<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20548
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition period from ________ to ________
Commission File Number: 0-25674
CBT GROUP PUBLIC LIMITED COMPANY
(Exact name of registrant as specified in its charter)
Republic of Ireland Not Applicable
----------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1005 HAMILTON COURT
MENLO PARK, CALIFORNIA 94025
(Address of principal executive offices, including zip code)
(650) 614-5900
(Registrant's telephone number, including area code)
Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past ninety (90) days.
Yes [X] No [_]
The number of American Depositary Shares (issued or issuable in exchange for
Registrant's issued and outstanding Ordinary Shares) outstanding as of July 29,
1998 was 43,881,451.
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CBT GROUP PUBLIC LIMITED COMPANY
TABLE OF CONTENTS
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
December 31, 1997 and as of June 30, 1998 3
Condensed Consolidated Statements of
Operations for the three and six month
periods ended June 30, 1997 and 1998 4
Condensed Consolidated Statements of Cash
Flows for the six month periods ended June
30, 1997 and 1998 5
Notes to Condensed Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 2. Changes in Securities 19
Item 4. Submission of Matters to a Vote of the
Security Holders 19
Item 6. Exhibits and Reports on Form 8-K 21
2
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PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
CBT GROUP PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
-------- --------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
- --------------
Cash $ 35,506 $ 45,577
Short term investments 36,038 36,091
Accounts receivable, net 40,030 44,009
Inventories 615 1,021
Deferred tax assets, net 140 142
Prepaid expenses 4,198 8,458
-------- --------
Total Current assets 116,527 135,298
Intangible assets 5,600 4,878
Property and equipment, net 10,207 14,345
Investment 200 350
Deferred tax assets, net 342 47
Other assets 8,453 12,023
-------- --------
Total assets 141,329 166,941
======== ========
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities
- -------------------
Borrowings under bank overdraft facility and overdrafts 13 13
Accounts Payable 4,820 6,296
Accrued payroll and related expenses 6,411 3,785
Other accrued liabilities 16,715 17,491
Deferred revenues 4,551 1,075
-------- --------
Total Current Liabilities 32,510 28,660
Non Current Liabilities
- -----------------------
Other accrued liabilities 519 474
Minority equity interest 622 622
-------- --------
Total Non Current Liabilities 1,141 1,096
Shareholders' Equity
- --------------------
Ordinary Shares: 30,000,000 shares authorized , IR37.5p par 6,372 6,571
value, at December 31, 1997 and 120,0000 shares
authorized, par value IR9.375p at June 30, 1998;
Issued and outstanding:10,511,190 shares at December 31,
1997 and 43,249,900 shares at June 30, 1998
Additional paid-in-capital 97,868 115,745
Accumulated surplus 2,984 14,425
Deferred Compensation (112) -
Treasury Stock (2) (2)
Cumulative translation adjustment 568 446
-------- --------
Total Shareholders' equity 107,678 137,185
-------- --------
Total Liabilities and shareholders' equity 141,329 166,941
======== ========
</TABLE>
Note: The condensed consolidated balance sheet at December 31, 1997 has been
derived from the audited financial statements at that date and has been restated
to reflect the acquisition of The ForeFront Group, Inc (see note 2 below). In
addition, the balance sheet does not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
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CBT GROUP PLC
Condensed Consolidated Statements of Operations
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Six Months
-------------------------------- ----------------------------------
Ended June 30, Ended June 30,
-------------------------------- ----------------------------------
1997 1998 1997 1998
--------------- --------------- ---------------- ----------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues $29,755 $44,852 $56,482 $84,781
Cost of revenues 5,173 6,697 9,854 12,641
------- ------- ------- -------
Gross profit 24,582 38,155 46,628 72,140
Operating expenses:
Research and development 4,731 6,604 9,162 12,994
Sales and marketing 13,415 18,622 26,243 35,490
General and administrative 3,616 3,594 5,964 6,808
Acquired research and development 447 -- 447 --
Cost of acquisitions -- 5,505 926 5,505
------- ------- ------- -------
Total operating expenses 22,209 34,325 42,742 60,797
------- ------- ------- -------
Income from operations 2,373 3,830 3,886 11,343
Other income, net 665 936 1,220 1,903
------- ------- ------- -------
Income before provision for income taxes 3,038 4,766 5,106 13,246
Provision for income taxes 817 667 1,336 1,805
------- ------- ------- -------
Net income 2,221 4,099 3,770 11,441
======= ======= ======= =======
Net income per equivalent ADS (1) - Basic $0.06 $0.09 $0.09 $0.27
======= ======= ======= =======
ADSs used in computing net income per 39,923 43,283 39,690 42,939
equivalent ADS - Basic ======= ======= ======= =======
Net income per equivalent ADS (1) - Diluted $0.05 $0.09 $0.09 $0.25
======= ======= ======= =======
ADSs used in computing net income per equivalent 43,938 46,357 43,757 46,080
======= ======= ======= =======
</TABLE>
(1) Net income per equivalent ADS gives effect to the two-for-one share split
of Registrants' ADSs effected March 1998. Prior periods have been restated
to give effect to such split.
4
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CBT GROUP PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
(dollars in thousands)
Six Months Ended June 30,
1997 1998
----------- -----------
(Unaudited) (Unaudited)
CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 3,770 $11,441
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,671 2,958
Loss on Disposal of Assets 70
Accrued interest on short-term investments (222) 236
Compensation Expense 51 112
Changes in operating assets and Liabilities:
Accounts receivable (3,928) (4,114)
Inventories (150) (410)
Deferred Tax Assets -- 293
Non Cash acquired R&D costs 447 --
Prepaid expenses and other assets (3,285) (7,885)
Accounts payable (391) 1,541
Accrued payroll and related expenses
and other accrued liabilities 2,338 (1,784)
Deferred revenues (2,251) (3,455)
------- -------
Net cash provided by operating activities (1,950) (997)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (2,096) (6,499)
Payments to acquire short-term investments (248) (50,330)
Proceeds from short-term investments -- 50,041
Proceeds from disposal of property and equipment -- 20
Payments to acquire Investments -- (150)
------ ------
Net cash used in investing activities (2,344) (6,918)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of bank loans (794) --
Repayments under bank overdraft facility (138) --
Proceeds from issuance of preferred shares
in subsidiary 605 --
Proceeds from issuance of ordinary shares,
net 5,106 18,076
----- ------
Net cash (used in) provided by financing
activities 4,779 18,076
----- ------
Effect of exchange rate changes on cash (80) (90)
----- ------
Net (decrease) increase in cash 405 10,071
Cash at beginning of period 17,560 35,506
------- -------
Cash at end of period $17,965 $45,577
======= =======
5
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CBT GROUP PLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 INTERIM CONSOLIDATED FINANCIAL STATEMENTS
These interim consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q. Accordingly, they do not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals),
considered necessary for a fair presentation of financial position, results of
operations and cash flows at the dates and for the periods presented have been
included. The interim financial information herein is not necessarily
indicative of results for any future period.
NOTE 2 ACQUISITION OF THE FOREFRONT GROUP, INC
On May 29, 1998, CBT Group PLC ("CBT," or the "Company") completed the
acquisition of The ForeFront Group, Inc ("ForeFront"). The Company issued
approximately 2.2 million ADSs in connection with the acquisition and assumed
options, warrants and other rights to acquire ForeFront common stock that can
be exercised for approximately 1.0 million ADSs. The transaction is being
accounted for as a "pooling of interests" in accordance with U.S. generally
accepted accounting principles.
NOTE 3 SHARE SPLIT
On March 9, 1998 the Company effected a two-for-one split of its issued and
outstanding ADSs. Subsequent thereto, the Company's shareholders approved a
proposal at the Company's 1998 Annual General Meeting to subdivide each of the
Ordinary Shares of IR37.5p into four Ordinary Shares of IR9.375p (the "Ordinary
Share Split"). As a consequence of the Ordinary Share Split, effective May 22,
1998 each ADS represents and is exchangeable for one Ordinary Share (the "Ratio
Change"). Aside from the Ratio Change, the Ordinary Share Split had no effect
on the ADSs and had no effect on the number of ADSs outstanding.
NOTE 4 CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income." This Statement
requires all items recognized under accounting standards as components of
comprehensive earnings be reported in an annual financial statement that is
displayed with the same prominence as other financial statements. This
Statement also requires that an entity classify items of other comprehensive
earnings by their nature in an annual financial statement. For example, other
comprehensive income may include foreign currency translation adjustments,
minimum pension liability adjustments, and other unrealized gains and losses on
marketable securities classified as available-for-sale. Annual financial
statements for prior periods will be reclassified, as required.
6
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The Company's total comprehensive earnings were as follows:
Six months ended
June 30,
1997 1998
----------- -----------
(dollars in thousands) (Unaudited) (Unaudited)
Net Income $3,770 $11,441
Other Comprehensive Income (123) (122)
------ -------
Total Comprehensive Income 3,647 11,319
====== =======
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
IMPORTANT NOTE ABOUT FORWARD LOOKING STATEMENTS
The following discussion contains forward looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Predictions of future events are
inherently uncertain. Actual events could differ materially from those
predicted in the forward looking statements as a result of the risks set forth
in the following discussion, and in particular, the risks discussed below under
the caption "Additional Risk Factors that Could Affect Operating Results."
OVERVIEW
CBT Group PLC ("CBT Group" or the "Company") is a leading provider of
interactive education software designed to meet the information technology
("IT") education and training needs of businesses and organizations worldwide.
The Company develops, publishes and markets a comprehensive library of 694
software titles covering a range of client/server, mainframe, Internet and
intranet technologies. CBT Group's products are used by 1,731 of the world's
leading corporations to train employees to develop and apply mission-critical
technologies in the workplace. CBT Group works with leading software companies,
including Cisco Systems, Inc. ("Cisco"), Informix Corporation ("Informix"),
Lotus Development Corporation ("Lotus"), Marimba, Inc. ("Marimba"), Microsoft
Corporation ("Microsoft"), Netscape Communications Corporation ("Netscape"),
Novell, Inc. ("Novell"), Oracle Corporation ("Oracle"), SAP America, Inc.
("SAP"), TIBCO Software Inc. ("TIBCO"), Intel Corp ("Intel), Centra Software
("Centra"), Rational Software ("Rational"), Sybase, Inc. ("Sybase") and the IBM-
Netscape-Sun Microsystems, collaborative Java education effort to develop and
market vendor-specific training. CBT Group has also formed the Internet Security
Training Consortium with Check Point Software Technologies, Inc. ("Check
Point"), Cisco, IBM, Intel Corporation, the Javasoft business unit of Sun
Microsystems, Inc., Lotus, Netscape, Network Associates, Inc. (formerly McAfee
Associates, Inc.) ("Network Associates"), RSA Data Security, Inc. ("RSA Data
Security"), Security Dynamics Technologies, Inc. ("Security Dynamics"), and
VeriSign, Inc. ("VeriSign") to address the Internet security training needs of
enterprises worldwide.
7
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The Company derives revenues primarily from license agreements under which
customers license the Company's titles for periods of one, two or three years.
The license agreement format generally allows the customer to exchange titles
for other titles in the Company's library on an annual basis if the agreement is
for more than one year. The initial annual license fee is generally recognized
as revenue at the time of delivery of products, and subsequent annual license
fees are generally recognized on the anniversary of each delivery date. Although
the Company's license agreements are noncancellable by their terms, there can be
no assurance that any customer will fulfill the contractual obligations under
its agreement. Cancellation, reduction or delay in orders by or shipments to any
of these customers could have a material adverse effect on the Company's
business and results of operations. In addition, the Company derives revenues
from sales of its courses, primarily through its direct sales and telesales
organizations and resellers.
In recent years, the Company has entered into several development and marketing
alliances with key vendors of client/server software under which the Company
develops titles for training on specific products. Under certain of its
development and marketing alliances, the Company's partners have agreed to fund
certain product development costs. The Company recognizes such funding as
revenues on a percentage of completion basis, and the costs associated with such
revenues are reflected as cost of revenues. These agreements have the effect of
shifting expenses associated with developing certain new products from research
and development to cost of revenues. The Company expects that cost of revenues
may fluctuate from period to period in the future based upon many factors,
including, but not limited to, the timing of expenses associated with
development and marketing alliances
RECENT DEVELOPMENTS
Acquisition of The ForeFront Group, Inc.
- ----------------------------------------
On May 29, 1998, the Company acquired The ForeFront Group, Inc., a Houston-based
provider of high-quality, cost-effective, computer-based training products and
network utilities for technical professionals. In the merger, each share of
ForeFront common stock was exchanged for 0.3137 ADSs, and the Company assumed
outstanding ForeFront stock options, warrants and other rights to acquire
ForeFront common stock. The Company issued approximately 2.2 million ADSs in
connection with the acquisition and assumed options, warrants and other rights
to acquire ForeFront common stock that can be exercised for approximately 1.0
million ADSs. The transaction is being accounted for as a "pooling of interests"
in accordance with U.S. generally accepted accounting principles.
Uncertainty Relating to Integration.
The successful combination of CBT Group and ForeFront, including the successful
operation of ForeFront as an autonomous subsidiary of CBT Group, will require
substantial effort from each company. The diversion of the attention of
management and any difficulties encountered in the transition process could have
an adverse impact on CBT Group's ability to realize the full benefits of the
merger. The successful combination of the two companies will also require
coordination of their sales and marketing efforts. In addition, the process of
combining the two organizations could cause the interruption of, or a loss of
momentum in, ForeFront's activities.
