES
UNDER UNITED STATES FEDERAL SECURITIES LAWS
CBT is a public limited company incorporated under the laws of the Republic
of Ireland. Certain of CBT's directors and officers, the Selling Shareholder
and experts named herein are non-residents of the United States, and a
significant portion of the assets of CBT and such persons are located outside
the United States. As a result, it may not be possible for investors to effect
service of process within the United States upon such persons or to enforce
against them in U.S. courts judgments predicated upon the civil liability
provisions of the laws of the United States, including the Federal securities
laws. CBT has been advised that there is doubt as to the enforceability
against such persons in the Republic of Ireland, whether in original actions
or in actions for the enforcement of judgments in U.S. courts, of civil
liabilities predicated solely upon the laws of the United States, including
the Federal securities laws.
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AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information filed by the Company can be inspected
and copied at the Public Reference Room of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the Commission's regional offices at Seven
World Trade Center, 13th Floor, New York, New York, 10048, and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661; and copies of such
material may be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Company's ADSs are listed for trading on the Nasdaq National Market under the
trading symbol "CBTSY". Such reports, proxy statements and other information
concerning the Company may also be inspected at the offices of the National
Association of Securities Dealers, Inc. at 1735 K Street, N.W., Washington,
D.C. 20006.
The Company has filed with the Commission a Registration Statement (which
term shall include all amendments, exhibits and schedules thereto) on Form S-3
under the Securities Act, with respect to the ADSs offered hereby. This
Prospectus does not contain all the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission, and to which reference is hereby made.
Statements made in this Prospectus as to the contents of any document referred
to are not necessarily complete. With respect to each such document filed as
an exhibit to the Registration Statement, reference is made to the exhibit for
a more complete description of the matter involved, and each such statement
shall be deemed qualified in its entirety by such reference. The Registration
Statement may be inspected without charge at the Public Reference Room of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at Seven World Trade Center, 13th Floor, New
York, New York 10048 and 500 Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such materials may be obtained from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission maintains a Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of the Commission's
Web site is http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference in this Prospectus the following
documents and information heretofore filed with the Commission:
(1) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 filed on March 31, 1997, as amended by an amendment
on Form 10-K/A filed on April 15, 1997;
(2) the Company's Quarterly Report on Form 10-Q for the fiscal quarters
ended March 31, 1997 (filed on May 14, 1997) and June 30, 1997 (filed
on August 14, 1997);
(3) the Company's Current Reports on Form 8-K filed on March 14, 1997 and
September 10, 1997; and
(4) the description of the Company's Ordinary Shares contained in the
Company's Registration Statement on Form 8-A filed on March 9, 1995 and
Amendment No. 1 thereto on Form 8-A/A filed on April 10, 1995.
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All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act on or after the date of this Prospectus and prior to
the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in this Prospectus and
to be part hereof from the date of filing such documents. Any statement
contained in a document incorporated by reference herein shall be deemed to be
modified or superseded for all purposes to the extent that a statement
contained in this Prospectus or in any other subsequently filed documents
which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement contained herein shall be deemed to
be modified or superseded for all purposes to the extent that a statement
contained in a subsequently filed document which is deemed to be incorporated
by reference herein modifies or supersedes such statement.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus is delivered, upon written or oral request of
any such person, a copy of any and all of the information that has been
incorporated by reference in this Prospectus, other than exhibits to such
documents. Requests for such copies should be directed to the Company at 1005
Hamilton Court, Menlo Park, CA 94025. The Company's telephone number at that
location is (650) 614-5900.
CURRENCY OF PRESENTATION
CBT's financial statements are presented in U.S. dollars and are prepared in
accordance with generally accepted accounting principles ("GAAP") in the
United States. In this Prospectus, references to "dollars" or "$" are to U.S.
dollars, references to "IR(Pounds)" are to Irish pounds, references to "pence"
or "p" are to Irish pence, and references to "Stg(Pounds)" are to U.K. pounds
sterling. Except as otherwise stated herein, all monetary amounts in this
Prospectus have been presented in dollars.
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THE COMPANY
GENERAL BACKGROUND
CBT Group PLC is a leading provider of interactive software designed to meet
businesses' information technology ("IT") education and training needs. CBT
develops, publishes and markets a broad library of over 433 software titles
focused on client/server technologies and delivered on networked and
standalone PCs.
CBT, a public limited company incorporated under the laws of the Republic of
Ireland, was initially formed to act as a holding company for investment
purposes and acquired a controlling interest in a number of companies in a
variety of business areas. In November 1990, CBT acquired its U.S. subsidiary,
CBT Systems USA, Ltd. (effective as of April 3, 1995, CBT Systems USA, Ltd.
was merged with and into its parent, Thornton Holdings, Ltd., which
subsequently changed its name to CBT Systems USA, Ltd.) ("CBT USA"). In
September 1991, CBT acquired its Irish and U.K. subsidiaries, including CBT
Systems Limited ("CBT Ireland") and CBT Systems UK Limited ("CBT UK"), and
sold or dissolved its other unrelated investment businesses. With effect from
January 1994, CBT acquired CBT Systems (Africa) (Proprietary) Ltd. ("CBT South
Africa") for the purpose of establishing a direct sales presence in Southern
Africa. In August 1995, CBT incorporated CBT Finance Limited ("CBT Finance")
under the laws of the Cayman Islands for the purpose of investing certain of
CBT's funds. In November 1995, CBT completed the purchase of Personal Training
Systems ("PTS"), a provider of end-user and consumer interactive educational
software, for an aggregate of 216,114 ADSs of CBT. On May 31, 1996, CBT
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. CBT
issued a total of 145,854 of its ADSs to the former shareholders of CLS and
NTT in connection with the acquisitions. On February 28, 1997 CBT acquired
Applied Learning Limited ("ALA"), an Australian public company, and CBT
Systems Benelux B.V. ("Benelux"), a Netherlands limited liability company. ALA
produces, distributes and exports multimedia training and education software
and performance-related services, and Benelux's primary business has been to
act as CBT's exclusive distributor in Belgium, the Netherlands and Luxembourg.
CBT issued an aggregate of 171,542 of its ADSs to the former shareholders of
ALA and an aggregate of 17,840 of its Ordinary Shares to the former
shareholders of Benelux in connection with the acquisitions. On August 31,
1997, CBT acquired Ben Watson Associates Ltd., a New Brunswick, Canada
corporation carrying on business under the registered business name
Scholars.com ("Scholars"). Scholars is a provider of online IT certification
training. CBT issued an aggregate of 9,408 of its Ordinary Shares to the
former shareholder of Scholars in connection with the acquisition. Each of the
PTS, CLS, NTT, ALA, Benelux and Scholars transactions was accounted for as a
"pooling of interests" in accordance with U.S. generally accepted accounting
principles ("U.S. GAAP"). Since September 1991, substantially all of CBT's
revenues and operating expenses have been attributable to developing and
selling interactive IT education and training software.
Unless the context otherwise requires, references to "CBT" are to CBT Group
PLC and its consolidated subsidiaries.
The Company's principal executive offices are located at 1005 Hamilton
Court, Menlo Park, CA 94025 and its telephone number at that address is (650)
614-5900.
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RISK FACTORS
This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain
factors, including those set forth in the following risk factors and elsewhere
in this Prospectus. In evaluating the Company's business, prospective
investors should consider carefully the following risk factors in addition to
the other information set forth in this Prospectus.
Fluctuations in Operating Results
CBT 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 CBT's ADSs. Although CBT was profitable in each of
the last fourteen quarters in the period ended June 30, 1997, 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.
CBT'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 CBT and products developed through development and
marketing alliances, royalty rates, the announcement, introduction and
acceptance of new products, product enhancements and technologies by CBT and
its competitors, mix of sales between CBT's field sales force, its other
direct sales channels and its indirect sales channels, competitive conditions
in the industry, loss of significant customers, delays in availability of
existing or new products, spending patterns of CBT's customers, currency
fluctuations and general economic conditions.
CBT'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, CBT 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 CBT's results of
operations. In addition, CBT hired additional employees in the first six
months of 1997. This increase in employee expense could have a negative impact
on CBT's operating margins during 1997.
Competition
The IT education and training market is highly fragmented and competitive,
and CBT expects this competition to increase. CBT 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 CBT
in the IT education and training market through the acquisition of CBT's
competitors, and CBT expects this trend to continue. Such competitors may also
include publishing companies and vendors of application software, including
those vendors with whom CBT has formed development and marketing alliances.
CBT competes primarily with third-party suppliers of instructor-led IT
education and training and internal training departments and with other
suppliers of IT education and training, including several other companies that
produce interactive software training. To a lesser extent, CBT also competes
with consultants, value-added resellers and network integrators. Certain of
these value-added resellers also market products competitive with those of
CBT. CBT expects that as organizations increase their dependence on outside
suppliers of training, CBT will face increasing competition from these other
suppliers as IT education and training managers more frequently compare
training products provided by outside suppliers.
Many of CBT's current and potential competitors have substantially greater
financial, technical, sales, marketing and other resources, as well as greater
name recognition, than CBT. In addition, the IT education and training market
is characterized by significant price competition, and CBT expects that it
will face increasing price pressures from competitors as IS managers demand
more value for their training budgets. Accordingly, there can be no assurance
that CBT 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 CBT to reduce its prices significantly.
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Developing Market
The market for IT education and training is rapidly evolving. New methods of
delivering interactive education software are being developed and offered in
the marketplace, including intranet and Internet deployment systems. Many of
these new delivery systems will involve new and different business models and
contracting mechanisms. In addition, multimedia and other product
functionality features are being added to educational software. Accordingly,
CBT's future success will depend upon, among other factors, the extent to
which CBT is able to develop and implement products which address these
emerging market requirements. There can be no assurance that CBT will be
successful in meeting changing market needs. In particular, CBT has announced
and will ship in 1997 its next generation education deployment and management
system, CBT Campus. If CBT Campus were to fail to secure market acceptance,
sales of CBT courseware, and CBT's operating results, could be materially
adversely affected. There can be no assurance that CBT will successfully
launch CBT Campus.
Seasonality
The software industry generally, and CBT 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 could cause, revenues in the first
quarter of a year to be less, perhaps substantially so, than revenues for the
immediately preceding fourth quarter. In addition, the Company has in past
years (as well as in 1997) added significant headcount in the sales and
marketing and research and development functions in the first quarter, and to
a lesser extent, the second quarter. Because these headcount additions do not
immediately contribute significant revenues, CBT's operating margins in the
earlier part of the year tend to be significantly lower than in the later
parts of the year. It is expected that this factor will affect CBT's operating
margins to some extent in the third quarter of 1997. There can be no
assurance, however, that operating margins in the fourth quarter will meet the
Company's expectations. 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
CBT's results of operations.
Management of Expanding Operations and Acquisitions
CBT has recently experienced rapid expansion of its operations, which has
placed, and is expected to continue to place, significant demands on CBT's
administrative, operational and financial personnel and systems. CBT'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. In
particular, the Company requires significant improvement in its order entry
and fulfillment and management information systems in order to support its
expanded operations. If CBT 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 PTS in late 1995, CLS
and NTT in May 1996, ALA and Benelux in February 1997, and Scholars in August
1997, CBT's operating expenses have increased. There can be no assurance that
the integration of these 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
adversely affecting CBT's operating margins. Any failure to successfully
complete the integration in a timely fashion or to generate sufficient
revenues from the acquired business could have a material adverse effect on
CBT's business and results of operations.
CBT regularly evaluates acquisition opportunities and is likely to make
acquisitions in the future. Future acquisitions by CBT 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 CBT's results
of operations. Product and technology acquisitions entail numerous
7
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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 CBT has no or limited
prior experience and potential loss of key employees of acquired companies.
CBT's management has had limited experience in assimilating acquired
organizations and products into CBT's operations. No assurance can be given as
to the ability of CBT to integrate successfully any operations, personnel or
products that have been acquired or that might be acquired in the future, and
the failure of CBT to do so could have a material adverse effect on CBT's
results of operations.
Dependence on Key Personnel
CBT's future success depends in large part on the continued service of its
key management and its sales, product development and operational personnel,
and on its ability to continue to attract, motivate and retain highly
qualified employees, including additional management personnel. In particular,
the loss of certain senior management personnel or other key employees could
have a material adverse effect on CBT's business. In addition, CBT depends on
writers, programmers and graphic artists, as well as third-party content
providers. CBT expects to continue to hire additional product development,
sales and marketing, IS and accounting staff. However, there can be no
assurance that CBT will be successful in attracting, retaining or motivating
key personnel. The inability to hire and retain qualified personnel or the
loss of the services of key personnel could have a material adverse effect on
CBT's current business, new product development efforts and future business
prospects.
Risk of Increasing Taxes
Certain of CBT's subsidiaries have significant operations and generate
significant taxable income in Ireland, and certain of CBT's Irish subsidiaries
are taxed at rates substantially lower than tax rates in effect in the United
States and in other countries in which the Company has operations. The extent
of the tax benefit could vary from period to period, and there can be no
assurance that CBT's tax situation will not change.
Dependence on Development and Marketing Alliances
CBT has entered into development and marketing alliances with Microsoft,
Oracle, IBM/Sun Microsystems/Netscape Java Consortium, Netscape, IBM/Lotus,
Cisco, Informix, Novell, SAP America, Asymetrix, Marimba and Sybase/Powersoft
under which it is currently developing courses. CBT believes that an
increasing portion of its revenues in the future may be attributable to
products developed through its alliances. There can be no assurance that any
of these parties will continue to cooperate with CBT, that CBT will be able to
successfully develop courses for its development and marketing alliances in a
timely fashion or at all, or that CBT will be able to negotiate additional
alliances in the future on acceptable terms or at all. There can be no
assurance that the marketing efforts of CBT's partners will not disrupt CBT's
direct sales efforts. In addition, CBT's development and marketing partners
could pursue their existing or alternative training programs in preference to
and in competition with those being developed with CBT. In the event CBT is
not able to maintain or expand its current development and marketing alliances
or enter into new development and marketing alliances, CBT's operating results
and financial condition could be materially adversely affected. Furthermore,
CBT is required to pay royalties to its development and marketing partners on
products developed with them, which reduces CBT's gross margins. CBT 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. In addition, the collaborative
nature of the development process under these alliances may result in longer
development times and less control over the timing of product introductions
than for courses developed solely by CBT.
Dependence on New Products
The subject matter of CBT's courseware is influenced by rapidly changing
technology, evolving industry standards, changes in customer needs and
frequent introductions of new products by software vendors.
8
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Accordingly, CBT believes that its future success will depend in large part
upon its ability to meet these changes by enhancing its existing courses and
developing and introducing new courses on a timely basis. There can be no
assurance that CBT will be successful in addressing the changing needs of the
marketplace by developing and marketing new products or enhancing its existing
products on a timely basis. If CBT were unable, due to resource, technological
or other constraints, to anticipate and respond adequately to changes in
customers' software technology and preferences, CBT's business and results of
operations would be materially adversely affected.
Moreover, software products as complex as those offered by CBT may contain
undetected errors or fail when first introduced or upon release of new
versions of CBT's products. There can be no assurance that, despite testing by
CBT and by current and potential customers, errors will not be found in new
products after commencement of commercial shipments, resulting in a loss of or
delay in market acceptance.
Operations Outside the United States
CBT's products are marketed throughout the world, and sales outside the
United States have represented a significant portion of CBT's revenues. CBT
expects that international operations will continue to account for a
significant portion of its revenues and intends to continue to expand its
operations outside of the United States. In addition, CBT's corporate
headquarters and its research and development organization are located outside
the United States. Operations outside the United States are subject to
inherent risks, including fluctuations in exchange rates, difficulties or
delays in developing and supporting non-English language versions of CBT's
products, political and economic conditions in various jurisdictions,
unexpected changes in regulatory requirements, tariffs and other trade
barriers, difficulties in staffing and managing foreign subsidiary operations,
longer accounts receivables payment cycles and potentially adverse tax
consequences. There can be no assurance that such factors will not have a
material adverse effect on CBT's future operations outside the United States.
Currency Fluctuations
CBT's consolidated financial statements are prepared in U.S. dollars, while
several of CBT's subsidiaries have functional currencies other than the U.S.
dollar, and a significant portion of CBT'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 CBT's results of operations, particularly its operating
margins, and could also result in exchange losses. The impact of future
exchange rate fluctuations on CBT's results of operations cannot be accurately
predicted. To date, CBT has not sought to hedge the risks associated with
fluctuations in exchange rates, but may undertake such transactions in the
future. There can be no assurance that any hedging techniques implemented by
CBT will be successful or that CBT's results of operations will not be
materially adversely affected by exchange rate fluctuations.
Risks Associated with Intellectual Property
CBT regards its software as proprietary and relies primarily on a
combination of statutory and common law copyright, trademark and trade secret
laws, customer licensing agreements, employee and third-party nondisclosure
agreements and other methods to protect its proprietary rights. Despite these
precautions, it may be possible for a third party to copy or otherwise obtain
and use CBT's courseware or technology without authorization, or to develop
similar courseware or technology independently. Furthermore, the laws of
certain countries in which CBT sells its products do not protect CBT's
software and intellectual property rights to the same extent as do the laws of
the United States. CBT generally does not include in its software any
mechanisms to prevent or inhibit unauthorized use, but generally requires the
execution of a license agreement which restricts copying and use of CBT's
products. If unauthorized copying or misuse of CBT's products were to occur to
any substantial degree, CBT's business and results of operations could be
materially adversely affected. There can be no assurance that CBT's means of
protecting its proprietary rights will be adequate or that CBT's competitors
will not independently develop similar technology.
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There can be no assurance that third parties will not claim CBT's current or
future products infringe the proprietary rights of others. CBT expects that
software developers will increasingly be subject to such claims as the number
of products and competitors in the IT education and training industry grows
and the functionality of products in the industry overlaps. Any such claim,
with or without merit, could result in costly litigation or might require CBT
to enter into royalty or licensing agreements. Such royalty or license
agreements, if required, may not be available on terms acceptable to CBT or at
all.
Differences in Shareholder Rights between United States and Irish
Corporations
CBT is incorporated under the laws of the Republic of Ireland. The rights of
holders of Ordinary Shares and, therefore, certain of the rights of ADS
holders, are governed by Irish law including the Companies Acts of the
Republic of Ireland, and by CBT's Articles of Association ("Articles") and
certain laws of the European Union. These rights differ in certain respects
from the rights of shareholders in typical U.S. corporations. In particular,
Irish law significantly limits the circumstances under which shareholders of
Irish corporations may bring derivative actions.
Volatility of Stock Price
CBT's initial public offering of the ADSs (the "IPO") was completed in April
1995, and there can be no assurance that a viable public market for the ADSs
will be sustained. The market price of the ADSs has fluctuated significantly
since the IPO. CBT believes that factors such as announcements of developments
related to CBT's business, announcements of new products or enhancements by
CBT or its competitors, sales of the ADSs into the public market, developments
in CBT's relationships with its customers, partners and distributors,
shortfalls or changes in revenues, gross margins, earnings or losses or other
financial results from analysts' expectations, regulatory developments,
fluctuations in results of operations and general conditions in CBT's market
or the markets served by CBT's customers or the economy could cause the price
of the ADSs to fluctuate, perhaps substantially. In addition, in recent years
the stock market in general, and the market for shares of small capitalization
and technology stocks in particular, have experienced extreme price
fluctuations, which have often been unrelated to the operating performance of
affected companies. Many companies in the software industry, including CBT,
have recently experienced historic highs in the market price of their equity
securities. There can be no assurance that the market price of the ADSs will
not decline substantially from such historic highs, or otherwise continue to
experience significant fluctuations in the future, including fluctuations that
are unrelated to CBT's performance.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of shares by
any Selling Shareholder hereunder.
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SELLING SHAREHOLDER
The following table sets forth the name of the Selling Shareholder and the
number of ADSs being offered by the Selling Shareholder or his transferees,
distributees, pledgees, donees or other successors in interest from time to
time. See "Plan of Distribution."
The Ordinary Shares represented by the ADSs being offered by the Selling
Shareholder were acquired from the Company in a transaction exempt from the
registration requirements of the Securities Act provided by Section 4(2) and
Regulation S thereof pursuant to the Share Purchase Agreement (the "Share
Purchase Agreement") dated as of August 4, 1997 among the Company, Scholars,
and Ben Watson.