Certain key executives of ForeFront will not continue with the combined company
after the transition period following the merger. David Sikora, President and
Chief Executive Officer of ForeFront, and Michael Kaplan, President of ForeFront
Direct, Inc., terminated their employment at the date of merger, May 29, 1998,
and Mr. Kaplan has agreed to continue as a consultant with CBT Group for four
months thereafter. There can be no assurance that the loss of these two
executives will not disrupt the integration of the two companies or prevent CBT
Group form realizing any of the anticipated benefits of the Merger.
8
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In addition, options previously granted to other key executives of ForeFront
accelerated at the date of the Merger. There can be no assurance that CBT Group
will be able to retain these other key executives of ForeFront's key management,
technical, sales and customer support personnel, or that it will realize any of
the anticipated benefits of the Merger.
Effect of Merger on Customers and Partners
Certain of ForeFront's existing customers or strategic partners may view
themselves as competitors of CBT Group, and therefore determine that the Merger
is competitively disadvantageous to them. As a consequence, ForeFront's
relationship with these customers or strategic partners could be adversely
affected. In addition, CBT Group's relationships with certain of its customers
that compete with ForeFront may be adversely affected by the Merger, which could
adversely affect the ability of CBT Group to continue relationships with such
customers after the Merger.
Share Split
- -----------
On March 9, 1998 the Company effected a two-for-one split of its issued and
outstanding ADSs. Subsequent thereto, the Company's shareholders approved a
proposal at the Company's 1998 Annual General Meeting to subdivide each of the
Ordinary Shares of IR37.5p into four Ordinary Shares of IR9.375p (the "Ordinary
Share Split"). As a consequence of the Ordinary Share Split, effective May 22,
1998 each ADS represents and is exchangeable for one Ordinary Share (the "Ratio
Change"). Aside from the Ratio Change, the Ordinary Share Split had no effect on
the ADSs and had no effect on the number of ADSs outstanding.
9
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RESULTS OF OPERATIONS
The following table sets forth certain restated consolidated statements of
operations data as a percentage of revenues:
Three Months Ended Six Months Ended
June 30, June 30,
1997 1998 1997 1998
---- ---- ---- ----
Revenues 100% 100% 100% 100%
Cost of revenues 17.4 14.9 17.4 14.9
---- ---- ---- ----
Gross profit 82.6 85.1 82.6 85.1
Operating expenses:
Research and development 15.9 14.7 16.2 15.3
Sales and marketing 45.1 41.5 46.5 41.9
General and administrative 12.1 8.0 10.6 8.0
Acquired research and development 1.5 -- 0.8 --
Costs of acquisitions -- 12.3 1.6 6.5
---- ---- ---- ----
Total operating expenses 74.6 76.5 75.7 71.7
---- ---- ---- ----
Income from operations 8.0 8.6 6.9 13.4
Other income, net 2.2 2.1 2.2 2.2
---- ---- ---- ----
Income before provision for
income taxes 10.2 10.7 9.1 15.6
Provision for income taxes 2.7 1.5 2.4 2.1
---- ---- ---- ----
Net income 7.5 9.2 6.7 13.5
==== ==== ==== ====
Revenues
- --------
Revenues increased 51% to $44.9 million in the three months ended June 30, 1998
from $29.8 million in the three months ended June 30, 1997, and increased 50% to
$84.8 million in the six months ended June 30, 1998 from $56.5 million in the
six months ended June 30, 1997. The increases in revenues during these periods
were primarily attributable to the continuing increase in the number of
available courses, strong customer contract renewals and upgrades and expanded
marketing and distribution efforts.
Revenues in the United States for the three and six month periods ended June 30,
1998 increased to $32.9 million (or 73.3% of revenues) and $61.1 million (or
72.1% of revenues), respectively, from $21.9 million (or 73.5% of revenues) and
$41.8 million (or 74% of revenues) for the three and six month periods ended
June 30, 1997, respectively. These increases were primarily the result of an
increase in new corporate customers, on-line training from Scholars.com and
telesales which reached in excess of 15% of sales for the first time (boosted by
the acquisition of ForeFront) and renewals and upgrades to existing customers.
The number of available courses continued to expand during the quarter. During
the second quarter the Company signed five contracts with a contract value in
excess of $1 million.
10
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Revenues in Europe for the three and six month periods ended June 30, 1998
increased to $7.9 million (or 17.6% of revenues) and $14.2 million (or 16.7% of
revenues), respectively, from $4.8 million (or 16.1% of revenues) and $8.7
million (or 15.4% of revenues) for the three and six month periods ended June
30, 1997, respectively. In addition, revenues from outside the United States and
Europe (principally from Australia, Canada and the Middle East) in the three and
six month period were $4.1 million (or 9.1% of revenues) and $9.5 million (or
11.2% of revenues) respectively compared to $3.1 million (or 10.4% of revenues)
and $6.0 million (or 10.6% of revenues) respectively for the three and six month
periods ended June 30, 1997. Because a significant portion of the Company's
business is conducted outside the United States, the Company is subject to
numerous risks of doing business in other countries, including risks related to
currency fluctuations.
Cost of Revenues
- ----------------
Cost of revenues includes the cost of materials (such as CD-ROMs, diskettes,
packaging and documentation), royalties to third parties, the portion of
development costs associated with funded development projects and fulfillment
costs.
Gross margins increased to 85.1% in the three and six month periods ended June
30, 1998, from 82.6% in the three and six month periods ended June 30, 1997. The
higher gross margins during the three and six month periods ended June 30, 1998
were primarily due to the decrease in third party products sold by the Company's
Australian subsidiary which have higher royalty obligations than CBT products.
The increased gross margin can also be attributed to ForeFront sales which have
lower royalty obligations than those of CBT. The Company expects that cost of
revenues may fluctuate from period to period in the future based upon many
factors, including the mix of titles licensed (between titles developed
exclusively by CBT and royalty-bearing titles developed pursuant to development
and marketing alliances) and the timing of expenses associated with development
and marketing alliances.
Research and Development Expenses
- ---------------------------------
Research and development expenses consist primarily of salaries and benefits,
occupancy expenses, travel expenses and fees paid to outside consultants.
Research and development expenses increased in absolute terms but declined as a
percentage of revenues in the three and six month periods ended June 30, 1998
to $6.6 million (or 14.7% of revenues) and $13 million (or 15.3% of revenues),
respectively, from $4.7 million (or 15.9% of revenues) and $9.2 million (or
16.2% of revenues) in the comparable periods of the prior year. These increases
in absolute terms are primarily the result of the hiring of additional research
and development personnel required to expand and enhance the Company's library
of software products. The Company delivered 69 new interactive education
software titles in the second quarter of 1998 bringing the total for the six
months ended June 30, 1998 to 136 titles. The company's library currently
comprises 694 titles, representing a 24 percent increase over the number of
titles at the end of 1997. The decreases in research and development expenses
as a percentage of revenues during these periods were due primarily to more
rapid increases in revenues than in associated expenses and the company's
ability to spread its fixed costs over a larger revenue base. The Company
believes that significant investment in research and development is required to
remain competitive in the information technology education and training market,
and the Company therefore expects research and development expenses to continue
to increase in absolute terms in future periods.
11
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Software development costs are accounted for in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 86, under which the Company is
required to capitalize software development costs after technological
feasibility has been established. To date, development costs after
establishment of technological feasibility have been immaterial, and all
software development costs have been expensed.
Sales and Marketing Expenses
- ----------------------------
Sales and marketing expenses consist primarily of salaries and commissions,
advertising and promotional expenses and related overhead costs. These expenses
increased in absolute terms but have declined as a percentage of revenues in the
three and six month periods ended June 30, 1998 to $18.6 million (or 41.5% of
revenues) and $35.5 million (or 41.9% of revenues), respectively, from $13.4
million (or 45.1% of revenues) and $26.2 million (or 46.5% of revenues) for the
comparable periods of the prior year. The increases in absolute terms were
primarily attributable to an increase in the number of sales and sales related
personnel in the United States and, to a lesser extent, outside the United
States. Commission costs have also increased in absolute terms along with the
increase in revenues during this period. The decreases in sales and marketing
expenses as a percentage of revenues during these periods were due primarily to
more rapid increases in revenues than in associated expenses and the company's
ability to spread its fixed costs over a larger revenue base. The Company
expects to continue to increase sales and marketing expenses in the future to
support an increase in its sales force and expansion of its marketing efforts.
General and Administrative Expenses
- -----------------------------------
General and administrative expenses increased in absolute terms but declined as
a percentage of revenues in the six month period ended June 30, 1998 to $6.8
million (or 8% of revenues), compared to $6 million (or 10.6% of revenues) for
the six month period ended June 30, 1997. The increases in absolute terms were
the result of increased staffing, primarily in the Management Information
Systems department, to support expanding operations. The decreases as a
percentage of revenues were principally due to more rapid increases in revenues
than in associated expenses and the company's ability to spread its fixed costs
over a larger revenue base. The Company anticipates that general and
administrative expenses will increase in future periods due to increases in
staffing and infrastructure.
Cost of acquisitions
- --------------------
The costs of acquisitions for the six months ending June 30, 1998 were $5.5
million (or 6.5% of revenues) for the six months ending June 30, 1998 compared
to $1 million (or 1.6% of revenues) for the six months ended June 30, 1997. The
acquisition costs during the three and six months ended June 30, 1998 are non
recurring costs relating to the acquisition of ForeFront on May 29, 1998.
Other Income, Net
- -----------------
Other income, net, comprises interest expense, interest income and foreign
currency exchange gains and losses. The Company recognized other income, net, of
$936,000 and $1.9 million in the three and six month periods ended June 30,
1998, respectively, as compared to other income, net, of $665,000 and $1.2
million for the comparable periods of the prior year. The increases in other
income during such periods were primarily attributable to higher cash balances
and interest on short-term investments.
12
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The Company's consolidated financial statements are prepared in dollars,
although several of the Company's subsidiaries have functional currencies other
than the US dollar, and a significant portion of the Company's and its
subsidiaries' revenues, costs and assets are denominated in currencies other
than their respective functional currencies. Fluctuations in exchange rates may
have a material adverse effect on the Company's results of operations,
particularly its operating margins, and could result in exchange losses. The
impact of future exchange rate fluctuations on the Company's results of
operations cannot be accurately predicted. To date, the Company has not sought
to hedge the risks associated with fluctuations in the exchange rate, but may
undertake such transactions to hedge specific currency risks in the future.
There can be no assurance that any hedging techniques implemented by the Company
would be successful in eliminating or reducing the effects of currency
fluctuations.
Provision for Income Taxes
- --------------------------
CBT Group PLC operates as a holding company with operating subsidiaries in
several countries, and each subsidiary is taxed based on the laws of the
jurisdiction in which it operates. Because taxes are incurred at the subsidiary
level, and one subsidiary's tax losses cannot be used to offset the taxable
income of subsidiaries in other tax jurisdictions, the Company's consolidated
effective tax rate may increase to the extent that the Company reports tax
losses in some subsidiaries and taxable income in others.
The Company has significant operations and generates a majority of its taxable
income in the Republic of Ireland, and certain of the Company's Irish operating
subsidiaries are taxed at rates substantially lower than U.S. tax rates. The
Company's largest Irish subsidiary currently qualifies for a 10% tax rate which,
under current legislation, is in force until 2010, and another Irish subsidiary
is income tax exempt. If such subsidiaries were no longer to qualify for such
tax rates or if the tax laws were rescinded or changed, the Company's operating
results could be materially adversely affected. Moreover, because the Company
incurs income tax in several countries, an increase in the profitability of the
Company in one or more of these countries could result in a higher overall tax
rate. In addition, if tax authorities were to challenge successfully the manner
in which profits are recognized among the Company's subsidiaries, the Company's
taxes could increase and its cash flow and net income could be materially
adversely affected.
The effective tax rates for the three and six month periods ended June 30, 1998
were 14.0% and 13.6%, compared to 26.9% and 26.2% for the comparable periods in
1997. The higher tax rates for the three and six month periods ended June 30,
1997 were primarily the result of the losses incurred by ForeFront during that
period, which were not available for offset against taxable profits of the
Company. The effective tax rate prior to restatement for ForeFront under pooling
of interests was 15.0% for the three and six month periods ending June 30, 1998.
LIQUIDITY AND CAPITAL RESOURCES
Cash and short-term investments at June 30, 1998 increased to $81.7 million from
$71.5 million at December 31, 1997. Working capital increased to $106.6 million
at June 30, 1998 from $84.0 million at December 31, 1997. These increases were
primarily the result of receipts from the issuance of shares upon exercise of
employee share options, which were partially offset by expenditures on property
and equipment to support the Company's expanded operations.
Net cash utilized by operating activities was $1.0 million in the six months
ended June 30, 1998 compared to net cash utilized by operating activities of
$2.0 million for the comparable period of the prior year.