The Selling Shareholder who acquired Ordinary Shares pursuant to the Share
Purchase Agreement represented to the Company that such Selling Shareholder
was acquiring the Ordinary Shares for investment and not with the present
intention of distributing such Ordinary Shares. The Company has filed with the
Commission, under the Securities Act, a Registration Statement on Form S-3, of
which this Prospectus forms a part, with respect to the resale of the ADSs
from time to time in transactions on one or more exchanges, including the
Nasdaq National Market or in the over-the-counter market or otherwise or in
negotiated transactions, and has agreed to use its best reasonable efforts to
keep such registration statement effective until the earlier of (i) August 31,
1999, (ii) the date all ADSs offered hereby have been resold or (iii) such
time as all ADSs held by the Selling Shareholder can be resold within a given
three-month period without registration pursuant to Rule 144 under the
Securities Act.
<TABLE>
<CAPTION>
NUMBER OF ADSs
NUMBER OF OR ORDINARY
ORDINARY SHARES SHARES
BENEFICIALLY OWNED NUMBER OF ADSs BENEFICIALLY OWNED
SHAREHOLDERS PRIOR TO OFFERING (1) BEING OFFERED AFTER OFFERING(2)
------------ --------------------- -------------- ------------------
<S> <C> <C> <C>
Ben Watson(3).......... 9,408 18,816 *
----- ------
Total................ 9,408 18,816 *
===== ======
</TABLE>
- --------
(1) Each Ordinary Share is represented by two ADSs.
(2) Because the Selling Shareholder or his transferees, distributees,
pledgees, donees or other successors in interest may sell all or any part
of their shares pursuant to this Prospectus, no estimate can be given as
to the number of CBT ADSs or Ordinary Shares that will be held by any
Selling Shareholder upon termination of this Offering. However, prior to
the Offering the Selling Shareholder named herein held less than one
percent (1%) of the Company's outstanding Ordinary Shares.
(3) Mr. Watson is the President and Chief Executive Officer of Scholars and
the former sole shareholder of Scholars. Scholars is a wholly-owned
subsidiary of CBT.
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DESCRIPTION OF SHARE CAPITAL
The following brief descriptions of certain provisions of CBT's share
capital and CBT's Articles of Association (the "Articles") do not purport to
be complete and are subject to and are qualified in their entirety by
reference to the provisions of CBT's Articles.
GENERAL
The authorized share capital of CBT is IR(Pounds)11,250,000, divided into
30,000,000 Ordinary Shares, nominal value IR37.5p per share. The number of
ADSs outstanding or issuable in exchange for CBT's issued and outstanding
Ordinary Shares as of August 15, 1997 was 9,251,809. The number of Ordinary
Shares outstanding as of August 15, 1997 was 18,503,618. All of the Ordinary
Shares issued and outstanding are fully paid, duly authorized and validly
issued and not subject to calls for additional capital of any kind.
On May 15, 1996, CBT effected a two-for-one split of its issued and
outstanding 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. ADRs reflecting the additional ADSs were distributed
on May 20, 1996 to holders of record on May 15, 1996.
Holders of Ordinary Shares, as such, have no conversion, preemptive or other
subscription rights (except as described below under "Pre-emptive Rights"),
and there are no redemption provisions applicable to the Ordinary Shares.
There are no appraisal rights under Irish law for dissenting shareholders. In
the following description, a "shareholder" is the person registered in CBT's
Register of Members as the holder of the relevant share. The Depositary will
be the shareholder of record in respect of those Ordinary Shares represented
by ADSs against which ADRs are issued pursuant to the Deposit Agreement. The
rights attaching to ADSs are described under "Description of American
Depositary Receipts."
RIGHTS ON A LIQUIDATION OR WINDING-UP
In the event of a liquidation, dissolution or winding up of CBT, the assets
remaining for distribution to the holders of Ordinary Shares, after payment of
liabilities and after provision has been made for each class of shares, if
any, having preference over the Ordinary Shares shall be divided, pari passu,
among the holders of Ordinary Shares in proportion to the amounts paid up on
the shares held by them, respectively. The liquidator may, with the sanction
of a special resolution of CBT and any other sanction required by the Irish
Companies Acts, 1963 to 1990, divide among the members in cash or property the
whole or any part of the assets of CBT and may vest any assets in trustees
upon such trusts for the benefit of contributories provided that no
shareholder shall be compelled to accept any assets upon which there is a
liability.
DIVIDENDS
Shareholders are entitled to receive such dividends as may be recommended by
the Board of Directors of CBT and approved by the shareholders and/or such
interim dividends as the Board of Directors of CBT may decide. No dividends
have been paid on the Ordinary Shares since inception. Under Irish company
law, dividends are payable only out of profits available for distribution. Any
dividend recommended by the Board of Directors of CBT may be in such currency
or currencies as the Board decides. CBT intends that any dividends, if and
when declared, will be paid in U.S. dollars.
VOTING RIGHTS
Voting at any general meeting of shareholders is by a show of hands unless a
poll (i. e., a written vote) is duly demanded. Subject to the Articles and any
rights or restrictions attaching to any class or classes of shares, on a show
of hands each shareholder present in person, and every proxy shall have one
vote and on a poll, each
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<PAGE>
shareholder shall have one vote for each share of which such shareholder is
the holder. Three or more shareholders present in person or by proxy holding
not less than one-third of the issued share capital of CBT constitute a quorum
at shareholders' meetings. A poll may be demanded by (i) the chairman of the
meeting, or (ii) at least three shareholders present (in person or by proxy)
entitled to vote at the meeting, or (iii) any shareholder or shareholders
present (in person or by proxy) representing not less than one-tenth of the
total voting rights of all the shareholders entitled to vote at the meeting,
or (iv) any shareholder or shareholders present (in person or by proxy)
holding shares conferring the right to vote at the meeting being shares on
which there have been paid up sums in the aggregate equal to not less than
one-tenth of the total sum paid up on all the shares conferring that right. A
majority of votes cast is required to pass ordinary resolutions; however, a
75% or greater vote in favor of the resolution is required for the adoption of
special resolutions. Variation of the rights relating to any class of shares
requires the approval of a special resolution by the class in question.
Shareholders do not have cumulative voting rights for the election of
directors. For a description of the method by which the Ordinary Shares held
by the Depositary will be voted, see "Description of American Depositary
Receipts--Voting of the Underlying Deposited Securities" below.
SHAREHOLDER MEETINGS
Under Irish company law, a company's annual general meeting of shareholders
must take place in the Republic of Ireland, and any business transacted at a
meeting held in breach of this requirement will be void, unless all
shareholders entitled to attend and vote at such meeting consent in writing to
the meeting being held elsewhere or alternatively that a resolution providing
that the meeting be held elsewhere has been passed at the preceding annual
general meeting of shareholders. The Articles do not provide that annual
general meetings of CBT be held in the Republic of Ireland and, accordingly,
annual general meetings may be held outside the Republic of Ireland if the
above procedures are followed. Under Irish company law, extraordinary general
meetings of a company may be convened by the Board of Directors or at the
request of shareholders holding not less than one-tenth of such of the paid-up
capital of that company as at the relevant date carries the right of voting at
general meetings of the company. Annual general meetings must be held once
every calendar year provided that not more than 15 months may elapse between
such meetings. The Minister for Enterprise and Employment for the Republic of
Ireland may, on the application of any shareholder, call or direct the calling
of an annual general meeting if default is made in holding such a meeting.
Unless all the shareholders of a company and the company's auditors consent to
shorter notice, Irish company law requires at least 14 days' written notice of
a meeting, except that an annual general meeting or a meeting convened for the
passing of a special resolution requires at least 21 days' written notice.
Meetings for the passage of a special resolution may be called on shorter
notice provided that shareholders holding not less than 90% in nominal value
of the shares giving the right to attend and vote at such meeting so agree.
ISSUANCE OF SHARES
Irish company law restricts the power of the directors of a company (other
than under certain employee share plans) to allot shares or to grant share
subscription rights and rights to convert any security into shares unless
either the Articles of Association of such company or a resolution of the
shareholders authorizes the board of directors to do so. No such authority may
be given for a period in excess of five years. The Articles contain a
provision giving the Board of Directors the necessary authority for a five
year period from the date of adoption of the Articles. Notwithstanding this
authority the rules of the Nasdaq National Market specify certain
circumstances in which the shareholders by ordinary resolution must authorize
the allotment of shares, e.g., where the allotment would result in a change of
control of CBT. In addition, CBT may not pay, directly or indirectly, a
commission in excess of 10% of the price at which shares are issued to any
person subscribing for or procuring subscriptions for shares in the capital of
CBT.
PRE-EMPTIVE RIGHTS
Irish company law provides that, in general, a company may not allot any
shares (or grant a right to subscribe for or to convert any securities into
shares in a company) for cash unless it has first offered those shares, on a
pro rata basis, to the existing shareholders of the company. These
requirements may be disapplied
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<PAGE>
for a period of up to five years by the Articles of Association of the company
or by a special resolution passed by the shareholders of the company. The
Articles contain a provision disapplying these preemptive rights for a
five year period from the date of adoption of the Articles in respect of all
allotments of shares made by the Board pursuant to the authorization given to
them by the Articles and referred to above under "Issuance of Shares."
DERIVATIVE ACTION SUITS
As a general principle of Irish law, only a company itself can be the proper
plaintiff for the purposes of maintaining proceedings in respect of wrongs
done to the company. Neither an individual shareholder nor any group of
shareholders has any right of action in such circumstances. There are,
however, certain exceptions to this principle available under equitable
principles on a case-by-case basis. In certain cases where the controlling
shareholders will not institute proceedings in the name of the company in
those instances where they are properly called for, one or more of the
aggrieved minority shareholders may apply to the court to bring what has come
to be known as a derivative action, namely an action that derives from the
injury to the company rather than the injury to individual shareholders.
CLASS ACTION SUITS
In contrast to a derivative action, Irish law permits an action by a
shareholder in his own right where he alleges that his personal rights have
been infringed. Such a shareholder may commence a suit in a representative
capacity on behalf of himself and other affected consenting shareholders of
the same class if their rights are identical. Additionally, under Irish law
any shareholder of a company who claims that the affairs of the company are
being conducted, or that the powers of the directors of the company are being
exercised, in a manner oppressive to him or any of the shareholders (including
himself) or in disregard of his or their interests as shareholders, may apply
to the courts for an appropriate order. CBT's officers and directors have
entered into separate Indemnification Agreements with a subsidiary of CBT to
limit the liability of such officers and directors as permitted by the
Certificate of Incorporation and Bylaws of the subsidiary.
INTERLOCKING AND INTERESTED DIRECTORS
Irish company law provides that it shall be the duty of a director of a
company who is in any way, whether directly or indirectly, interested in a
contract or proposed contract with the company to declare the nature of his
interest at a meeting of the directors of the company. A director includes a
"shadow director" who is any person in accordance with whose directions or
instructions the directors are accustomed to act. Irish company law and the
Articles provide, among other things, that a director may not generally vote
in respect of any contract or arrangement or any other proposal in which he
has any material interest otherwise than by virtue of his interests in shares
or other securities of or otherwise in or through CBT. The Articles also
provide that if any question shall arise at any meeting as to the materiality
of a director's interest or as to the right of any director to vote and such
question is not resolved by his voluntarily agreeing to abstain from voting,
such question may, before the conclusion of the meeting, be referred to the
meeting of directors whose votes are not in question. Additionally, the
Articles provide that the shareholders of CBT may, by ordinary resolution,
suspend or relax these provisions to any extent to ratify any transaction not
duly authorized by reason of a contravention of the Articles.
In 1990, significant changes were made in Irish company law with regard to
transactions of a company involving its directors and connected persons where
a conflict of interest is present. The matters dealt with include contracts of
employment, substantial property transactions and loans.
DISCLOSURE REQUIREMENTS
Under Irish company law, where any person acquires an interest in 5% or more
of the issued voting share capital of any class of a public limited company
such as CBT, or disposes of an interest in voting shares and, prior to that
disposal, such person had an interest in 5% or more of that class of shares,
such person must notify the company (in the prescribed manner and normally
within five business days) of his interest and of certain circumstances and
events affecting that interest. Any interest in an ADS would be regarded as an
interest in the
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<PAGE>
Ordinary Shares for this purpose. Failure to notify punctually and properly is
an offence under Irish company law. Additionally, no right or interest
whatsoever in respect of any of the relevant shares will be enforceable,
whether directly or indirectly, by action or legal proceeding by the person
having such an interest should they fail to notify the company of such
interest. Application may be made to the court to remove this restriction, and
if the court is satisfied that the failure to notify was accidental or due to
inadvertence or that it is just and equitable to grant relief then the court
may grant such relief as it sees fit.
IRISH MERGERS LEGISLATION
Subject to certain exceptions and if certain financial thresholds are
exceeded, any person or entity acquiring Ordinary Shares or ADSs must provide
advance notice of such acquisition to the Minister for Enterprise and
Employment for the Republic of Ireland if, after such acquisition, that person
or entity can control 25% or more of the voting rights in the company. Subject
to certain exceptions, such person or entity must also notify such Minister of
any subsequent acquisition of Ordinary Shares or ADSs. Failure to notify
properly is an offense under Irish law. Under Irish law, title to the Ordinary
Shares concerned will not pass unless either clearance for such acquisition is
obtained from such Minister or the prescribed statutory period following
notification of such acquisition lapses.
APPROVAL OF FINANCIAL STATEMENTS BY SHAREHOLDERS
The Board of Directors is required to lay before the shareholders annually
for their approval the statutory consolidated financial statements of CBT and
its subsidiaries and a report by the directors on the state of affairs of CBT
and its subsidiaries as a group and incorporating certain other information.
It is CBT's intention to provide such information to the holders of Ordinary
Shares with its Annual Report to Shareholders which is distributed with CBT's
Notice of Annual General Meeting.
PURCHASE OF OWN SHARES
Under Irish company law, a company may, if so authorized by its Articles of
Association, purchase its own shares, including redeemable shares, and CBT has
such an authority in its Articles. This power may not be exercised by CBT
unless, in the case of a purchase other than on a recognized stock exchange,
the terms of the contract relating to such purchase have first been authorized
by a special resolution of CBT before the contract is entered into and, in the
case of a purchase on a recognized stock exchange, the purchase has first been
authorized by CBT in a general meeting.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Ordinary Shares is AIB Bank plc.,
Registrars' & New Issue Department, Bankcentre, Ballsbridge, Dublin 4,
Ireland. The telephone number at this location is 011-353-1-660-0311. The
Transfer Agent and Registrar for the ADSs is The Bank of New York, 101 Barclay
Street, New York, New York 10286. The telephone number at this location is
(212) 815-2291.
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TAXATION
The following is a general summary of certain Republic of Ireland and U.S.
Federal tax consequences of the purchase, ownership and disposition of ADSs
evidenced by ADRs to U.S. Holders. For purposes of this discussion, a "U.S.
Holder" means an individual citizen or resident of the United States for U.S.
Federal income tax purposes, corporations or partnerships created or organized
under the laws of the United States or any State thereof, or estates or trusts
the income of which is subject to U.S. Federal income taxation regardless of
its source, in each case who is not also resident or, in the case of
individuals, ordinarily resident, in the Republic of Ireland for Irish tax
purposes. This summary is of a general nature only and does not discuss all
aspects of U.S. and Irish taxation that may be relevant to a particular
investor. PROSPECTIVE PURCHASERS OF ADSs ARE ADVISED TO CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE U.S. FEDERAL, STATE AND LOCAL TAX CONSEQUENCES,
AS WELL AS WITH RESPECT TO THE TAX CONSEQUENCES IN THE REPUBLIC OF IRELAND AND
OTHER JURISDICTIONS, OF THE OWNERSHIP OF ADSs AND THE ORDINARY SHARES
REPRESENTED THEREBY APPLICABLE IN THEIR PARTICULAR TAX SITUATIONS. In
particular, the following summary does not address the tax treatment of U.S.
Holders who own, actually or constructively, 10% or more of the Company's
outstanding voting stock and certain U.S. Holders (including, but not limited
to, insurance companies, tax-exempt organizations, financial institutions and
persons subject to the alternative minimum tax) who may be subject to special
rules not discussed below.
The statements of U.S. and Irish tax laws set out below are based on the
laws in force and as interpreted by the relevant taxation authorities as of
the date of this Prospectus and are subject to any changes in the U.S. or
Irish law, or in the interpretation thereof by the relevant taxation
authorities, or in the double taxation conventions between the Republic of
Ireland and the United States (the "Conventions"), occurring after such date.
For purposes of the Conventions and the Internal Revenue Code of 1986, as
amended (the "Code"), U.S. Holders will be treated as the owners of the
Ordinary Shares represented by ADSs evidenced by ADRS.
TAXATION OF THE COMPANY
Republic of Ireland Taxation. Companies which are resident (e.g. managed and
controlled) in the Republic of Ireland are subject to Irish corporation tax on
their total profits (wherever arising and whether or not remitted to the
Republic of Ireland). The standard rate of Irish corporation tax on both
trading and non-trading income presently is 36%. However, a corporation tax
rate of 10% applies in respect of income derived from certain activities of
the Company carried out in the Republic of Ireland.
United States Taxation. Under the Convention relating to income taxation
(the "Income Tax Convention"), the Company will not be subject to U.S. income
tax unless it engages in a trade or business in the United States through a
permanent establishment. The Company currently operates in the United States
through its wholly-owned U.S. subsidiary, CBT USA. The Company expects to be
able to conduct its business activities in a manner that will not result in
its being considered to be engaged in a trade or business or to have a
permanent establishment in the United States, even though CBT USA is a U.S.
taxpayer.
TAXATION OF DIVIDENDS
Republic of Ireland Taxation. The Company does not expect to pay dividends
for the foreseeable future. Should the Company begin paying dividends, the
dividends will carry an imputed tax credit (the "Tax Credit"). The amount of
the Tax Credit is calculated as a weighted average of Tax Credits applicable
to different portions of the dividend, the amount of which credits vary
depending on the nature of the income out of which the dividend is paid.
Accordingly, dividends paid out of profits taxable at the standard rate carry
an imputed Tax Credit equal to 21/79 of the amount of such dividend; dividends
paid out of profits taxable at the 10% incentive rate carry an imputed tax
credit equal to 1/18 of the amount of such dividend. Dividends paid out of
income not subject to tax do not carry an imputed tax credit.
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The Company will be required, when paying a dividend in respect of the
Ordinary Shares, to account to the Irish Revenue Commissioners for a payment
known as advance corporation tax ("ACT") equal to the amount of the Tax
Credit. ACT is available for setoff against the corporation tax liability of
the Company or can be used by other Irish tax resident group companies for
setoff against their corporation tax liabilities.
Persons who are never resident nor ordinarily resident in the Republic of
Ireland do not have an Irish income tax liability on dividends received from
Irish resident companies. Although a net Irish income tax is imposed, the
income tax liability of each such person is restricted to the amount of the
Tax Credit attaching to the dividend and, as the Tax Credit is allowed against
the restricted liability, the Irish income tax liability is fully offset by
the Tax Credit. Individuals are liable for Irish health and employment levies
of 2.25% on such dividends. These levies only apply to dividends of
IR(Pounds)10,250 or more paid to any one shareholder in any one year. There is
no Irish withholding tax on dividends paid by an Irish resident company.
United States Taxation. For U.S. Federal income tax purposes, the gross
amount (i.e. including the amount of the imputed Tax Credit) of any dividend
paid (to the extent of the current or accumulated earnings and profits of the
Company) will be included in gross income and treated as foreign source
dividend income in the year the shareholder becomes entitled to such dividend.
The dividend will not be eligible for the dividends received deduction allowed
to U.S. corporations. The amount includible in income will be the U.S. dollar
value of the payment on the date of payment regardless of whether the payment
is in fact converted into U.S. dollars. Generally, gain or loss (if any)
resulting from currency fluctuations during the period from the date any
dividend is paid to the date such payment is converted into U.S. dollars will
be treated as ordinary income or loss.
There is some uncertainty regarding the availability of a U.S. tax credit
under Article XIII of the Income Tax Convention with respect to a portion of
the Irish taxes paid by the Company because the Income Tax Convention was
ratified in 1951 prior to the Republic of Ireland's adoption of the "partial
imputation" system. Nonetheless, it is the general view that a U.S. Holder
would usually be entitled to a credit against U.S. Federal income tax, subject
to the limitation of Section 904 of the Code, for a portion of the Irish taxes
attributable to the distributed earnings. The amount of the allowable credit
(the "Tax Credit Amount") is likely to be determined by applying a statutorily
defined formula. To the extent that any distribution is made by the Company
out of profits taxed in the Republic of Ireland at the standard rate, the Tax
Credit Amount should be equal to 23/77 of the net distribution. To the extent
that the distribution is paid out of profits taxable in the Republic of
Ireland at the reduced 10% rate, the Tax Credit Amount should be equal to 1/18
of the net distribution.
If the U.S. Holder is a U.S. partnership, trust or estate, the Tax Credit
Amount will be available only to the extent that the income derived by such
partnership, trust or estate is subject to U.S. tax as the income of a
resident either in its hands or in the hands of its partners or beneficiaries,
as the case may be.