13
<PAGE>
Capital expenditures were $6.5 million in the six months ended June 30, 1998
compared to $2.1 million for the comparable period of 1997. The increase was
primarily attributable to expenditures relating to computer equipment and
infrastructure and a new facility in Scottsdale, Arizona. Although the Company
currently has no material capital commitments, the Company expects to spend
significantly more in 1998 than in previous years, primarily as a result of
improvements to its information systems and capital expenditures associated with
new offices in Redwood City, California, Scottsdale, Arizona and the new
research and development and fulfillment facilities in Dublin, Ireland. The
Company expects to make significant additional investments in these areas during
the remainder of 1998.
The Company believes that its existing cash and short-term investments will be
sufficient to meet its cash requirements for at least the next twelve months.
The Company from time to time considers the acquisition of complementary
businesses, products or technologies, which may require additional financing.
NEW ACCOUNTING STANDARDS
In February 1998, the Financial Accounting Standards Board issued SFAS No.132,
"Employers' Disclosures About Pensions and Other Post-Retirement Benefits."
This Statement revises employers' disclosures about pensions and other post-
retirement benefit plans. It does not, however, change the measurement of
recognition of those plans. This Statement standardizes the disclosure
requirements for pensions and other post-retirement benefits to the extent
practicable, requires additional information on changes in the benefit
obligations and fair values of plan assets that will facilitate financial
analysis, and eliminates certain disclosures. Restatement of disclosures for
earlier periods is required. This Statement is effective for the Company's
financial statements for the fiscal year ended December 31, 1998.
In March 1998, the American Institute of Certified Public Accountants issued
Statement of Opinion ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use". This SOP provides guidance on
accounting for the costs of computer software developed or obtained for internal
use. This SOP states that entities are required to capitalize certain internal-
use software costs once certain criteria are met. Currently, the Company
generally expenses the costs of developing or obtaining internal-use software as
incurred. The Company is currently evaluating SOP 98-1, but does not expect it
to have a material impact on its consolidated financial statements. This SOP is
effective for financial statements for fiscal years beginning after December 15,
1998. Earlier application is encouraged in fiscal years for which the annual
financial statements have not been issued.
ADDITIONAL RISK FACTORS THAT COULD AFFECT OPERATING RESULTS
In addition to the other factors identified in this report, the following risk
factors could materially and adversely affect the Company's future operating
results and could cause actual events to differ materially from those predicted
in the Company's forward looking statements relating to its business.
Fluctuations in Operating Results
- ---------------------------------
The Company has in the past experienced fluctuations in its quarterly operating
results and anticipates that such fluctuations will continue and could intensify
in the future. Fluctuations in operating results may result in volatility in the
price of the Company's ADSs. Although the Company was profitable in each of the
last eighteen quarters, there can be no assurance that such profitability will
continue in the future or that the levels of profitability will not vary
significantly among quarterly periods. The Company's operating results may
fluctuate as a result of many factors, including size and timing of orders and
shipments, mix of sales between products developed solely by the Company and
products developed through development and marketing alliances, royalty rates,
the announcement, introduction and acceptance of new products, product
14
<PAGE>
enhancements and technologies by the Company and its competitors, mix of sales
between the Company'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 the Company's customers, currency fluctuations and general
economic conditions.
The Company's expense levels are based in significant part on its expectations
regarding future revenues and are fixed to a large extent in the short term.
Accordingly, the Company may be unable to adjust spending in a timely manner to
compensate for any unexpected revenue shortfall. Any significant revenue
shortfall would therefore have a material adverse effect on the Company's
results of operations. In addition, the Company hired additional employees in
the first six months of 1998. This increase in employee expense could have a
negative impact on the Company's operating margins during 1998.
Competition
- -----------
The IT education and training market is highly fragmented and competitive, and
the Company expects this competition to increase. The Company expects that
because of the lack of significant barriers to entry into this market, new
competitors may enter the market in the future. In addition, larger companies
are competing with the Company in the IT education and training market, in part
through the acquisition of the Company's competitors, and the Company expects
this trend to continue. Such competitors may also include publishing companies
and vendors of application software, including those vendors with whom the
Company has formed development and marketing alliances.
The Company competes primarily with third-party suppliers of instructor-led 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, the Company also
competes with consultants, value-added resellers and network integrators.
Certain of these value-added resellers also market products competitive with
those of the Company. The Company expects that as organizations increase their
dependence on outside suppliers of training, the Company 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 the Company's current and potential competitors have substantially
greater financial, technical, sales, marketing and other resources, as well as
greater name recognition, than the Company. In addition, the IT education and
training market is characterized by significant price competition, and the
Company 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 the Company will be able to provide products that compare
favorably with new instructor-led techniques or other interactive training
software or that competitive pressures will not require the Company to reduce
its prices significantly.
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 and management systems.
Many of these new delivery and training management systems will involve new and
different business models and contracting mechanisms. In addition, multimedia
and other product functionality features are being added to the 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.
15
<PAGE>
Seasonality
- -----------
The software industry generally, and the Company in particular, are subject to
seasonal revenue fluctuations, based in part on customers' annual budgetary
cycles and in part on the annual nature of sales quotas. These seasonal trends
have in the past caused, and in the future are expected to continue to 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 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, the Company'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 1998. 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 the Company's results
of operations.
Management of Expanding Operations and Acquisitions
- ---------------------------------------------------
The Company has recently experienced rapid expansion of its operations, which
has placed, and is expected to continue to place, significant demands on the
Company's administrative, operational and financial personnel and systems. The
Company's future operating results will substantially depend on the ability of
its officers and key employees to manage changing business conditions and to
implement and improve its operational, financial control and reporting systems.
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 the Company is unable to respond to and manage changing
business conditions, its business and results of operations could be materially
adversely affected.
As a result of the consummation of a number of acquisitions the Company'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 the Company's operating margins. Any failure to
successfully complete the integration in a timely fashion or to generate
sufficient revenues from the acquired businesses could have a material adverse
effect on the Company's business and results of operations.
The Company regularly evaluates acquisition opportunities and is likely to make
acquisitions in the future. Future acquisitions by the Company could result in
potentially dilutive issuances of equity securities, the incurrence of debt and
contingent liabilities and amortization expenses related to goodwill and other
intangible assets, which could materially adversely affect the Company's results
of operations. Product and technology acquisitions entail numerous risks,
including difficulties in the assimilation of acquired operations, technologies
and products, diversion of management's attention to other business concerns,
risks of entering markets in which the Company has no or limited prior
experience and potential loss of key employees of acquired companies. The
Company's management has had limited experience in assimilating acquired
organizations and products into the Company's operations. No assurance can be
given as to the ability of the Company to integrate successfully any operations,
personnel or products that have been acquired or that might be acquired in the
future, and the failure of the Company to do so could have a material adverse
effect on the Company's results of operations.
16
<PAGE>
Dependence on Key Personnel
- ---------------------------
The Company's future success depends, in large part, on the continued service of
its key management, sales, product development and operational personnel and on
its ability to attract, motivate and retain highly qualified employees,
including management personnel. In particular, the loss of certain senior
management personnel or other key employees could have a material adverse effect
on the Company's business. In addition, the Company depends on writers,
programmers and graphic artists, as well as third-party content providers. The
Company expects to continue to hire additional product development, sales and
marketing, IS and accounting staff. However, there can be no assurance that the
Company 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 upon the Company's current
business, new product development efforts and future business prospects.
Risk of Increasing Taxes
- ------------------------
Certain of the Company's subsidiaries have significant operations and generate
significant taxable income in Ireland, and certain of the Company's Irish
subsidiaries are taxed at rates substantially lower than 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 the Company's tax situation will not change.
Year 2000 Risk
- --------------
The Company is aware of the issues associated with the programming code in
existing computer systems as the millennium (year 2000) approaches. The "Year
2000" issue is pervasive and complex, as virtually every computer operation will
be effected in the same way by the rollover of the two digit year value to 00.
The issue is whether computer systems will properly recognize date sensitive
information when the year changes to 2000. Systems that do not properly
recognize such information could generate erroneous data or cause a system to
fail.
The Company is assessing both the internal readiness of its computer systems and
the compliance of its software sold to customers for handling the year 2000. The
Company expects to implement successfully the systems and programming changes
necessary to address year 2000 issues, and does not believe that the cost of
such actions will have a material effect on the Company's results of operations
or financial condition. There can be no assurance, however, that there will not
be a delay in, or increased costs associated with, the implementation of such
changes, and the Company's inability to implement such changes could have an
adverse effect on future results of operations. With the exception of CBT
Group's DOS-based courseware and its Wintracs administrative tracking tool, the
Company is satisfied that the software it supplies to its customers is year 2000
compliant and it is not dependent on its customers implementing the systems and
programming changes necessary to handle the year 2000.
The company is utilizing both internal and external resources to identify,
correct or reprogram, and test the systems for year 2000 compliance. It is
anticipated that all reprogramming, except for CBT Group products which will no
longer be available beginning December 31, 1999, will be complete by June 30,
1999, allowing adequate time for testing. This process includes getting
confirmations from the Company's primary vendors that plans are being developed
or are already in place to address processing transactions in the year 2000.
However, there can be no assurance that the systems of other companies on which
the Company's
17
<PAGE>
systems rely will be timely converted or that any such failure to
convert by another company would not have an adverse effect on the Company's
system.
18
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
During the period covered by this report, the previously disclosed
possible litigation involving the transfer of certain securities of
Datacode Electronics Ltd. was settled. The terms of the settlement did
not have a material effect on the results of operations or financial
condition of the Company.
ITEM 2. CHANGES IN SECURITIES
On March 9, 1998 the Company effected a two-for-one split of its
issued and outstanding ADSs. Subsequent thereto, the Company's
shareholders approved a proposal at the Company's 1998 Annual General
Meeting to subdivide each of the Ordinary Shares of IR37.5p into four
Ordinary Shares of IR9.375p (the "Ordinary Share Split"). As a
consequence of the Ordinary Share Split, effective May 22, 1998 each
ADS represents and is exchangeable for one Ordinary Share (the "Ratio
Change"). Aside from the Ratio Change, the Ordinary Share Split had no
effect on the ADSs and had no effect on the number of ADSs
outstanding.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS
The Company held its annual general meeting of shareholders on April
28, 1998 (the "AGM"). Voting was conducted by a show of hands in
accordance with Irish law. Four shareholders or their representatives
were present for the vote. There were no abstentions, broker non-votes
or votes withheld with respect to any matter. The following is a brief
description of each matter submitted to a vote of the security holders
at the AGM and a summary of the votes tabulated with respect to each
such matter:
(1) Re-election as directors of the following persons who retired by
rotation and being eligible offered themselves for re-election in
accordance with the Company's Articles of Association;
Mr. John M. Grillos
Votes "FOR" Votes "AGAINST"
----------- ---------------
4 0
Mr. Patrick J. McDonagh
Votes "FOR" Votes "AGAINST"
----------- ---------------
4 0
19
<PAGE>
(2) The shareholders authorized the Company's Board of Directors to
fix the remuneration of the Company's auditors for the year
ending December 31, 1998;
Votes "FOR" Votes "AGAINST"
----------- ---------------
4 0
(3) The shareholders authorized and approved an amendment to the 1994
Share Option Plan (the "1994 Plan") increasing the total number
of shares reserved for issuance thereunder by 250,000 ordinary
shares (which will be represented by 1,000,000 ADSs) and the
directors were authorized to do such acts and things as they may
consider necessary or expedient to establish and carry into
effect the increase in the number of shares available for
issuance under the 1994 plan;
Votes "FOR" Votes "AGAINST"
----------- ---------------
4 0
(4) The shareholders authorized and approved an amendment to the
Company's Capital to subdivide each of the Ordinary Shares of
IR37.5p, issued and authorized, into four Ordinary Shares of
IR9.375p each (the "Ordinary Share Split"), giving the Company an
authorized share capital of IR11,250,000 divided into 120,000,000
ordinary shares of IR9.375p each and the Memorandum and Articles
of Association of the Company were amended to reflect this change
in the authorized share capital of the company;
Votes "FOR" Votes "AGAINST"
----------- ---------------
4 0
20
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
-------------
2.1 Agreement and Plan of Reorganization, dated as of March 16, 1998,
among CBT Group PLC, Rockets Acquisition Corp. and The ForeFront
Group, Inc (Incorporated by reference to Exhibit 2.1 to the Company's
Registration Statement on Form S-4 (File No. 333-51159))
2.2 Form of Voting Agreement (Incorporated by reference to exhibit 2.2 to
the Company's Registration Statement on Form S-4 (File No. 333-
51159))
2.3 Form of ForeFront Affiliate Agreement (Incorporated by reference to
Exhibit 2.3 to the Company's Registration Statement on Form S-4 (File
No. 333-51159))
2.4 Form of Certificate of Merger (Incorporated by reference to Exhibit
2.4 to the Company's Registration Statement on Form S-4 (File No. 333-
51159))
3.1 Memorandum of Association of CBT Group PLC
3.2 Articles of Association of CBT Group PLC
4.1 Deposit Agreement, dated as of April 13, 1995 as amended and restated
as of May 22, 1998, among CBT Group PLC, The Bank of New York as
Depositary, and the Owners and Beneficial Owners of American
Depositary Receipts (Incorporated by reference to Exhibit (a) to Post-
Effective Amendment No. 1 to the Company's Registration Statement on
Form F-6 (File No. 333-8380))
4.2 Restricted Deposit Agreement, dated as of November 30, 1995 as
amended and restated as of May 22, 1998, among CBT Group PLC, The Bank
of New York as Depositary, and the Owners and Beneficial Owners of
Restricted American Depositary Receipts
10.1 Agreement and Mutual Release, dated June 3, 1998 between CBT Group
PLC and Jeffrey N. Newton
11.1 Statement Regarding Computation of Net Income Per Ordinary Share
27.1 Financial Data Schedule (EDGAR version only)
(b) Reports on Form 8-K
------------------------
The Company filed a report on Form 8-K with the Securities and Exchange
Commission on June 12, 1998 reporting under ITEM 2 the Company's
acquisition of THE FOREFRONT GROUP, INC.