TAXATION OF CAPITAL GAINS
A U.S. Holder who is not resident or ordinarily resident in the Republic of
Ireland for Irish tax purposes will not be subject to Irish capital gains tax
on capital gains realized or accrued on the sale or other disposal of ADSs
unless the ADSs are held in connection with a trade, profession or vocation
carried on by such U.S. Holder in the Republic of Ireland through a branch or
agency which constitutes a permanent establishment or fixed base, and the ADSs
are or have been used, held or acquired for the purposes of such trade,
profession or vocation of such branch or agency. Subject to the discussion
below under the heading "Passive Foreign Investment Company Considerations," a
U.S. Holder will be liable for U.S. Federal income tax on such gains to the
same extent as on any other gains from sales or disposition of shares.
A U.S. Holder that is liable for both Irish and U.S. tax on a gain on the
disposal of the ADSs will generally be entitled, subject to certain
limitations and pursuant to the Income Tax Convention, to credit the amount of
Irish capital gains or corporation tax, as the case may be, paid in respect of
such gain against such U.S. Holder's U.S. Federal income tax liability in
respect of such gain.
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PASSIVE FOREIGN INVESTMENT COMPANY CONSIDERATIONS
The Company will be classified as a passive foreign investment company
("PFIC") for U.S. Federal income tax purposes if it satisfies either of the
following two tests: (i) 75% or more of its gross income is passive income or
(ii) on average for the taxable year, 50% or more of its assets (by value or,
if the Company so elects, by adjusted basis) produce or are held for the
production of passive income.
The Company does not believe that it satisfies (or, after the completion of
this offering, will satisfy) either of the tests for PFIC status. If the
Company is a PFIC for any taxable year, U.S. Holders would be required to
either (i) pay an interest charge together with tax calculated at maximum
ordinary income rates on certain "excess distributions" (defined to include
gain on a sale or other disposition of ADSs) or (ii) if a Qualified Electing
Fund ("QEF") election is made, to include in their taxable income certain
undistributed amounts of the Company's income. Each U.S. Holder should consult
its own tax advisor regarding the advisability of making the QEF election.
U.S. INFORMATION REPORTING AND BACKUP WITHHOLDING
Generally, the amount of dividends paid to U.S. Holders of ADSs, the name
and address of the recipient and the amount, if any, of tax withheld must be
reported annually to the IRS. A similar report is sent to the U.S. Holder.
Backup withholding tax at the rate of 31% will apply to certain payments
made to U.S. Holders who fail to furnish certain identifying information under
the U.S. information reporting rules. Amounts withheld from payments will be
allowed as a credit against such U.S. Holders' U.S. Federal income tax
liability.
IRISH CAPITAL ACQUISITIONS TAX
Irish capital acquisitions tax ("CAT") applies to gifts and inheritances (i)
where the person making the gift or inheritance is domiciled in the Republic
of Ireland or (ii) to the extent that the property of which the gift or
inheritance consists is situated in the Republic of Ireland at the date of the
gift or inheritance. The person by whom CAT is primarily payable is the person
who receives the gift or inheritance. Persons who are secondarily liable
include the donor, his personal representatives and an agent, trustee or other
person in whose care the property constituting the gift or inheritance or the
income therefrom is placed. All taxable gifts and inheritances received by an
individual since June 2, 1982 are aggregated and only the excess over a
certain tax free threshold is taxed. The tax free threshold is dependent on
the relationship between the donor and donee and the aggregation of all
previous gifts and inheritances. The tax free thresholds range from
IR(Pounds)12,370 in the case of unrelated parties to IR(Pounds)24,740 in the
case of linear descendants or ancestors, siblings, or children of siblings to
IR(Pounds)185,550 in the case of gifts and inheritances taken from one's
parents. Gifts and inheritances passing between spouses are exempt from CAT.
Although ADSs may be held by persons who are neither domiciled nor resident
in Ireland, ADSs may be regarded as located in Ireland because the underlying
Ordinary Shares are situated in Ireland because the Company is required to
maintain its Ordinary Share register in Ireland. Accordingly, ADS may be
subject to CAT notwithstanding the fact that the Holder may be domiciled
and/or resident outside of the Republic of Ireland. The Convention relating to
estate taxes generally provides for CAT paid on inheritances in the Republic
of Ireland to be credited against tax payable in the United States and for tax
paid in the United States to be credited against any tax payable in the
Republic of Ireland, based on priority rules set forth in that Convention, in
a case where an ADS is subject to both Irish CAT with respect to inheritance
and U.S. Federal estate tax. The Convention does not apply to gifts.
IRISH STAMP DUTY
Stamp duty, which is a tax on certain documents, is payable on all transfers
of Ordinary Shares (other than between spouses) in companies registered in
Ireland wherever the instrument of transfer may be executed. In the
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case of a transfer on sale, stamp duty will be charged at the rate of
IR(Pounds)1 for every IR(Pounds)100 (or part thereof) of the amount or value
of the consideration (i.e., purchase price). Where the consideration for the
sale is expressed in a currency other than Irish pounds, the duty will be
charged on the Irish pound equivalent calculated at the rate of exchange
prevailing on the date of the transfer. In the case of a transfer by way of
gift (subject to certain exceptions) or for considerations less than the
market value of the shares transferred, stamp duty will be charged at the
above rate on such market value.
In the case of transfers of Ordinary Shares where no beneficial interest
passes (e.g. a transfer of shares from a beneficial owner to his nominee), a
rate of IR(Pounds)10 (the nominal rate) will apply.
A transfer to the Depositary or custodian of Ordinary Shares for deposit
under the Deposit Agreement in return for ADRs will be similarly chargeable
with stamp duty as will a transfer of Ordinary Shares from the Depositary or
the custodian upon surrender of an ADR for the purpose of the withdrawal of
the underlying Ordinary Shares in accordance with the terms of the Deposit
Agreement, unless, in either case, the transfer does not relate to a sale or
contemplated sale or any other change in the beneficial ownership of such
Ordinary Shares, in which case the transfer will be chargeable with nominal
duty of IR(Pounds)10.
Transfers of ADRs issued in respect of the Company's shares will not be
chargeable with Irish stamp duty for as long as the ADSs are dealt in and
quoted on the Nastaq National Market or any recognized stock exchange in the
United States.
The person accountable for payment of stamp duty is the transferee or, in
the case of a transfer by way of gift or for a consideration less than the
market value, both parties to the transfer. Stamp duty is normally payable
within 30 days after the date of execution of the transfer. Late or inadequate
payment of stamp duty will result in liability to interest, penalties and
fines.
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DESCRIPTION OF AMERICAN DEPOSITARY RECEIPTS
The following is a summary of certain provisions of the Deposit Agreement
dated as of April 13, 1995, as amended (the "Deposit Agreement"), among CBT,
The Bank of New York, as depositary (the "Depositary"), and the registered
holders of ADRs (the "Owners") and the owners of a beneficial interest in
book-entry ADRs (the "Beneficial Owners"), pursuant to which ADRs are to be
issued to shareholders.
This summary does not purport to be complete and is subject to and qualified
in its entirety by reference to the Deposit Agreement, including the form of
ADRs. Terms used herein and not otherwise defined will have the meanings set
forth in the Deposit Agreement. Copies of the Deposit Agreement and the
Memorandum and Articles of Association of CBT are available for inspection at
the Corporate Trust Office of the Depositary, currently located at 101 Barclay
Street, New York, New York 10286, and at the principal office of the agent of
the Depositary (the "Custodian"), currently located at the Dublin office of
AIB Custodial Services. The Depositary's principal executive office is located
at 48 Wall Street, New York, New York, 10286.
American Depositary Receipts
ADRs evidencing ADSs are issuable by the Depositary pursuant to the Deposit
Agreement. Each ADS represents one-half of one Ordinary Share or evidence of
the right to receive one-half of one Ordinary Share (together with any
additional Ordinary Shares at any time deposited or deemed deposited under the
Deposit Agreement and any and all other securities, cash and property received
by the Depositary or the Custodian in respect thereof and at such time held
under the Deposit Agreement, "Deposited Securities"). Only persons in whose
names ADRs are registered on the books of the Depositary will be treated by
the Depositary and CBT as Owners. On May 15, 1996, CBT effected a two-for-one
split of its issued and outstanding ADSs, whereby each issued and outstanding
ADS represents one-half of one Ordinary Share and each issued and outstanding
Ordinary Share that is deposited with the Depositary will be represented by
two ADSs. ADRs reflecting the additional ADSs were distributed on May 20, 1996
to holders of record on May 15, 1996.
Deposit, Transfer and Withdrawal of ADRs
The Depositary has agreed, subject to the terms and conditions of the
Deposit Agreement, that upon delivery to the Custodian of Ordinary Shares (or
evidence of rights to receive Ordinary Shares) and pursuant to appropriate
instruments of transfer in a form satisfactory to the Custodian, the
Depositary will, upon payment of the fees, charges and taxes provided in the
Deposit Agreement, execute and deliver at its Corporate Trust Office (as
defined in the Deposit Agreement) to, or upon the written order of, the person
or persons named in the notice of the Custodian delivered to the Depositary or
requested by the person depositing such Ordinary Shares with the Depositary,
an ADR or ADRs, registered in the name or names of such person or persons, and
evidencing any authorized number of ADSs requested by such person or persons.
Upon surrender at the Corporate Trust Office of the Depositary of an ADR for
the purpose of withdrawal of the Deposited Securities represented by the ADSs
evidenced by such ADR, and upon payment of the fees of the Depositary for the
surrender of ADRs, governmental charges and taxes provided in the Deposit
Agreement, and subject to the terms and conditions of the Deposit Agreement,
the Owner of such ADR will be entitled to delivery, to the Owner or upon the
Owner's order, of the amount of Deposited Securities at the time represented
by one or more ADSs evidenced by such ADR. The forwarding of share
certificates, other securities, property, cash and other documents of title
for such delivery will be at the risk and expense of the Owner.
No Ordinary Share will be accepted for deposit unless accompanied by
evidence satisfactory to the Depositary that any necessary approval has been
granted by the governmental body in the Republic of Ireland, if any, which is
then performing the function of the regulation of currency exchange or which
has jurisdiction over foreign investment or regulated foreign ownership of
Irish companies, if any.