21
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
CBT GROUP PLC
Date: August 14, 1998 By: /s/ James J. Buckley
--------------------
James J. Buckley
Chief Executive Officer and President
Date: August 14, 1998 By: /s/ Richard Y. Okumoto
----------------------
Richard Y. Okumoto
Vice President, Finance and Chief Financial
Officer
22
<PAGE>
EXHIBIT 3.1
-----------
COMPANIES ACTS 1963 TO 1990
PUBLIC COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION
OF
CBT GROUP PUBLIC LIMITED COMPANY
(as amended by Special Resolutions passed
on 24th March 1992, 31st March 1995 and 28th April 1998)
1. The name of the Company is CBT GROUP PUBLIC LIMITED COMPANY.
2. The Company is to be a public limited company.
3. The objects for which the Company is established are:
(1) (a) To acquire and hold shares and stocks of any class or
description, debentures, debenture stock, bonds, bills, mortgages,
obligations, investments and securities of all descriptions and of any
kind issued or guaranteed by any company, corporation or undertaking
of whatever nature and wheresoever constituted or carrying on business
or issued or guaranteed by any government, state, dominion, colony,
sovereign ruler, commissioners, trust, public, municipal, local or
other authority or body of whatsoever nature and wheresoever situated
and investments, securities and property of all descriptions and of
any kind, including real and chattel real estate, mortgages,
reversions, assurances policies, contingencies and choses in action.
To purchase for investment only property of any tenure and any
interest therein, and to make advances upon the security of land or
other similar property or any interest therein.
(b) To carry on any other trade or business whatsoever which can in
the opinion of the directors be advantageously or conveniently carried
on by the Company in connection with or as ancillary to any of the
above businesses or the general business of the Company.
(2) To carry on the business of surveyors, estate agents, valuers,
auctioneers, carriers, shippers, forwarding agents, garagement,
caterers, licensed publicans, fuel suppliers, textile manufacturers
and dealers, insurance agents and brokers, farmers and generally to
import, export, manufacture, make, grow, produce, repair, adapt for
sale and prepare for market goods and materials of every kind, or
otherwise to carry on any
<PAGE>
business which may seem to the Company capable of being conveniently
carried on in connection with the above or any one of the above or
calculated directly or indirectly to enhance the value of or render
more profitable any of the Company's property or rights.
(3) To acquire by purchase, exchange, lease, fee farm grant or otherwise,
either for an estate in fee simple or for any less estate or other
estate or interest whether immediate or reversionary and whether
vested or contingent, any lands, tenements or hereditaments of any
tenure, whether subject or not to any charges or encumbrances, and to
hold, farm, work and manage and to let, sublet, either furnished or
unfurnished, mortgage or charge land and buildings of any kind,
reversions, interests, annuities, life policies, and any other
property real or personal, movable or immovable, either absolutely or
conditionally, and either subject or not to any mortgages, charges,
ground rent or other rents or encumbrances.
(4) To hold and farm and work or manage or to sell, let, licence,
alienate, mortgage, lease or charge land, house property, shops,
flats, maisonettes, reversions, interests, annuities, life policies,
and any other property real or personal, movable or immovable, either
absolutely or conditionally, and either subject to or not to any
mortgage, charge, rent or encumbrance and to pay for any lands,
tenements, hereditaments, chattels, or assets acquired by the Company
in cash or shares, stock, debentures or obligations of the Company
whether fully paid or otherwise or in any other manner.
(5) To enter into contracts of every nature and kind and to carry on the
business of a trust and investment company and to invest the funds of
the Company in or upon or otherwise acquire, hold and deal in
property, securities, stocks, shares, debentures, interests and
investments of every nature and description and to hold, serve,
exchange, and otherwise deal in such properties and investments, and
receive income therefrom, and to borrow for investment purposes, and
to place the funds of the Company on deposit with bankers or financial
or mercantile houses or companies and withdraw same therefrom, and to
enter into hire purchase, credit sales and other deferred payment
arrangements.
(6) To acquire shares, stocks, debentures, debenture stock, bonds,
obligations as securities either by original subscription, tender,
purchase, exchange or otherwise, and to subscribe for the same either
conditionally or otherwise, to guarantee and to write descriptions
thereof and to exercise and enforce all rights and powers conferred by
or incidental to the ownership thereof.
(7) To act as agents or managers in carrying on any business concerns or
undertakings and to employ experts to investigate and examine the
condition, management,
-2-
<PAGE>
prospects, value and circumstances of any business concerns and
undertakings and generally of any assets, property or rights of any
kind.
(8) To apply for, purchase or otherwise acquire and protect, prolong,
renew, whether in Ireland or elsewhere any patents, patent rights,
brevets d'invention, licences, protection, concessions and the like,
conferring any exclusive or non-exclusive or limited right to use, or
any secret or other information as to any invention, process or
privilege which may seem capable of being used for any of the purposes
of the Company or the acquisition of which may seem calculated
directly or indirectly to benefit the Company, and to use, exercise,
develop, manufacture under or grant licences or privilege in respect
thereof or otherwise turn to account the property, rights, privileges
and information so acquired, and to carry on any business in any way
connected therewith, and to expend money in experimenting upon and
testing, and in improving or seeking to improve any patents,
inventions, systems, programmes, computing or other machines or rights
which the Company may acquire or propose to acquire.
(9) To raise or borrow money, and to secure the payment of money by the
issue of or upon debentures or debenture stock, perpetual, terminable
or otherwise or bonds or other obligations, charged or not charged
upon or by mortgage, charge, hypothecation, lien or pledge of the
whole or any part of the undertaking property, assets and rights of
the Company, both present and future, including its uncalled capital
and generally in such other manner and on such terms as may seem
expedient, and to issue any of the Company's securities, for such
consideration and on such terms as may be thought fit, including the
power to pay a proportion of the profits of the Company by way of
interest on any monies so raised or borrowed; and also by a similar
mortgage, charge, hypothecation, lien or pledge, to secure and
guarantee the performance by the Company of any obligation or
liability it may undertake; and to redeem or pay off any such
securities aforesaid.
(10) To draw, make, accept, endorse, discount, execute and issue promissory
notes, bills of exchange, bills of lending, warrants, debentures and
other negotiable or transferable instruments.
(11) To guarantee, support or secure, whether by personal covenant or by
mortgaging or charging all or any part of the undertaking property and
assets (present and future) and uncalled capital of the Company, or
all such methods, the performance of the obligations of and the
repayment or payment of the principal amounts and interest of any
person, firm or company or the dividends or interest of any
securities, including (without prejudice to the generality of the
forgoing) any company which is the Company's holding company or a
subsidiary or associated company.
-3-
<PAGE>
(12) To acquire and undertake the whole or any part of the business,
property, goodwill and assets of any person, firm or company carrying
on or proposing to carry on any of the businesses which the Company is
authorised to carry on, or which can be conveniently carried on in
connection with the same, or may seem calculated directly or
indirectly to benefit the Company, or possessed of property suitable
for the purposes of the Company and as part of the consideration for
any of the acts or things aforesaid or property acquired to undertake
all or any of the liabilities of such person, firm or company, or to
acquire an interest in, amalgamate with, or enter into any arrangement
for sharing profits, or for co-operation, or for limiting competition,
or for mutual assistance with any such person, firm or company, and to
give issue or accept by way of consideration for any of the acts or
things aforesaid or property acquired, any shares, debentures,
debenture stock or securities that may be agreed upon, and to hold and
retain or sell, mortgage and deal with any shares, debentures,
debenture stock or securities so received.
(13) To enter into partnership or into any arrangement for sharing profits,
union of interest, a joint adventure, reciprocal concession, co-
operation or otherwise with any company carrying on or engaged in any
business or transaction which the Company is authorised to carry on or
engaged in, or any business or transaction capable of being conducted
so as directly or indirectly to benefit the Company, and to lend money
to, guarantee the contracts or debentures of or otherwise assist any
such companies, and to take or otherwise acquire and hold shares or
stock in or securities of, and to subsidise or otherwise assist any
such company and to sell, hold, re-issue, with or without guarantee,
or otherwise deal with such shares, stocks or securities.
(14) To undertake the office of trustee, executor, administrator,
committee, manager, secretary, registrar, attorney, delegate,
substitute or treasurer, and any other offices or situations of trust
or confidence, and to perform and discharge the duties and functions
incidental thereto, and generally to transact all kinds of trust and
agency business either gratuitously or otherwise.
(15) To take part in the creation, issue or conversion of debentures,
debenture stock, bonds, obligations, shares, stocks or securities, and
to act as trustees in connection with any such securities and to take
part in the conversion of business concerns and undertakings into
companies.
(16) To take part in the management, supervision or control of the business
or operations of any company or undertaking, and for that purpose to
appoint and remunerate any Directors, Accountants or other experts or
agents.
(17) To carry on and undertake any business, transaction or operation
commonly carried on or undertaken by financial agents, factors,
financiers, underwriters, concessionaires, contractors for public and
other works or merchants and to enter into
-4-
<PAGE>
hire purchase, credit sales, and other agreements providing for
payment by instalments or deferred means.
(18) To apply for, promote and obtain any Act of the Oireachtas,
provisional order or licence of the Minister for Industry and Commerce
or other authority for enabling the Company to carry any of its
objects into effect, or for effecting any modification of the
Company's constitution, or for any other purpose which may seem
expedient, and to oppose any proceedings or applications which may
seem calculated, directly or indirectly, to prejudice the Company's
interests.
(19) To enter into any arrangements with any governments or authorities
(supreme, municipal, local or otherwise), or any corporations,
companies or persons that may seem conducive to the attainment of the
Company's objects, or any of them, and to obtain from any such
government, authority, corporation, company, or person any charters,
contracts, decrees, rights, privileges and concessions which the
Company may think desirable, and to carry out, exercise and comply
with any such arrangements, charters, contracts, decrees, rights,
privileges and concessions.
(20) To subscribe for, take, purchase or otherwise acquire and hold shares
or other interests in, or securities of any other company having
objects altogether or in part similar to those of this Company or
carrying on any business capable of being carried on so as, directly
or indirectly, to benefit this Company.
(21) To promote any company for the purpose of acquiring all or any of the
property or liabilities of the Company, or of undertaking any business
or operations which may appear likely to assist or benefit the Company
or to enhance the value of or render more profitable any property,
assets or business of the Company, or for any other purpose which may
seem directly or indirectly calculated to benefit the Company.
(22) To guarantee the payments of dividends or interest on any stocks,
shares, debentures or other securities issued by, or any other
contract or obligation of any company, societe anonyme, association,
undertaking or public or private body and the performance of contracts
by or become security for members of any company having dealings with
the Company.
(23) To accumulate capital for any of the purposes of the Company, and to
appropriate any of the Company's assets to specific purposes, either
conditionally or unconditionally and to admit any class or section of
those who have any dealings with the Company to any share in the
profits thereof or in the profits of any particular branch of the
Company's business, or to any other special rights, privileges,
advantages or benefits.
(24) To apply for and obtain any legislative, municipal or other acts or
authorisations for enabling the Company to carry any of its objects
into effect or for any extension or
-5-
<PAGE>
alteration of its powers, or for effecting any modification of the
Company's constitution, or for any other purpose which may seem
expedient, and to oppose any proceedings, or applications which may
seem calculated directly or indirectly to prejudice the Company's
interest.
(25) To apply for and obtain all such licences, consents, authorities,
grants, permissions and concessions as may be required, or deemed to
be desirable, in connection with the running or administration of the
Company's business or otherwise in relation to its affairs.
(26) To advance and lend money, with or without security to such persons or
companies and upon such terms and subject to such conditions as may
seem expedient.
(27) To create, maintain, invest and deal with any reserve or sinking funds
for redemption of obligations of the Company, or for depreciation of
works or stock, or any other purpose of the Company.
(28) To remunerate any person, firm or company rendering services to this
Company, either by cash payment or by the allotment to him or them of
shares or securities of the Company credited as paid up in full or in
part or otherwise as may be thought expedient.
(29) To effect assurance and insurance contracts and policies of every
description, provided that nothing herein contained shall empower the
Company to carry on a business of insurance in the meaning of the
Insurance Acts, 1909 to 1989.
(30) To sell or otherwise dispose of the whole or any part of the business
or property of the Company, either together or in portions, for such
consideration as the Company may think fit, and in particular for
shares, debentures or securities of any company purchasing the same.
(31) To distribute either upon a distribution of assets or a division of
profits among the members of the Company in kind any property of the
Company, and in particular any shares, debentures or securities of
other companies belonging to this Company, or of which this Company
may have the power of disposing.