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Subject to the terms and conditions of the Deposit Agreement and any
limitations established by the Depositary, the Depositary may deliver ADRs
prior to the receipt of Ordinary Shares (a "Pre-Release") and deliver Ordinary
Shares upon the receipt and cancellation of ADRs which have been Pre-Released,
whether or not such cancellation is prior to the termination of such Pre-
Release or the Depositary knows that such ADR has been Pre-Released. The
Depositary may receive ADRs in lieu of Ordinary Shares in satisfaction of a
Pre-Release. Each Pre-Release must be (i) preceded or accompanied by a written
representation from the person to whom the ADRs or Ordinary Shares are to be
delivered that such person, or its customer, owns the Ordinary Shares or ADRs
to be remitted, as the case may be, (ii) at all times fully collateralized
with cash or such other collateral as the Depositary deems appropriate, (iii)
terminable by the Depositary on not more than five business days' notice and
(iv) subject to such further indemnities and credit regulations as the
Depositary deems appropriate.
Dividends, Other Distributions and Rights
Subject to any restrictions imposed by Irish law, regulations or applicable
permits, the Depositary is required to convert or cause to be converted into
dollars, to the extent that in its judgment it can do so on a reasonable basis
and can transfer the resulting dollars to the United States, all cash
dividends and other cash distributions denominated in a currency other than
dollars, including Irish Pounds ("Foreign Currency"), that it receives in
respect of the deposited Ordinary Shares, and to distribute the resulting
dollar amount (net of reasonable and customary expenses incurred by the
Depositary in converting such Foreign Currency) to the Owners entitled
thereto, in proportion to the number of ADSs representing such Deposited
Securities evidenced by ADRs held by them, respectively. Such distribution may
be made upon an averaged or other practicable basis without regard to any
distinctions among Owners on account of exchange restrictions or the date of
delivery of any ADR or ADRs or otherwise. The amount distributed to the Owners
of ADRs will be reduced by any amount on account of taxes to be withheld by
CBT or the Depositary. See "--Liability of Owner for Taxes."
If the Depositary determines that in its judgment any Foreign Currency
received by the Depositary or the Custodian cannot be converted 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 received by the Depositary or the Custodian
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.
If CBT declares a dividend in, or free distribution of, Ordinary Shares, the
Depositary may, and will if CBT so requests, distribute to the Owners of
outstanding ADRs entitled thereto, in proportion to the number of ADSs
evidenced by the ADRs held by them, respectively, additional ADRs evidencing
an aggregate number of ADSs that represents the amount of Ordinary Shares
received as such dividend or free distribution, subject to the terms and
conditions of the Deposit Agreement with respect to the deposit of Ordinary
Shares and the issuance of ADSs evidenced by ADRs, including the withholding
of any tax or other governmental charge and the payment of fees of the
Depositary. The Depositary may withhold any such distribution of ADRs if it
has not received satisfactory assurances from CBT 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 ADRs for
fractional ADSs in the event of any such dividend or free distribution, the
Depositary will sell the amount of Ordinary Shares represented by the
aggregate of such fractions and distribute the net proceeds in accordance with
the Deposit Agreement. If additional ADRs are not so distributed, each ADS
will thenceforth also represent the additional Ordinary Shares distributed
upon the Deposited Securities represented thereby.
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If CBT offers or causes to be offered to the holders of any Deposited
Securities any rights to subscribe for additional Ordinary Shares or any
rights of any other nature, the Depositary will have discretion as to the
procedure to be followed in making such rights available to any Owners of ADRs
or in disposing of such rights for the benefit of any Owners and making the
net proceeds available in dollars 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; provided, however, 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 Owners or to 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 ADSs
held by such Owner, warrants or other instruments therefor in such form as it
deems appropriate. If the Depositary determines in its discretion that it is
not lawful and feasible to make such rights available to certain Owners, it
may sell the rights, warrants or other instruments in proportion to the number
of ADSs 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 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 ADR, or otherwise. The Depositary
will 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 or
Owners in particular.
In circumstances in which rights would not otherwise be distributed, if an
Owner of ADRs requests the distribution of warrants or other instruments in
order to exercise the rights allocable to the ADSs of such Owner, the
Depositary will make such rights available to such Owner upon written notice
from CBT to the Depositary that (i) CBT has elected in its sole discretion to
permit such rights to be exercised and (ii) such owner has executed such
documents as CBT has determined in its sole discretion are reasonably required
under applicable law. Upon instruction 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 Ordinary Shares to be received in
exercise of the rights, and upon payment of the fees of the Depositary as set
forth in the Deposit Agreement or in such warrants or other instruments, the
Depositary will, on behalf of such Owner, exercise the rights and purchase the
Ordinary Shares, and CBT shall cause the Ordinary Shares so purchased to be
delivered to the Depositary on behalf of such Owner. As agent for such Owner,
the Depositary will cause the Ordinary Shares so purchased to be deposited,
and will execute and deliver ADRs to such Owner, pursuant to the Deposit
Agreement.
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 the Securities Act; provided, that nothing
in the Deposit Agreement will create, or be construed to create, any
obligation on the part of CBT 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 ADRs requests the
distribution of warrants or other instruments, notwithstanding that there has
been no such registration under the Securities Act, the Depositary will not
effect such distribution unless it has received an opinion from recognized
counsel in the United States for CBT upon which the Depositary may rely that
such distribution to such Owner is exempt from such registration. The
Depositary will 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.
Whenever the Depositary receives any distribution other than cash, Ordinary
Shares or rights in respect of the Deposited Securities, the Depositary will
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 their holdings, respectively, in any manner that the Depositary
may reasonably 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
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owners entitled thereto, or if for any other reason (including, but not
limited to, any requirement that CBT 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 of the
Depositary) will be distributed by the Depositary to the Owners entitled
thereto as in the case of a distribution received in cash.
If the Depositary determines that any distribution of property (including
Ordinary Shares and rights to subscribe therefor) is subject to any taxes or
other governmental charges which the Depositary is obligated to withhold, the
Depositary may, by public or private sale, dispose of all or a portion of such
property in such amount and in such manner as the Depositary deems necessary
and practicable to pay such taxes or charges and the Depositary will
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 ADSs
held by them, respectively.
Upon any change in nominal or 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 CBT or to
which it is a party, any securities which shall be received by the Depositary
or Custodian in exchange for, in conversion of, or in respect of Deposited
Securities will be treated as new Deposited Securities under the Deposit
Agreement, and the ADSs will 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 ADRs are
delivered pursuant to the following sentence. In any such case the Depositary
may, after consultation with CBT, and will, if CBT so requests, execute and
deliver additional ADRs as in the case of a distribution in Ordinary Shares,
or call for the surrender of outstanding ADRs to be exchanged for new ADRs
specifically describing such new Deposited Securities.
Record Dates
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 for any reason
the Depositary causes a change in the number of Ordinary Shares that are
represented by each ADS, or whenever the Depositary, shall receive notice of
any meeting of holders of Ordinary Shares or other Deposited Securities, or
whenever the Depositary shall find it necessary or convenient, the Depositary
will fix a record date, which shall be the record date, if any, established by
CBT for such purpose or, if different, as close thereto as practicable, (i)
for the determination of the Owners who will be (a) entitled to receive such
dividend, distribution or rights, or the net proceeds of the sale thereof, or
(b) given instructions for the exercise of voting rights at any such meeting,
or (ii) on or after which each ADS will represent the changed number of
Ordinary Shares, all subject to the provisions of the Deposit Agreement.
Voting of Deposited Securities
Upon receipt of notice of any meeting or solicitation of consents or proxies
of holders of Ordinary Shares or other Deposited Securities, if requested in
writing by CBT, the Depositary will, as soon as practicable thereafter, mail
to all Owners a notice, the form of which notice will be in the sole
discretion of the Depositary, containing (i) the information included in such
notice of meeting received by the Depositary from CBT, (ii) 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 CBT, to instruct the Depositary as
to the exercise of the voting rights, if any, pertaining to the amount of
Ordinary Shares or other Deposited Securities represented by their respective
ADSs, (iii) 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 instructions are given, subject to any applicable
provisions of Irish law and of CBT's Memorandum and Articles of Association
and (iv) a
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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 CBT. Upon the written request of an Owner on such date, received
on or before the date established by the Depositary for such purpose, the
Depositary will endeavor, insofar as practicable, to vote or cause to be voted
the amount of Ordinary Shares or other Deposited Securities represented by the
ADSs evidenced by such ADRs in accordance with the nondiscretionary
instructions set forth in such request. Accordingly, pursuant to CBT's
Memorandum and Articles and applicable Irish law, the Depositary will cause
its authorized representative to attend each meeting of holders of Ordinary
Shares and call for a poll as instructed in accordance with clause (iii) above
for the purpose of effecting such vote. The Depositary will not vote or
attempt to exercise the right to vote that attaches to the Ordinary Shares or
other Deposited Securities, other than in accordance with such instructions or
deemed instructions.
The Deposit Agreement provides that if no instructions are received by the
Depositary from any Owner with respect to any of the Deposited Securities
represented by the ADSs evidenced by such Owner's ADRs 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 CBT with respect to such Deposited Securities and the
Depositary will give a discretionary proxy to a person designated by CBT to
vote such Deposited Securities, under circumstances and according to the terms
as set forth in the Deposit Agreement; provided, that no such instructions
will be deemed given and no such discretionary proxy will be given when CBT
notifies the Depositary (and CBT agrees to provide such notice as promptly as
practicable in writing) that the matter to be voted upon: (i) is a matter not
submitted to shareholders by means of a proxy statement comparable to that
specified in Schedule 14A of the Commission; (ii) 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); (iii) relates to a merger or
consolidation (except when CBT's proposal is to merge with its own wholly-
owned subsidiary, provided its shareholders dissenting thereto do not have
rights of appraisal); (iv) involves right of appraisal; (v) authorizes
mortgaging of property; (vi) authorizes or creates indebtedness or increases
the authorized amount of indebtedness; (vii) authorizes or creates preferred
shares or increases the authorized amount of existing preferred shares; (viii)
alters the terms or conditions of any shares then outstanding or existing
indebtedness; (ix) involves waiver or modification of preemptive rights
(except when CBT's proposal is to waive such rights with respect to shares
being offered pursuant to share option or purchase plans involving the
additional issuance of not more than 5% of CBT's outstanding Ordinary Shares
(see Item (xii) below); (x) 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 CBT's proposal involves a change in the
number of its directors by not more than 10% or not more than one); (xi)
changes existing quorum requirements with respect to shareholder meetings;
(xii) 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, CBT 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); (xiii) 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: (I) retirement plans based
on agreement or negotiations with labor unions (or which have been or are to
be approved by such unions), and (II) 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); (xiv) changes the purposes or
powers of CBT to an extent which would permit it to change to a materially
different line of business and it is CBT's stated intention to make such a
change; (xv) 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; (xvi) authorizes the
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sale or other disposition of assets or earning power of 20% or more of those
existing prior to the transaction; (xvii) 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; or (xviii) 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.