(32) To establish, join, support and subscribe to, or to aid in the
establishment and support of associations, institutions, societies,
co-operatives, clubs, funds, trusts or conveniences calculated to
benefit the Company or employees or ex-employees of the Company or the
dependants or connections of such persons or connected with any town
or place where the Company carries on business and to grant pensions,
gratuities, allowances or charitable aid to any person who may have
served the Company, or to the wives, children or other relatives of
such person and to make
-6-
<PAGE>
payments towards insurance, and to form and contribute to provident
and benefit funds for the benefit of any persons employed by the
Company and to subscribe or guarantee money for charitable or
benevolent objects or for any exhibition or for any public general or
useful object.
(33) To support and subscribe to any charitable or public object, and any
institution, society or club which may be for the benefit of the
Company or its employees, or may be connected with any town or place
where the Company carries on business.
(34) To make gifts or grant bonuses to officers or other persons who are or
have been in the employment of the Company and to allow any such
persons to have the use and enjoyment of such property, chattels or
other assets belonging to the Company upon such terms as the Company
shall think fit.
(35) To insure the life of any persons who may, in the opinion of the
Company, be of value to the Company, as having or holding for the
Company interests, goodwill, or influence or otherwise and to pay the
premiums on such insurance.
(36) To promote freedom of contract and to resist, insure against,
counteract and discourage interference therewith, to join any lawful
federation, union, association or party and to contribute to the funds
thereof or do any other lawful act or thing with a view to preventing
or resisting directly or indirectly any interruption of or
interference with the Company or any other trade or business or
providing or safeguarding against the same, or resisting or opposing
any strike movement or organisation which may be thought detrimental
to the interests of the Company or it employees, and to subscribe to
any association for funds for any such purposes.
(37) To procure the Company to be registered or recognised in any foreign
country, colony, dependency or place.
(38) To pay all or any expenses of, incidental to or incurred in connection
with the formation and incorporation of the Company and the raising of
its share and loan capital, or to contract with any person or company
to pay the same, and (except for the case of shares subject to the
provisions of any statute for the time being in force) to pay
commissions to brokers and others for underwriting, placing, selling
or guaranteeing the subscription of any shares, debentures or
securities of the Company.
(39) To do all or any of the above things in any part of the world, and as
principals, agents, contractors, trustees or otherwise, and either by
or through trustees, agents, subcontractors or otherwise and either
alone or in partnership or conjunction with any person or company, and
to contract for the carrying on of any operation connected with the
Company's business by any person or company.
-7-
<PAGE>
(40) To carry on any other trade or business whatsoever which can in the
opinion of the board of directors be advantageously carried on by the
Company in connection with or as ancillary to any of the above
businesses or the general business of the Company.
(41) To do all such other things as may be deemed incidental or conducive
to the attainment of the above objects or any of them:
And it is hereby declared that in the construction of this clause the word
"company" except where used in reference to this Company, shall be deemed to
include any person or partnership or other body or persons, whether incorporated
or not incorporated and whether domiciled in Ireland or elsewhere, and words
denoting the singular number only shall include the plural number and vice
versa.
The objects set forth in any sub-clause of this clause shall not be
restrictively construed but the widest interpretation shall be given thereto and
they shall not except where the context expressly so requires in such sub-
clause, be in any way limited to or restricted by reference to or inference from
any other object or objects set forth in such sub-clause or from the terms of
any other sub-clause or by the name of the Company. None of such sub-clauses or
the object or objects therein specified for the powers thereby conferred shall
be deemed subsidiary or auxiliary to the objects or powers mentioned in any
other sub-clause, but the Company shall have full power to exercise all or any
of the powers and to achieve or endeavour to achieve all or any of the objects
conferred by and provided in any one or more of the said sub-clauses.
4. The liability of the members is limited.
5. The share capital of the Company is IR(Pounds)11,250,000 divided into
120,000,000 ordinary shares of 9.375p each. The share capital of the Company
whether the original or any increased capital of the Company may be divided into
different classes of shares with any special, qualified, preferred, deferred or
other rights or privileges or conditions as to capital, dividends, rights of
voting or other matters attached thereto, and from time to time the Company's
regulations may be varied so far as may be necessary to give effect to any such
rights, privileges or conditions.
-8-
<PAGE>
We, the several persons, whose names, addresses and descriptions are subscribed,
wish to be formed into a company in pursuance of this Memorandum of Association,
and we agree to take the number of shares in the capital of the Company set
opposite our respective names.
- --------------------------------------------------------------------
NAMES, ADDRESSES AND NUMBER OF SHARES
DESCRIPTIONS OF SUBSCRIBERS TAKEN BY EACH SUBSCRIBER
- --------------------------------------------------------------------
Bridget Trust, One Share
Highdown Hill,
Newcastle,
Co. Dublin
Formations Manager
Susan Lawless, One Share
14 Springhill Park,
Blackrock,
County Dublin
Systems Manager
- --------------------------------------------------------------------
Total Shares Taken: Two
- --------------------------------------------------------------------
Dated this 25th day of July 1989
Witness to the above signatures: Geraldine Reynolds
39 Birchwood Heights
Tallaght,
Dublin 24
Secretary
-9-
<PAGE>
EXHIBIT 3.2
-----------
COMPANIES ACTS 1963 TO 1990
COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
CBT GROUP PUBLIC LIMITED COMPANY
(adopted by a special resolution passed on 31st March 1995
and amended by special resolutions passed
on 6th July 1995 and 28th April 1998)
PART I - PRELIMINARY
--------------------
1. Interpretation
--------------
(a) The Regulations contained in Table A in the First Schedule to the Companies
Act 1963 shall not apply to the Company.
(b) In these Articles the following expressions shall have the following
meanings:
"the Acts" the Companies Acts 1963 to 1990 including any statutory
modification or re-enactment thereof for the time being
in force
"these Articles" these Articles of Association as from time to time
altered by resolution of the Company
"the Auditors" the auditors for the time being of the Company
"Board" the board of directors for the time being of the Company
"clear days" in relation to the period of a notice, that period
excluding the day the notice is given, the day the
notice is deemed to be received and the day for which it
is given or on which it is to take affect
"the Directors" the directors for the time being of the Company or the
directors present at a meeting of the Board of directors
and includes any person occupying the position of
director by whatever name called
1
<PAGE>
"the holder" in relation to any share the member whose name is
entered in the Register as the holder or the share
"the Office" the registered office for the time being of the Company
"the Ordinary ordinary shares of 9.375p each in the capital of the
Shares" Company
"the Register" the register of members to be kept as required by the
Acts
"the Seal" the common seal of the Company or (where relevant) the
official securities seal kept by the company pursuant to
the Acts
"Secretary" any person appointed to perform the duties of the
secretary of the Company
"the State" the Republic of Ireland
(c) Expressions referring to writing shall, unless the contrary intention
appears, be construed as including references to printing, lithography,
photography and any other modes of representing or reproducing words in a
visible form. The expression "executed" shall include any mode of
execution whether under seal or under hand.
(d) Unless specifically defined herein or the context otherwise requires, words
or expressions contained in these Articles shall bear the same meaning as
in the Acts but excluding any statutory modification thereof not in force
upon the date of adoption of these Articles.
(e) Reference to Articles are to Articles of these Articles. The headings and
captions included in these Articles are inserted for convenience of
reference only and shall not be considered a part of or affect the
construction or interpretation of those Articles.
PART II - SHARE CAPITAL AND RIGHTS
----------------------------------
2. Share Capital
-------------
The share capital of the Company is IR(Pounds)11,250,000 divided into
120,000,000 ordinary Shares.
3. Rights of Shares on Issue
-------------------------
Without prejudice to any special rights conferred on the holders of any
existing shares or class of shares and subject to the provisions of the
Acts any share may be issued with such rights or restrictions as the
Company may by ordinary resolution determine.
2
<PAGE>
4. Redeemable Shares
-----------------
Subject to the provisions of the Acts redeemable shares may be issued by
the Company and redeemed accordingly.
5. Purchase of Own Shares
----------------------
Subject to the provisions of the Acts the Company may purchase its own
shares (including any redeemable shares) and enter into a contingent
purchase contract for the purchase of its shares.
6. Variation of Rights
-------------------
(a) Whenever the share capital of the Company is divided into different classes
of shares, the rights attaching to any class may be varied or abrogated
with the consent in writing of the holders of three-fourths of the issued
shares of that class, or with the sanction of a special resolution passed
at a separate general meeting of the holders of the shares of that class
and may be so varied or abrogated either whilst the Company is a going
concern or during or in contemplation of a winding-up.
(b) Unless otherwise provided by the rights attaching to any shares, the rights
attaching to any shares shall be deemed to be varied by the reduction of
the capital paid up on those shares and by the allotment of further shares
ranking in priority for payment of a dividend or in respect of capital or
which confer on the holders voting rights more favourable than those
conferred by such first mentioned shares, but shall not otherwise be deemed
to be varied by the creation or issue of further shares.
(c) To every separate general meeting of the holders of shares of any class all
the provisions of these Articles relating to general meetings of the
Company or to the proceedings thereat shall, mutatis mutandis, apply,
except that in respect of any class where all of the shares are hold by
only one shareholder then for the purposes of a general meeting of the
holders of shares of that class the necessary quorum shall be one person
and in all other cases the necessary quorum shall be two persons at least
present in person or by proxy and holding or representing by proxy one-
third in nominal amount of the issued shares of the class of shares (but so
that if at any adjourned meeting of such holders a quorum as above defined
is not present, those members who are present in person or by proxy shall
be a quorum), and that any holder of shares of the class present in person
or by proxy may demand a poll and that the holders of shares of the class
shall, on a poll, have one vote in respect of every share of the class held
by then respectively.
7. Trusts not Recognised
---------------------
Except as required by law, no person shall be recognized by the Company as
holding any share upon any trust and the Company shall not be bound by or
be compelled in any way to recognise (even when having notice thereof) any
equitable, contingent, future or partial interest in any share or any
interest in any fractional part of a share or (except only as by these
Articles or by law otherwise provided) any other rights in respect of any
share except an absolute right to the entirety thereof in the holder. This
shall not preclude the Company
3
<PAGE>
from requiring the members or a transferee of shares to furnish the Company
with information as to the beneficial ownership of any share when such
information is reasonably required by the Company.
8. Allotment of Shares
-------------------
(a) The Directors are generally and unconditionally authorised to exercise all
the powers of the Company to allot relevant securities (as defined for the
purpose of section 20 of the Companies (Amendment) Act 1983 (up to an
amount equal to the authorized but as yet unissued share capital of the
Company as at the date of adoption of these Articles of Association). The
authority hereby conferred shall expire five years from such date unless
previously renewed, revoked or varied by the Company in general meeting,
save that the Company may before such expiry make an offer or agreement
which would or might require relevant securities to be allotted after the
authority has expired and the Directors may allot relevant securities in
pursuance of such offer or agreement as if the authority hereby conferred
had not expired. The pre-emption provisions of sub-section (1), of section
23 of the Companies (Amendment) Act 1983 shall not apply to any allotment
by the Company of equities securities (within the meaning of the said
section 23).
(b) Notwithstanding the provisions of Article 8(a) above no allotment of shares
shall be made which would result in a change in control of the Company
unless such allotment has first been approved by the shareholders of the
Company in general meeting.
9. Payment of Commission
---------------------
The Company may exercise the powers of paying commissions conferred by the
Acts. Subject to the provisions of the Acts, any such commission may be
satisfied by the payment of cash or by the allotment of fully or partly
paid shares or partly in one way and partly in the other. The Company may
also, on any issue of shares, pay such brokerage as may be lawful.
10. Financial Assistance
--------------------
Except as provided in these Articles or as permitted by the Acts, the
Company shall not give, whether directly or indirectly and whether by means
of a loan, guarantee, the provision of security or otherwise, any financial
assistance for the purpose of or in connection with a purchase or
subscription made or to be made by any person for any shares in the Company
or in its holding company.
PART III - SHARE CERTIFICATES
-----------------------------
11. Issue of Certificates
---------------------
Every member shall be entitled without payment to one certificate for all
the shares of each class hold by him or several certificates each for one
or more of his shares upon payment for every certificate after the first of
such reasonable sum as the Directors may determine provided that the
company shall not be bound to issue more than one certificate for shares
held jointly by several persons and delivery of a certificate to one joint
holder shall be a sufficient delivery to all of them. Every certificate
shall be sealed with the Seal and shall
4
<PAGE>
specify the number, class and distinguishing numbers (if any) of the shares
to which it relates and the amount or respective amounts paid up thereon.
12. Balance and Exchange Certificates
---------------------------------
(a) Where some only of the shares comprised in a share certificate are
transferred the old certificate shall be cancelled and a new certificate
for the balance of such shares shall be issued in lieu without charge.
(b) Any two or more certificates representing shares of any one class held by
any member may at his request be cancelled and a single new certificate for
such shares issued in lieu without charge. If any member shall surrender
for cancellation a share certificate representing shares held by him and
request the Company to issue in lieu two or more share certificates
representing such shares in such proportions as he may specify, the
Directors may, if they think fit, comply with such request.
13. Renewal of Certificates
-----------------------
If a share certificate is defaced, worn-out, lost, stolen or destroyed, it
may be renewed on such terms (if any) as to evidence and indemnity and
payment of the expenses incurred by the company in investigating evidence
as the Directors may determine but otherwise free of charge and (in the
case of defacement or wearing-out) on delivery of the old certificate.
PART IV - LIEN ON SHARES
------------------------
14. Extent of Lien
--------------
The Company shall have a first and paramount lien on every share (not being
a fully paid share) for all moneys (whether presently payable or not)
payable at a fixed time or called in respect of that share. The Directors
may at any time declare any share to be wholly or in part exempt from the
provisions of this Article. The Company's lien on a share shall extend to
all moneys payable in respect of it.
15. Power of Sale
-------------
The Company may sell in such manner as the Directors determine any share on
which the Company has a lien if a sum in respect of which the lien exists
is presently payable and is not paid within fourteen clear days after
notice demanding payment (and stating that if the notice is not complied
with the shares may be sold) has been given to the holder of the share or
to the person entitled to it by reason of the death or bankruptcy of the
holder.
16. Power to Effect Transfer
------------------------
To give effect to a sale the Directors may authorise some person to
execute an instrument of transfer of the shares sold to, or in accordance
with the directions of, the purchaser. The transferee shall be entered in
the Register as the holder of the shares comprised in any such transfer and
he shall not be bound to see to the application of the purchase moneys nor
shall his title to the shares be affected by any irregularity in or
invalidity of the proceedings in reference to the sale.
5
<PAGE>
17. Proceeds of Sale
----------------
The proceeds of the sale, after payment of the costs, shall be applied in
payment of so much of the sum for which the lien exists as is presently
payable and any residue shall (upon surrender to the Company for
cancellation of the certificate for the shares sold and subject to a like
lien for any moneys not presently payable as existed upon the shares before
the sale) be paid to the person entitled to the shares at the date of the
sale.
PART V - CALLS ON SHARES AND FORFEITURE
---------------------------------------
18. Making of Calls
---------------
Subject to the terms of allotment, the Directors may make calls upon the
members in respect of any moneys unpaid on their shares (whether in respect
of nominal value or premium) and each member shall (subject to receiving at
least fourteen clear days' notice specifying when and where payment is to
be made) pay to the Company as required by the notice the amount called on
his shares. A call may be required to be paid by instalments. A call may,
before receipt by the Company of a sum due thereunder, be revoked in whole
or in part and payment of a call may be postponed in whole or in part. A
person upon whom a call is made shall remain liable for calls made upon him
notwithstanding the subsequent transfer of the shares in respect whereof
the call was made.
19. Time of Call
------------
A call shall be deemed to have been made at the time when the resolution of
the Directors authorising the call was passed.
20. Liability of Joint Holders
--------------------------
The joint holders of a share shall be jointly and severally liable to pay
all calls in respect thereof.
21. Interest on Calls
-----------------
(a) If a call remains unpaid after it has become due and payable the person
from whom it is due and payable shall pay interest on the amount unpaid
from the day it became due until the day it is paid at the rate fixed by
the terms of allotment of the share or in the notice of the call or, if no
rate is fixed, at the appropriate rate (as defined by the Companies
(Amendment) Act 1983) but the Directors may waive payment of the interest
in whole or in part.
(b) The Directors may, if they think fit, receive from any member willing to
advance the same, all or any part of the moneys uncalled and unpaid upon
any shares hold by him and upon all or any of the moneys so advanced may
(until the same would, but for such advance, become payable) pay interest
at such rate not exceeding (unless the Company in general meeting otherwise
directs) 5 per cent per annum, as may be agreed upon between the Directors
and the member paying such sum in advance.
22. Instalments Treated as Calls
----------------------------
6
<PAGE>
An amount payable in respect of a share on allotment or at any fixed date,
whether in respect of nominal value or premium or as an instalment of a
call, shall be deemed to be a call and if it is not paid the provisions of
these Articles shall apply as if that amount had become due and payable by
virtue of a call.
23. Power to Differentiate
----------------------
Subject to the terms of allotment, the Directors may make arrangements on
the issue of shares for a difference between the holders in the amounts and
times of payment of calls on their shares.
24. Notice Requiring Payment
------------------------
If a call remains unpaid after it has become due and payable the Directors
may give the person from whom it is due not less than fourteen clear days
notice requiring payment of the amount unpaid together with any interest
which may have accrued. The notice shall name the place where payment is
to be made and shall state that if the notice is not complied with the
shares in respect of which the call was made will be liable to be
forfeited.
25. Forfeiture
----------
If the notice is not complied with any share in respect of which it was
given may, before the payment required by the notice has been made, be
forfeited by a resolution of the Directors and the forfeiture shall include
all dividends or other moneys payable in respect of the forfeited share and
not paid before the forfeiture. The Directors may accept a surrender of
any share liable to be forfeited hereunder.
26. Power of Disposal
-----------------
Subject to the provisions of the Acts, a share forfeited (or surrendered in
lieu thereof) may be sold, re-allotted or otherwise disposed of on such
terms and in such manner as the Directors may determine either to the
person who was before forfeiture the holder thereof or to any other person
and at any time before any such sale, re-allotment or other disposition,
the forfeiture may be cancelled on such term as the Directors may think
fit. Where for the purposes of its disposal such a share is to be
transferred to any person the Directors may authorise some person to
execute an instrument of transfer of the share to that person.
27. Effect of Forfeiture
--------------------
A person any of whose shares have been forfeited or surrendered shall cease
to be a member in respect of them and shall deliver to the Company for
cancellation the certificate(s) for the shares forfeited or surrendered but
shall remain liable to pay to the Company all moneys which at the date of
forfeiture or surrender were payable by him to the Company in respect of
those shares with interest at the rate at which interest was payable on
those moneys before the forfeiture or, if no interest was so payable, at
the appropriate rate (as defined in the Acts) from the date of forfeiture
or surrender until the date of payment but the Directors may waive payment
in whole or in part or enforce payment without any allowance for the value
of the shares at the time of forfeiture or surrender or for any
consideration received on their disposal.
7
<PAGE>
28. Statutory Declaration
---------------------
A statutory declaration by a Director or the Secretary that a share has
been forfeited or surrendered on a specified date shall be conclusive
evidence of the facts stated in it as against all persons claiming to be
entitled to the share and the declaration shall (subject to the execution
of an instrument of transfer if necessary) constitute a good title to the
share and the person to whom the share is disposed of shall be registered
as the holder of the share and shall not be bound to see to the application
of the consideration, if any, nor shall his title to the share be affected
by any irregularity in or invalidity of the proceedings in reference to the
forfeiture, surrender, sale, re-allotment or other disposal of the share.
PART VI - TRANSFER OF SHARES
----------------------------
29. Instrument of Transfer
----------------------
The instrument of transfer of any share shall be in writing in any usual
form or in any other form which the Directors may approve. Any instrument
of transfer shall be executed by or on behalf of the transferor and (except
in the case of fully paid shares) by the transferee.
30. Refusal to Register Transfer
----------------------------
(a) The Directors may, in their absolute discretion and without giving any
reason therefor, refuse to register the transfer of a share not being a
fully paid share.
(b) The Directors may also refuse to register any transfer (whether or not it
is in respect of a fully paid share) unless:
(i) it is lodged at the Office or at such other place as the Directors
may appoint and is accompanied by the certificate of the shares to
which it relates and such other evidence as the Directors may
reasonably require to show the right of the transferor to make the
transfer;
(ii) it is in respect of only one class of shares; and
(iii) it is in favour of not more than four transferees.
31. Procedure on Refusal
--------------------
If the Directors refuse to register a transfer they shall, within two
months after the date an which the transfer was lodged with the Company,
send to the transferee notice of the refusal.
32. Closing of Transfer Books
-------------------------
The registration of transfers of shares or of transfers of any class of
shares may be suspended at such times and for such periods (not exceeding
thirty days in each year) as the Directors may determine.
33. Absence of Registration Fees
----------------------------
No fee shall be charged for the registration of any instrument of transfer
or other document relating to or affecting the title to any share.
8
<PAGE>
34. Retention of Transfer Instruments
---------------------------------
The Company shall be entitled to retain any instrument of transfer which is
registered, but any instrument of transfer which the Directors refuse to
register shall be returned to the person lodging it when notice of the
refusal is given.
PART VII - TRANSMISSION OF SHARES
---------------------------------
35. Death of Member
---------------
If a member dies the survivor or survivors where he was a joint holder and
his personal representatives where he was a sole holder or the only
survivor of joint holders, shall be the only persons recognised by the
Company as having any title to his interest in the shares, but nothing
herein contained shall release the estate of a deceased member from any
liability in respect of any share which has been jointly held by him.
36. Transmission on Death or Bankruptcy
-----------------------------------
A person becoming entitled to a share in consequence of the death or
bankruptcy of a member may, upon such evidence being produced as the
Directors may properly require, elect either to become the holder of the
share or to have some person nominated by him registered an the transferee.
If he elects to become the holder he shall give notice to the Company to
that effect. If he elects to have another person registered he shall
execute an instrument of transfer of the share to that person. All of
these Articles relating to the transfer of shares shall apply to the notice
or instrument of transfer as if it were an instrument of transfer executed
by the member and the death or bankruptcy of the member had not occurred.
37. Rights before Registration
--------------------------
A person becoming entitled to a share by reason of the death or bankruptcy
of a member (upon supplying to the Company such evidence as the Directors
may reasonably require to show his title to the share) shall have the
rights to which he would be entitled if he were the holder of the share,
except that he shall not, before being registered as the holder of the
share, be entitled in respect of it to attend or vote at any meeting of the
Company or at any separate meeting of the holders of any class of shares in
the Company, so, however, that the Directors may at any time give notice
requiring any such person to elect either to be registered himself or to
transfer the share, and if the notice is not complied with within ninety
days, the Directors may thereupon withhold payment of all dividends,
bonuses or other moneys payable in respect of the share until the
requirements of the notice have been complied with.
PART VIII - ALTERATION OF SHARE CAPITAL
----------------------------------------
38. Increase of Capital
-------------------
The Company may from time to time by ordinary resolution increase the share
capital by such sum, to be divided into shares of such amount, as the
resolution shall prescribe.
39. Consolidation, Sub-Division and Cancellation of Capital
-------------------------------------------------------
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The Company may by ordinary resolution:
(i) consolidate and divide all or any of its share capital into shares
of larger amount;
(ii) subject to the provisions of the Acts, subdivide its shares, or any
of them, into shares of smaller amount (and so that the resolution
whereby any share is sub-divided may determine that, as between the
holders of the shares resulting from such sub-division, one or more
of the shares may, as compared with the others, have any such
preferred, deferred or other rights or be subject to any
restrictions as the Company has power to attach to unissued or new
shares); or
(iii) cancel any shares which, at the date of the passing of the
resolution, have not been taken or agreed to be taken by any person
and diminish the amount of its share capital by the amount of the
shares so cancelled.
40. Fractions on Consolidation
--------------------------
Subject to the provisions of these Articles, whenever as a result of a
consolidation of shares any members would become entitled to fractions of a
share, the Directors may, on behalf of these members, either elect to sell
the shares representing the fractions for the best price reasonably
obtainable to any person and distribute the proceeds of sale in due
proportion among those members, and the Directors may authorise some person
to execute an instrument of transfer of the shares to, or in accordance
with the directions of, the purchaser or elect, should they consider it
appropriate, that no payment shall be made in respect of fractions of
shares. The transferee shall not be bound to see to the application of the
purchase money nor shall his title to the shares be affected by any
irregularity in or invalidity of the proceedings in reference to the sale.
41. Reduction of Capital
--------------------
The Company may by special resolution reduce its share capital, any capital
redemption reserve fund or any share premium account in any manner and with
and subject to any incident authorised, and consent required, by law.
PART IX - GENERAL MEETINGS
--------------------------
42. Annual General Meetings
-----------------------
The Company shall in each year hold a general meeting as its annual general
meeting in addition to any other meeting in that year, and shall specify
the meeting as such in the notice calling it.
43. Extraordinary General Meeting
-----------------------------
All general meetings other than annual general meetings shall be called
extraordinary general meetings.
44. Convening General Meetings
--------------------------
The Directors may convene general meetings. Extraordinary general meetings
may also be convened on such requisitions, or in default, may be convened
by such requisitionists and in such manner as may be provided by the Acts.
If at any time there are not within the State
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sufficient Directors capable of acting to form a quorum, any Director or
any two members of the Company may convene an extraordinary general meeting
in the same manner as nearly as possible as that in which general meetings
may be convened by the Directors.
45. Notice of General Meetings
--------------------------
(a) Subject to the provisions of the Acts allowing a general meeting to be
called by shorter notice, an annual general meeting and an extraordinary
general meeting called for the passing of a special resolution shall be
called by at least twenty-one clear days notice and all other extraordinary
general meetings shall be called by at least fourteen clear days notice.
The notice shall specify the time and place of the meeting and the general
nature of the business to be transacted. It shall also give particulars of
any Directors who are to retire by rotation or otherwise at the meeting and
of any persons who are recommended by the Directors for appointment or re-
appointment as Directors at the meeting, or in respect of whom notice has
been duly given to the Company of the intention to propose them for
appointment or re-appointment as Directors at the meeting. Subject to any
restrictions imposed on any shares, notice shall be given to all the
members, to all persons entitled to a share by reason of the death or
bankruptcy of a member, to the Directors and the Auditors.