There can be no assurance that the Owners generally or any Owner in
particular will receive the notice described in the preceding paragraph
sufficiently prior to the date established by the Depositary for the receipt
of instructions to ensure that the Depositary will in fact receive such
instructions on or before such date. Neither the Depositary nor CBT shall 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.
Reports and Other Communications
The Depositary will make available for inspection by Owners at its Corporate
Trust Office any reports and communications, including any proxy soliciting
material received from CBT, which are both (i) received by the Depositary as
the holder of the Deposited Securities and (ii) generally made available to
the holders of such Deposited Securities by CBT. The Depositary also will send
to the Owners copies of such reports when furnished by CBT pursuant to the
Deposit Agreement. Any such reports and communications, including any proxy
soliciting material, furnished to the Depositary by CBT will be furnished in
English when so required pursuant to any regulations of the Commission.
Amendment and Termination of the Deposit Agreement
The form of ADRs and any provisions of the Deposit Agreement may at any time
and from time to time be amended by agreement between CBT and the Depositary
in any respect which they may deem necessary or desirable without the consent
of the Owners; provided, however, that any amendment that imposes or increases
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 otherwise prejudices any substantial
existing rights of the Owners, will not take effect as to outstanding ADRs
until the expiration of 30 days after notice of any amendment has been given
to the Owners of outstanding ADRs. Every Owner of an ADR, at the time any
amendment becomes effective, will be deemed, by continuing to hold such ADR,
to consent and agree to such amendment and to be bound by the Deposit
Agreement as amended thereby. In no event will any amendment impair the right
of the Owner of any ADR to surrender such ADR and receive therefor the
Deposited Securities represented thereby, except to comply with mandatory
provisions of applicable law.
The Depositary will at any time at the direction of CBT terminate the
Deposit Agreement by mailing notice of such termination to the Owners of the
ADRs then outstanding at least 90 days prior to the date fixed in such notice
for such termination. The Depositary may likewise terminate the Deposit
Agreement by mailing notice of such termination to CBT and the Owners of all
ADRs then outstanding if, any time after 90 days have expired after the
Depositary will have delivered to CBT a written notice of its election to
resign, a successor depositary will not have been appointed and accepted its
appointment, in accordance with the terms of the Deposit Agreement. If any
ADRs remain outstanding after the date of termination of the Deposit
Agreement, the Depositary thereafter will discontinue the registration of
transfers of ADRs, will suspend the distribution of dividends to the Owners
thereof and will not give any further notices or perform any further acts
under the Deposit Agreement, except the collection of dividends and other
distributions pertaining to the Deposited Securities, the sale of rights and
other property and the delivery of underlying Ordinary Shares, 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
surrendered ADRs (after deducting, in each case, the fees of the Depositary
for the surrender of an ADR and other expenses set forth in 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 thereunder and hold uninvested the net
proceeds of such sale, together with any other cash, unsegregated and without
liability for interest, for the pro rata benefit of the Owners
25
<PAGE>
that have not theretofore surrendered their Receipts, such Owners thereupon
becoming general creditors of the Depositary with respect to such net
proceeds. After making such sale, the Depositary will be discharged from all
obligations under the Deposit Agreement, except to account for net proceeds
and other cash (after deducting, in each case, the fee of the Depositary and
other expenses set forth in the Deposit Agreement for the surrender of an ADR
and any applicable taxes or other governmental charges).
Charges of Depositary
The Depositary will charge any party depositing or withdrawing Ordinary
Shares or any party surrendering ADRs or to whom ADRs are issued (including,
without limitation, issuance pursuant to a stock dividend or stock split
declared by CBT or an exchange of stock regarding the ADRs or Deposited
Securities or a distribution of ADRs pursuant to the Deposit Agreement) where
applicable: (i) taxes and other governmental charges; (ii) such registration
fees as may from time to time be in effect for the registration of transfers
of Ordinary Shares generally on the share register of CBT or the appointed
agent of CBT for transfer and registration of Ordinary Shares and applicable
to transfers of Ordinary Shares to the name of the Depositary or its nominee
or the Custodian or its nominee on the making of deposits or withdrawals;
(iii) such cable, telex and facsimile transmission expenses as are expressly
provided in the Deposit Agreement to be at the expense of persons depositing
Ordinary Shares or Owners; (iv) such expenses as are incurred by the
Depositary in the conversion of Foreign Currency pursuant to the Deposit
Agreement; (v) a fee not in excess of US$5.00 per 100 ADSs (or portion
thereof) for the issuance and surrender, respectively, of ADRs pursuant to the
Deposit Agreement; (vi) a fee not in excess of US$0.02 per ADS (or portion
thereof) for any cash distribution made pursuant to the Deposit Agreement;
(vii) a fee for the distribution of securities pursuant to the Deposit
Agreement, such fee being in an amount equal to the fee for the execution and
delivery of ADSs 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 Ordinary Shares), but which securities are
instead distributed by the Depositary to Owners and the net proceeds
distributed; and (viii) a fee not in excess of US$1.50 per certificate for an
ADR or ADRs for transfers made pursuant to the Deposit Agreement.
The Depositary, pursuant to the Deposit Agreement, may own and deal in any
class of securities of CBT and its affiliates and in ADRs.
Liability of Owner for Taxes
If any tax or other governmental charge shall become payable by the
Custodian or the Depositary with respect to any ADR or any Deposited
Securities represented by the ADSs evidenced by such ADR, such tax or other
governmental charge will be payable by the Owner or Beneficial Owner of such
ADR to the Depositary. The Depositary may refuse to effect any transfer of
such ADR or any withdrawal of Deposited Securities underlying such ADR 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 underlying such ADR and may apply such
dividends, distributions or the proceeds of any such sale to pay any such tax
or other governmental charge and the Owner or Beneficial Owner of such ADR
will remain liable for any deficiency.
Disclosure of Interests
Each ADR Owner agrees to comply with CBT's Articles, as they may be amended
from time to time, and the laws of the Republic of Ireland, if applicable,
with respect to any disclosure requirements regarding ownership of Ordinary
Shares, all as if such ADRs were, for this purpose, the Ordinary Shares
represented thereby. Each ADR Owner has agreed to be bound by provisions of
the Deposit Agreement mandating compliance with the disclosure requirements of
Irish company law. See "Description of Share Capital-- Disclosure
Requirements" and "--Irish Mergers Legislation."
In order to facilitate compliance with the notification requirements, ADR
Owners may deliver any notification to the Depositary with respect to Ordinary
Shares represented by ADSs, and the Depositary shall, as soon as practicable,
forward such notification to CBT and, if applicable, to the extent practicable
and as permitted by applicable law, any authorities in the Republic of Ireland
as specified by the ADR Owner.
26
<PAGE>
General
Neither the Depositary nor CBT nor any of their respective directors,
employees, agents or affiliates will be liable to any Owner or Beneficial
Owner of ADRs, if by reason of any provision of any present or future law or
regulation of the United States, the Republic of Ireland or any other country,
or of any other governmental or regulation, authority or stock exchange, or by
reason of any provision, present or future, of the Memorandum and Articles of
Association of CBT, or by reason of any provision of any securities issued or
distributed by CBT, 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 CBT or any of their respective directors, employees, agents, or
affiliates 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 the Deposit Agreement or the Deposited Securities it is
provided will be done or performed; nor will the Depositary or CBT incur any
liability to any Owner or Beneficial Owner of any ADR by reason of any
nonperformance or delay, caused as aforesaid, in the performance of any act or
thing which by the terms of the Deposit Agreement it is provided will or may
be done or performed, or by reason of any exercise of, or failure to exercise,
any discretion provided for under the Deposit Agreement. Where, by the terms
of a distribution pursuant to the Deposit Agreement or an offering pursuant to
the 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 will not make such
distribution or offering, and will allow the rights, if applicable, to lapse.
CBT and the Depositary assume no obligation nor will they be subject to any
liability under the Deposit Agreement to Owners or Beneficial Owners of ADRs,
except that they agree to perform their respective obligations specifically
set forth under the Deposit Agreement without negligence or bad faith.
The ADRs are transferable on the books of the Depositary, provided that 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 or at
the written request of CBT. As a condition precedent to the execution and
delivery, registration of transfer, split-up, combination or surrender of any
ADR or withdrawal of any Deposited Securities, the Depositary, the Custodian
or the Registrar may require payment from the person presenting the ADR or the
depositor of the Ordinary Shares 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
Ordinary Shares being deposited or withdrawn) and payment of any applicable
fees payable by the Owners and Beneficial Owners of ADRs. The Depositary may
refuse to deliver ADRs, to register the transfer of any ADR or to make any
distribution on, or related to, Ordinary Shares until it has received such
proof of citizenship or residence, exchange control approval or other
information as it may deem necessary or proper. The delivery, transfer or
registration of outstanding ADRs and surrender of ADRs generally may be
suspended or refused during any period when the transfer books of the
Depositary, CBT or the Foreign Registrar are closed or if any such action is
deemed necessary or advisable by the Depositary or CBT, at any time or from
time to time.
The Depositary will keep books, at its Corporate Trust Office, for the
registration and transfer of ADRs, which at all reasonable times will be open
for inspection by the owners, provided that such inspection will not be for
the purpose of communications with Owners in the interest of a business or
object other than the business of CBT or a matter related to the Deposit
Agreement or the ADRs.
The Depositary may appoint one or more co-transfer agents for the purpose of
effecting transfers, combinations and split-ups of ADRs 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 ADRs
and will be entitled to protection and indemnity to the same extent as the
Depositary.
Governing Law
The Deposit Agreement is governed by the laws of the State of New York.