(b) The accidental omission to give notice of a meeting to, or the non-receipt
of notice of a meeting by, any person entitled to receive notice shall not
invalidate the proceedings at the meeting.
PART X - PROCEEDINGS AT GENERAL MEETINGS
----------------------------------------
46. Quorum for General Meetings
---------------------------
(a) No business other than the appointment of a chairman shall be transacted at
any general meeting unless a quorum of members is present at the time when
the meeting proceeds to business. Except as provided in relation to an
adjourned meeting, three persons entitled to vote upon the business to be
transacted and together holding not less than one-third of the voting share
capital of the Company in issue, each being a member or a proxy for a
member or a duly authorised representative of a corporate member, shall be
a quorum.
(b) If such a quorum is not present within half an hour from the time appointed
for the meeting the meeting shall stand adjourned to the same day in the
next week at the same time and place, or to such time and place as the
Directors may determine. If at the adjourned meeting such a quorum is not
present within half an hour from the time appointed for the meeting, one
person entitled to be counted in a quorum present at the meeting shall be a
quorum.
47. Chairman of General Meetings
----------------------------
(a) The chairman of the Board of Directors or, in his absence, the deputy
chairman (if any) or, in his absence, some other Director nominated by the
Directors shall preside as the chairman at every general meeting of the
Company. If at any general meeting none of such persons shall be present
within fifteen minutes after the time appointed for the holding of the
meeting and
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willing to act, the Directors present shall elect one of their number to be
the chairman of the meeting and, if there is only one Director present and
willing to act, he shall be the chairman.
(b) If at any meeting no Director in willing to act as the chairman or if no
Director is present within fifteen minutes after the time appointed for
holding the meeting, the members present shall choose one of their number
to be the chairman of the meeting.
48. Directors and Auditors Right to Attend General Meetings
-------------------------------------------------------
A Director shall, notwithstanding that he is not a member, be entitled to
attend and speak at any general meeting and at any separate meeting of the
holders of any class of shares in the Company. The Auditors shall be
entitled to attend any general meeting and to be heard on any part of the
business of the meeting which concerns them as the Auditors.
49. Adjournment of General Meetings
-------------------------------
The chairman may, with the consent of a meeting at which a quorum is
present (and shall if so directed by the meeting) adjourn the meeting from
time to time (or sine die) and from place to place, but no business shall
be transacted at any adjourned meeting other than business which might
properly have been transacted at the meeting had the adjournment not taken
place. Where a meeting is adjourned sine die, the time and place for the
adjourned meeting shall be fixed by the Directors. When a meeting is
adjourned for fourteen days or more or sine die, at least seven clear days'
notice shall be given specifying the time and place of the adjourned
meeting and the general nature of the business to be transacted. Save as
aforesaid it shall not be necessary to give any notice of an adjournment.
50. Determination of Resolutions
----------------------------
At any general meeting a resolution put to the vote of the meeting shall be
decided on a show of hands unless before, or on the declaration of the
result of, the show of hands a poll is duly demanded. Unless a poll is so
demanded a declaration by the Chairman that a resolution has been carried
or carried unanimously, or by a particular majority, or lost, or not
carried by a particular majority and an entry to that effect in the minutes
of the meeting shall be conclusive evidence of the fact without proof of
the number or proportion of the votes recorded in favour of or against the
resolution. The demand for a poll may, before the poll is taken, be
withdrawn but only with the consent of the chairman and a demand so
withdrawn shall not be taken to have invalidated the result of a show of
hands declared before the demand was made.
51. Entitlement to Demand a Poll
----------------------------
Subject to the provisions of the Acts, a poll may be demanded:
(i) by the chairman of the meeting;
(ii) by at least three members present (in person or by proxy) having the
right to vote at the meeting;
(iii) by any member or members present (in person or by proxy)
representing not less than one-tenth of the total voting rights of
all the members having the right to vote at the meeting; or
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(iv) by a member or members present (in person or by proxy) holding
shares in the Company conferring the right to vote at the meeting
being shares on which an aggregate sum has been paid up equal to not
less than one-tenth of the total sum paid up an all the shares
conferring that right.
52. Taking of a Poll
----------------
(a) Except as provided in Article 52(b) a poll shall be taken in such manner as
the chairman directs and he may appoint scrutineers (who need not be
members) and fix a time and place for declaring the result of the poll.
The result of the poll shall be deemed to be the resolution of the meeting
at which the poll was demanded.
(b) A poll demanded on the election of a chairman or on a question of
adjournment shall be taken forthwith. A poll demanded on any other
question shall be taken either forthwith or at such time (not being more
than thirty days after the poll is demanded) and place as the chairman or
the meeting may direct. The demand for a poll shall not prevent the
continuance of a meeting for the transaction of any business other than the
question on which the poll was demanded. If a poll is demanded before the
declaration of the result of a show of hands and the demand is duly
withdrawn, the meeting shall continue as if the demand had not been made.
(c) No notice need be given of a poll not taken forthwith if the time and place
at which it is to be taken are announced at the meeting in respect of which
it is demanded. In any other case at least seven clear days notice shall
be given specifying the time and place at which the poll is to be taken.
53. Written Resolution of Members
-----------------------------
Subject to section 141 of the Companies Act 1963 a resolution in writing
executed by or on behalf of each member who would have been entitled to
vote upon it if it had been proposed at a general meeting shall be as valid
and effective as if it had been passed at a general meeting duly convened
and held and may consist of several instruments in the like form each
executed by or on behalf of one or more members. If the resolution in
writing is described as a special resolution or as an extraordinary
resolution it shall have effect accordingly.
54. Votes of Members
----------------
Votes may be given either personally or by proxy. Subject to any rights or
restrictions for the time being attaching to any class or classes of
shares, on a show of hands every member present in person and every proxy
shall have one vote, so, however, that no individual shall have more than
one vote and, on a poll, every member shall have one vote for every share
of which he is the holder.
55. Chairman's Casting Vote
-----------------------
Where there is an equality of votes, whether on a show of hands or on a
poll, the chairman of the meeting at which the show of hands takes place or
at which the poll is demanded, shall be entitled to a casting vote in
addition to any other vote he may have.
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56. Voting by Joint Holders
-----------------------
Where there are joint holders of a share, the vote of the senior who
tenders a vote, whether in person or by proxy, in respect of such share
shall be accepted to the exclusion of the votes of the other joint holders
and for this purpose, seniority shall be determined by the order in which
the names of the holders stand in the Register.
57. Voting by Incapacitated Holders
-------------------------------
A member of unsound mind, or in respect or whom an order has been made by
any court having jurisdiction (whether in the State or elsewhere) in
matters concerning mental disorder may vote, whether on a show of hands or
on a poll, by his committee, receiver, guardian or other person appointed
by that court, and any such committee, receiver, guardian or other person
may vote by proxy on a show of hands or on a poll. Evidence to the
satisfaction of the Directors of the authority of the person claiming to
exercise the right to vote shall be deposited at the Office or at such
other place as is specified in accordance with these Articles for the
deposit or instruments of proxy, not less than forty-eight hours before the
time appointed for holding the meeting or adjourned meeting at which the
right to vote is to be exercised and, in default, the right to vote shall
not be exercisable.
58. Default in Payment of Calls
---------------------------
No member shall be entitled to vote at any general meeting or any separate
meeting of the holders of any class of shares in the Company either in
person or by proxy, in respect of any share held by him unless all moneys
presently payable by him in respect of that share have been paid.
59. Time for Objection to Voting
----------------------------
No objection shall be raised to the qualification of any voter except at
the meeting or adjourned meeting at which the vote objected to is tendered
and every vote not disallowed at such meeting shall be valid. Any such
objection made in due time shall be referred to the chairman of the meeting
whose decision shall be final and conclusive.
60. Proxy Voting
------------
The instrument appointing a proxy shall be in writing in any usual form or
in any other form which the Directors may approve and shall be executed by
or on behalf of the appointor. The signature on such instrument need not
be witnessed. A proxy need not be a member of the Company. A member may
appoint more than one proxy to attend on the same occasion.
61. Deposit of Proxy Instruments
----------------------------
The instrument appointing a proxy and any authority under which it is
executed or a copy, certified notarially or in some other way approved by
the Directors, shall be deposited at such place or one of such places (if
any) within the State as may be specified for that purpose in or by way of
note to the notice convening the meeting (or, if no place is so specified,
at the Office) not less than forty-eight hours before the time appointed
for the holding of the meeting or adjourned meeting or (in the case of a
poll taken otherwise than at or on the same
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<PAGE>
day as the meeting or adjourned meeting) for the taking of the poll at
which it is to be used and, in default, shall not be treated as valid.
Provided that:
(i) in the case of a meeting which is adjourned to, or a poll which is to
be taken on a date which is less than seven days after the date of the
meeting which was adjourned or at which the poll was demanded, it
shall be sufficient if the instrument of proxy and any such authority
and clarification thereof as aforesaid, is lodged with the Secretary
at the commencement of the adjourned meeting or the taking of the
poll; and
(ii) an instrument of proxy relating to more than one meeting (including
any adjournment thereof) having once been so delivered for the
purposes of any meeting shall not require again to be delivered for
the purposes of any subsequent meeting to which it relates.
62. Effect of Proxy Instruments
---------------------------
Deposit of an instrument of proxy in respect of a meeting shall not
preclude a member from attending and voting at the meeting or at any
adjournment thereof. The instrument appointing a proxy shall, unless the
contrary is stated therein, be valid as well as for any adjournment of the
meeting as for the meeting to which it relates.
63. Effect of Revocation of Proxy
-----------------------------
A vote given or poll demanded by proxy or by the duly authorised
representative of a body corporate shall be valid notwithstanding the death
or insanity of the principal or resignation of the authority of the person
voting or demanding a poll unless notice of the determination was received
by the Company at the Office before the commencement of the meeting or
adjourned meeting at which the proxy is used or at such other place at
which the instrument of proxy was duly deposited, before the commencement
of the meeting or adjourned meeting at which the vote is given or the poll
demanded or (in the case of a poll taken otherwise than on the same day as
the meeting or adjourned meeting) the time appointed for taking the poll.
PART XI - DIRECTORS
-------------------
64. Number of Directors
-------------------
Subject to the provisions of Articles 12(d) and 13(i), the number of
Directors (other than alternate Directors) shall not be more than ten
unless otherwise determined by ordinary resolution.
65. Ordinary Remuneration of Directors
----------------------------------
The ordinary remuneration of the Directors shall from time to time be
determined by an ordinary resolution of the Company and shall (unless such
resolution shall otherwise provide) be divisible among the Directors an
they may agree, or, failing agreement, equally, except that any Director
who shall hold office for part only of the period in respect of which such
remuneration is payable shall be entitled only to rank in such division for
a proportion of the remuneration related to the period during which he has
held office.
66. Special Remuneration of Directors
---------------------------------
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<PAGE>
Any Director who holds any executive office (including for this purpose the
office of chairman or deputy chairman) or who serves an any committee, or
who otherwise performs services which in the opinion of the Directors are
outside the scope of the ordinary duties of a Director, may be paid such
extra remuneration by way of salary, commission or otherwise as the
Directors may determine.
67. Expenses of Directors
---------------------
The Directors may be paid all travelling, hotel and other expenses properly
incurred by them in connection with their attendance at meetings of
Directors or committees of Directors or general meetings or separate
meetings of the holders of any class of shares or of debentures of the
company or otherwise in connection with the discharge of their duties.
68. Shareholding Qualification
--------------------------
The shareholding qualification for Directors may be fixed by the Company in
general meeting and unless and until so fixed, no qualification shall be
required.
69. Alternative Directors
---------------------
(a) Any Director other than an alternate may by writing under his hand appoint
any person (including another Director) to be his alternate provided always
that no such appointment of a person other than a Director as an alternate
shall be operative unless and until such appointment shall have been
approved by resolution of the Directors.
(b) An alternate Director shall be entitled to receive notices of all meetings
of the Directors and of all meetings of committees of the Directors of
which his appointor is a member, to attend and vote at any such meeting at
which the Director appointing him is not personally present and in the
absence of his appointor to exercise all the powers, rights, duties and
authorities of his appointor as a Director (other than the right to appoint
an alternate hereunder).
(c) Save as otherwise provided in these Articles, an alternate Director shall
be deemed for all purposes to be a Director and shall alone be responsible
for his own acts and defaults and he shall not be deemed to be the agent of
the Director appointing him. The remuneration of such alternate Director
shall be payable out of the remuneration paid to the Director appointing
him and shall consist of such portion of the last mentioned remuneration as
shall be agreed between the alternate and the Director appointing him.
(d) A Director may at any time revoke the appointment of any alternate
appointed by him. If a Director shall die or cease to hold the office of
Director the appointment of his alternate shall thereupon cease and
determine but if a Director retires by rotation or otherwise but is re-
appointed or deemed to have been re-appointed at the meeting at which he
retires, any appointment of any alternate Director made by him which was in
force immediately prior to his retirement shall continue after his re-
appointment.
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<PAGE>
(e) Any appointment or revocation by a Director under this Article shall be
effected by notice in writing given under his hand to the Secretary or
deposited at the Office or in any other manner approved by the Directors.