27
<PAGE>
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Shareholder that he intends to
deposit the Ordinary Shares underlying the ADSs offered hereby with The Bank
of New York, as Depositary, pursuant to the Deposit Agreement in exchange for
ADRs evidencing ADSs, and that the Selling Shareholder then intends to sell
all or a portion of the ADSs offered hereby from time to time in transactions
on one or more exchanges, including the Nasdaq National Market, or in the
over-the-counter market or otherwise, at prices and at terms then prevailing
or at prices related to the then current market prices, or in negotiated
transactions. The ADSs may be sold by one or more of the following: (a) a
block trade in which the broker or dealer engaged will attempt to sell the
ADSs as agent but may position and resell a portion of the block as principal
to facilitate the transaction; (b) purchases by a broker or dealer as
principal and resale by such broker or dealer for its account pursuant to this
Prospectus; (c) an exchange distribution in accordance with the rules of such
exchange; and (d) ordinary brokerage transactions and transactions in which
the broker solicits purchasers. In effecting sales, brokers or dealers engaged
by the Selling Shareholder may arrange for other brokers or dealers to
participate in the resales. The ADSs may be sold from time to time by a
Selling Shareholder, or by his transferees, distributees, pledgees, donees or
other successors in interest.
In connection with distributions of the ADSs or otherwise, a Selling
Shareholder may enter into hedging transactions with brokers-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
the ADSs registered hereunder in the course of hedging the positions they
assume with a Selling Shareholder. A Selling Shareholder may also sell ADSs
short and redeliver the ADSs to close out such short positions. A Selling
Shareholder may also enter into option or other transactions with broker-
dealers which require the delivery to the broker-dealer of the ADSs registered
hereunder. A Selling Shareholder may also pledge the Ordinary Shares
underlying the ADSs offered hereby to a broker or dealer and upon a default
the broker or dealer may effect sales of the ADSs representing such Ordinary
Shares pursuant to this Prospectus.
Brokers, dealers or agents may receive compensation in the form of
commissions, discounts or concessions from a Selling Shareholder in amounts to
be negotiated in connection with the sale. Such brokers or dealers and any
other participating brokers or dealers may be deemed to be "underwriters"
within the meaning of the Securities Act in connection with such sales, and
any such commission, discount or concession may be deemed to be underwriting
discounts or commissions under the Securities Act. In addition, any securities
covered by this Prospectus which qualify for sale pursuant to Rule 144 may be
sold under Rule 144 rather than pursuant to this Prospectus.
There can be no assurance that any Selling Shareholder will sell any or all
of the ADSs offered hereunder.
LEGAL MATTERS
The validity of the Ordinary Shares represented by the ADSs offered hereby
has been passed upon by Binchys, Solicitors, Irish counsel for the Company.
EXPERTS
The consolidated financial statements of CBT Group PLC appearing in CBT
Group PLC's Annual Report (Form 10-K) for the year ended December 31, 1996,
have been audited by Ernst & Young, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
28
<PAGE>
IRISH EXCHANGE CONTROL REGULATIONS
Irish exchange control regulations ceased to apply from and after December
31, 1992. Except as indicated below, there are no restrictions on non-
residents of the Republic of Ireland dealing in domestic securities which
includes shares or depositary receipts of Irish companies such as CBT and
dividends and redemption proceeds are freely transferable to non-resident
holders of such securities.
The Financial Transfers Act, 1992 was enacted in December 1992. This Act
gives power to the Minister for Finance of the Republic of Ireland to make
provision for the restriction of financial transfers between the Republic of
Ireland and other countries. Financial transfers are broadly defined and
include all transfers which would be movements of capital or payments within
the meaning of the treaties governing the European Communities. The
acquisition or disposal of ADRs representing shares issued by an Irish
incorporated company and associated payments may fall within this definition.
In addition, dividends or payments on redemption or purchase of shares and
payments on a liquidation of an Irish incorporated company would fall within
this definition. Currently, orders under this Act prohibit any financial
transfer to or by the order of or on behalf of residents of the Federal
Republic of Yugoslavia (Serbia and Montenegro), Iraq and Libya unless
permission for the transfer has been given by the Central Bank of Ireland.
CBT does not anticipate that Irish exchange controls or orders under the
Financial Transfers Act, 1992 will have a material effect on its business.
29
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
<TABLE>
<S> <C>
SEC Registration Fee................................................ $ 390
Accountant's fees and expenses...................................... $ 5,000
Legal fees and expenses............................................. $10,000
Miscellaneous....................................................... $ 610
-------
Total............................................................. $16,000
=======
</TABLE>
- --------
* Represents expenses relating to the distribution by the Selling Shareholder
pursuant to the Prospectus prepared in accordance with the requirements of
Form S-3. These expenses will be borne by the Company on behalf of the
Selling Shareholder. All amounts are estimates except for the SEC
Registration Fee.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Articles of Association authorize the Company, subject to
certain conditions, to indemnify the directors and officers of the Company
against certain liabilities and expenses incurred by such persons in
connection with claims made by reason of their being such a director or
officer. A subsidiary of the Company, CBT Systems USA Ltd., has agreed to
indemnify the Company's officers and directors serving at the request of CBT
Systems USA Ltd. as directors of CBT Group PLC against certain liabilities and
expenses incurred by such persons in connection with claims made by reason of
their being such a director or officer. The Company has obtained directors and
officers' insurance providing indemnification for certain of the Company's
directors, officers, affiliates, partners or employees for certain
liabilities.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<C> <S>
4.1 Amended and Restated Deposit Agreement (including the form of
American Depository 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
(incorporated by reference to exhibit included in Registrant's
Registration Statement on Form F-6 (File No. 33-90380) filed with
the Securities and Exchange Commission on April 15, 1996).
5.1 Opinion of Binchys Solicitors
23.1 Consent of Ernst & Young, Chartered Accountants
23.2 Consent of Binchys Solicitors (included in Exhibit 5.1)
24.1 Power of Attorney (See page II-3)
</TABLE>
II-1
<PAGE>
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material
change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in this registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Menlo Park, State of California, on September
16, 1997.
CBT GROUP PUBLIC LIMITED COMPANY
/s/ James J. Buckley
By:
---------------------------------
James J. Buckley
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints James J. Buckley and Gregory M. Priest, jointly
and severally, his true and lawful attorneys-in-fact and agents, each with the
power of substitution and resubstitution, for him and in his name, place and
all capacities, to sign, execute and file this Registration Statement on Form
S-3 and any or all amendments (including, without limitation, post-effective
amendments and abbreviated registration statements to this Registration
Statement), and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission
or any regulatory authority, granting unto said attorneys-in-fact and gents,
and each of them, full power and authority to do and perform each and every
thing requisite and necessary to be done in connection therewith, as fully to
all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or any of them, or
their or his substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by or on behalf of the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ William G. McCabe Chairman of the Board September 16, 1997
____________________________________
William G. McCabe
/s/ James J. Buckley President, Chief Executive September 16, 1997
____________________________________ Officer (Principal
James J. Buckley Executive Officer) and
Director
/s/ Gregory M. Priest Vice President, Finance and September 16, 1997
____________________________________ Chief Financial Officer
Gregory M. Priest (Principal Financial
Officer), Director and U.S.
Representative
/s/ John P. Hayes Group Financial Controller September 16, 1997
____________________________________ (Principal Accounting
John P. Hayes Officer) and Director
/s/ Patrick J. McDonagh Director September 16, 1997
____________________________________
Patrick J. McDonagh
/s/ John M. Grillos Director September 16, 1997
____________________________________
John M. Grillos
</TABLE>
II-3
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.1 Amended and Restated Deposit Agreement (including the form of
American Depository 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
(incorporated by reference to exhibit included in Registrant's
Registration Statement on Form F-6 (File No. 33-90380) filed with
the Securities and Exchange Commission on April 15, 1996).
5.1 Opinion of Binchys Solicitors
23.1 Consent of Ernst & Young, Chartered Accountants
23.2 Consent of Binchys Solicitors (included in Exhibit 5.1)
24.1 Power of Attorney (See page II-3)
</TABLE>
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF BINCHYS SOLICITORS]
17th September 1997
The Directors
CBT Group Plc,
Beech Hill,
Clonskeagh
Dublin 4 Ireland
RE: CBT GROUP PLC
Gentlemen:
This letter is written in connection with the registration (the
"Registration") of 9,408 Ordinary Shares of CBT Group Public Limited
Company (the "Company") for which we have acted as Irish solicitors.
This opinion is limited to Irish law as applied by the Irish courts and is
given on the basis that it will be governed by and construed in accordance
with Irish law. We have made no investigation of the laws of any jurisdiction
other than Ireland and neither express nor imply any opinion as to any other
laws and in particular the laws of the United States of America or any
individual state thereof.
For purposes of this opinion we have examined the following documents:
1. A copy of the Articles of Association of the Company adopted on March 31,
1995 and amended by a Special Resolution passed on July 6, 1995 (the
"Articles");
2. The Form S-3 Registration Statement (the "Registration Statement") in
respect of the Registration proposed to be filed on 17th September, 1997
with the U.S. Securities and Exchange Commission;
3. The Share Register of the Company, its minute book and the records of the
Company as maintained at the Companies Registration Office in Dublin.
We have assumed that all of the documents examined are accurate
records of the matters to which they refer and have been executed by the
people who appear to have signed them and that all copy documents are
authentic copies of the original documents.
On the basis of the foregoing, we are of the opinion that under the
Articles the authorised share capital of the Company is, and will, upon
completion of the Registration, be IR(Pounds)11,250,000 divided into
30,000,000 Ordinary Shares, par value IR37.5p per share.
The adoption of the Articles and the creation of the Ordinary Shares
have been carried out in accordance with Irish law, so that the Ordinary
Shares to be registered pursuant to the Registration have been legally and
validly issued and are fully paid and no further contributions in respect
thereof are required to be made to the Company by the holders of such Ordinary
Shares by reason of their being such holders.
This opinion is addressed to you on the understanding that it may not
be transmitted to any person for any purpose, or quoted or referred to in any
public document or filed with any government agency or other person without
our prior written consent. We hereby give such consent in relation to the
filing of this letter as an exhibit to the Registration Statement and to the
references made to our firm in the Registration Statement and incorporated by
reference into any Registration Statement on Form S-3 filed with the
Securities and Exchange Commission pursuant to Rule 462 of the Securities Act
of 1933, as amended, under the heading "Legal Matters."
Yours faithfully,
/s/ Binchys
----------------------------
Binchys
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
CBT Group PLC:
We consent to the reference to our firm under the caption "Experts" in this
Registration Statement (Form S-3) and related Prospectus of CBT Group PLC for
the registration of 18,816 American Depositary Shares and to the incorporation
by reference therein of our report dated January 20, 1997, with respect to the
consolidated financial statements of CBT Group PLC included in its Annual
Report (Form 10-K) for the year ended December 31, 1996, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young, Chartered Accountants
Dublin, Ireland
September 16, 1997.