PART XII - POWERS OF DIRECTORS
------------------------------
70. Director's Powers
-----------------
Subject to the provisions of the Acts, the Memorandum of Association of the
Company and these Articles and to any directions given by ordinary
resolution, the business of the Company shall be managed by the Directors
who may exercise all the powers of the Company. No alteration of the
Memorandum of Association of the Company or of these Articles and no such
direction shall invalidate any prior act of the Directors which would have
been valid if that alteration had not been made or that direction had not
been given. The powers given by this Article shall not be limited by any
special power given to the Directors by these Articles and a meeting of
Directors at which a quorum is present may exercise all powers exercisable
by the Directors.
71. Power to Delegate
-----------------
The Directors may delegate any of their powers to any Managing Director or
any Director holding any other executive office and to any committee
consisting of one or more Directors. Any such delegation may be made
subject to any conditions the Directors may impose, and either collaterally
with or to the exclusion of their own powers and may be revoked. Subject
to any such conditions, the proceedings of a committee with two or more
members shall be governed by the provisions of these Articles regulating
the proceedings of Directors so far as they are capable of applying.
72. Appointment of Attorneys
------------------------
The Directors may from time to time and at any time by power of attorney
appoint any company, firm or person or body of persons, whether nominated
directly or indirectly by the Directors, to be the attorney or attorneys of
the Company for such purposes and with such powers, authorities and
discretions (not exceeding those vested in or exercisable by the Directors
under these Articles) and for such period and subject to such conditions as
they may think fit, and any such power of attorney may contain such
provisions for the protection of persons dealing with any such attorney as
the Directors may think fit, and may also authorise any such attorney to
delegate all or any of the powers, authorities and discretions vested in
him.
73. Local Management
----------------
The Directors may establish any committees, local boards or agencies for
managing any of the affairs of the Company, either in the State or
elsewhere, and may appoint any persons to be members of such committees,
local boards or agencies and may fix their remuneration and may delegate to
any committee, local board or agent any of the powers authorities and
discretions vested in the Board with power to sub-delegate and any such
appointment or delegation may be made upon such terms and subject to such
conditions as the Board may
17
<PAGE>
think fit, and the Board may remove any person so appointed, and may annul
or vary any such delegation, but no person dealing in good faith without
notice of any such annulment or variation shall be affected thereby.
74. Borrowing Powers
----------------
(a) Subject as hereinafter provided, the Directors may exercise all the powers
of the Company to borrow money and to mortgage or charge its undertaking,
property and uncalled capital and to issue debentures and other securities,
whether outright or as collateral security for any debt, liability or
obligation of the Company or for any third party.
(b) The Directors may restrict the borrowings of the Company and exercise all
voting and other rights or powers of control exercisable by the Company in
relation to its subsidiary companies so as to secure that the aggregate
amount for the time being remaining undischarged of all borrowed moneys (as
hereinafter defined) shall not at any time without the previous sanction of
an ordinary resolution of the Company exceed a sum equal to the amount paid
up on the issued share capital of the Company plus the aggregate amount
standing to the credit of the Company's consolidated capital and revenue
reserves (including any share premium account or capital redemption reserve
fund) ("the Share Capital and Consolidated Reserves").
(c) The certificate of the Auditors as to the amount of the Share Capital and
consolidated Reserves at any time shall be conclusive and binding upon all
concerned.
(d) No person dealing with the Company or any of its subsidiaries shall by
reason of the foregoing provision be concerned to see or enquire whether
this limit is observed and no debt incurred or security had at the time
when the debt was incurred or the security given in excess of such limit
shall be invalid or ineffectual unless the lender or the recipient of the
security are given express notice that the limit hereby imposed had been or
would thereby be exceeded.
(e) For the purposes of this Article the expression "Borrowed Moneys" means the
principal amount of moneys borrowed by the Company and each subsidiary
thereof as extracted from the latest published audited consolidated balance
sheet of the Company and its subsidiaries provided that:
(i) moneys borrowed by the Company from and for the time being owing to
a subsidiary or by any subsidiary from and for the time being owing
to the Company or another subsidiary shall not be included in the
calculation of Borrowed Moneys;
(ii) moneys borrowed for the purpose of and within four months applied in
repaying other borrowed moneys shall not themselves be taken into
account until such application;
(iii) there shall be included in the meaning of such expression such
proportion of the money borrowed by any subsidiary as the equity
share capital of such subsidiary which is beneficially owned
directly or indirectly by the Company bears to the total equity
share capital of such subsidiary and the remainder of the money
borrowed by such subsidiary shall be excluded;
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<PAGE>
(iv) the principal amount (including any premium payable on final
redemption) of any debentures issued for a consideration other than
cash by the Company and/or any such subsidiary shall be included in
the meaning of such expression; and
(v) from the aggregate of the amounts which would apart from this
provision be regarded as Borrowed Moneys there shall be deducted an
amount equal to the principal amount of cash balances held in hand
or with banks by the Company and all such subsidiaries.
(f) The Directors may raise or secure the repayment of such sums in such manner
and upon such terms and conditions in all respects as they think fit and,
in particular, by the issue of bonds, perpetual or redeemable debentures or
debenture stock, loan stock or any mortgage, charge or other security on
the undertaking or the whole or any part of the property of the Company
(both present and future) including its uncalled capital.
(g) Debentures, debenture stock and other securities may be made assignable
free from any equities between the Company and the person to whom the same
may be issued. Subject to the provisions of the Acts any debentures,
debenture stock, bonds or other securities may be issued at a discount
premium or otherwise, and with any special privileges as to redemption,
surrender, drawings, allotment of shares, attending and voting at general
meetings of the Company, appointment of Directors or otherwise.
PART XIII - APPOINTMENT, RETIREMENT AND DISQUALIFICATION OF DIRECTORS
75. Eligibility for Appointment
---------------------------
No person shall be appointed as a Director at any general meeting unless,
not less than seven nor more than thirty clear days before the date
appointed for the meeting, a notice executed by a member qualified to vote
at the meeting has been given to the Company of the intention to propose
that person for appointment stating, with respect to such person to be
proposed, the particulars which would, it he were so appointed, be required
to be included in the company's Register of Directors together with a
notice executed by that person of his willingness to be appointed.
76. Appointment of Additional Directors
-----------------------------------
(a) Subject as aforesaid the Company may by ordinary resolution appoint a
person to be a Director either to fill a vacancy or as an additional
Director.
(b) The Directors may appoint a person who is willing to act to be a Director,
either to fill a vacancy or as an additional Director provided that the
appointment does not cause the number of Directors to exceed any number
fixed by or in accordance with these Articles as the maximum number of
Directors.
77. Retirement by Rotation
----------------------
19
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(a) Subject to the provisions of these Articles, one-third of the Directors for
the time being or, if their number is not three or a multiple of three,
then the number nearest to, but not exceeding, one-third shall retire from
office at each annual general meeting.
(b) Subject to the provisions of the Acts and of these Articles, the Directors
to retire at each annual general meeting shall be the Directors who have
been longest in office since their last appointment. As between Directors
of equal seniority, the Directors to retire shall, in the absence of
agreement, be selected from among them by lot. Subject as aforesaid, a
retiring Director shall be eligible for reappointment and shall act as a
Director throughout the meeting at which he retires.
(c) A retiring Director shall be eligible for re-election.
(d) The Company may by ordinary resolution at the meeting at which any Director
retires in the manner aforesaid fill the vacated office by appointing a
person thereto and, in default, the retiring Director, if willing to act,
shall be deemed to have been re-appointed unless at such meeting it is
expressly resolved not to fill such vacated office or a resolution for the
re-appointment of such Director shall have been put to the meeting and
lost.
(e) At a general meeting a motion for the appointment of two or more persons as
Directors of the Company by a single resolution shall not be put unless a
resolution that it shall be so put has been first agreed to by the meeting
without any vote being given against it.
78. Disqualification of Directors
-----------------------------
The office of a Director shall be vacated if:
(i) he ceases to be a Director by virtue of any provision of the Acts,
or he becomes prohibited or restricted by law from being a Director;
(ii) he is adjudged a bankrupt in the State or in Northern Ireland or
Great Britain or in the United States of America or makes any
arrangement or composition with his creditors generally and in the
case of a Director domiciled in the United States of America matters
pertaining to the bankruptcy or insolvency of that director or the
rights of creditors against him or in and to his estate shall be
determined pursuant to the laws of the State of his domicile.;
(iii) he becomes prohibited or restricted from being a Director by reason
of any order made under Part VII of the Companies Act 1990;
(iv) in the opinion of a majority of his co-Directors he becomes
incapable by reason of mental disorder of discharging his duties as
a Director;
(v) he resigns his office by notice to the Company;
(vi) he is convicted of an indictable offence, unless the Directors
otherwise determine; or
(vii) he shall for more than six consecutive months have been absent
without permission of the Directors from meetings of the Directors
held during that period, and the Directors pass a resolution that he
has by reason of such absence vacated office.
PART XIV - DIRECTORS' OFFICERS AND INTERESTS
--------------------------------------------
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79. Executive Officers
------------------
(a) The Directors may appoint one or more of their body to any executive office
under the Company (including, where considered appropriate, the office of
chairman) on such terms and for such period as they may determine and,
without prejudice to the terms of any contract entered into in any
particular case, may at any time revoke any such appointment.
(b) The appointment of any Director to the office of chairman shall
automatically determine if he ceases to be a Director but without prejudice
to any claim for damages for breach of any contract of service between him
and the Company.
(c) The appointment of any Director to any other executive office shall not
automatically determine if he ceases from any cause to be a Director unless
the contract or resolution under which he holds office shall expressly
state otherwise, in which event such determination shall be without
prejudice to any claim for damages for breach of any contract of service
between him and the Company.
80. Directors' Interests
--------------------
(a) Subject to the provisions of the Acts, and provided that he had disclosed
to the Directors the nature and extent of any material interest of his, a
Director notwithstanding his office:
(i) may be a party to, or otherwise interested in, any transaction or
arrangement with the Company or any subsidiary or associated company
thereof or in which the Company or any subsidiary or associated
company thereof is otherwise interested;
(ii) may be a Director or other officer of, or employed by, or a party to
any transaction or arrangement with, or otherwise interested in, any
body corporate promoted by the Company or in which the Company or
any subsidiary or associated company thereof is otherwise
interested;
(iii) shall not, by reason of his office, be accountable to the Company
for any benefit which he derives from any such office or employment
or from any such transaction or arrangement or from any interest in
any such body corporate and no such transaction or arrangement shall
be liable to be avoided on the ground of any such interest or
benefit;
(b) For the purposes of this Article:
(i) a general notice given to the Directors that a Director is to be
regarded as having an interest of the nature and extent specified in
the notice in any transaction or arrangement in which a specified
person or class of persons is interested shall be deemed to be a
disclosure that the Director has an interest in any such transaction
of the nature and extent so specified; and
(ii) an interest of which a Director has no knowledge and of which it is
unreasonable to expect him to have knowledge shall not be treated as
an interest of his.
81. Restriction on Director's Voting
--------------------------------
21
<PAGE>
(a) Save as otherwise provided by these Articles a Director shall not vote at a
meeting of the Directors of a committee of the Directors on any resolution
concerning a matter in which he has, directly or indirectly, an interest or
duty which is material and which conflicts or may conflict with the
interests of the Company. A Director shall not be counted in the quorum
present at a meeting in relation to a resolution on which he is not
entitled to vote.
(b) A Director shall (in the absence of some other material interest than is
indicated below) be entitled to vote (and be counted in the quorum) in
respect of any resolutions concerning any of the following matters, namely:
(i) the giving of any security, guarantee or indemnity to him in respect
of money lent by him to the Company or any of its subsidiary or
associated companies or obligations incurred by him at the request
of or for the benefit of the Company or any of its subsidiary or
associated companies;
(ii) the giving of any security, guarantee or indemnity to a third party
in respect of a debt or obligation of the Company or any of its
subsidiary or associated companies for which he himself has assumed
responsibility in whole or in part and whether alone or jointly with
others under a guarantee or indemnity or by the giving of security;
(iii) any subscription by him or agreement by him to subscribe for shares
or debentures or other securities of the Company or any of its
subsidiary or associated companies or any proposal concerning any
offer of shares or debentures or other securities of or by the
Company or any of its subsidiary or associated companies for
subscription, purchase or exchange in which offer he is or is to be
interested as a participant in the underwriting or sub-underwriting
thereof;
(iv) any proposal concerning any other company in which he is interested,
directly or indirectly and whether as an officer or shareholder or
otherwise howsoever, provided that he is not the holder of or
beneficially interested in 1% or more of the issued shares of any
class of such company or of the voting rights available to members
of the relevant company (any such interest being deemed for the
purposes of this Article to be a material interest in all
circumstances); or
(v) any proposal concerning the adoption, modification or operation of a
superannuation fund or retirement benefits scheme under which he may
benefit and which has been approved by or is subject to and
conditional upon approval for taxation purposes by the appropriate
Revenue authorities.
(c) Where proposals are under consideration concerning the appointment
(including fixing or varying the terms of appointment) of two or more
Directors to offices or employments with the Company or any company in
which the Company is interested, such proposals may be divided and
considered in relation to each Director separately and in such case each of
the Directors concerned (if not debarred from voting under sub-paragraph
(b)(iv) of this Article) shall be entitled to vote (and be counted in the
quorum) in respect of each resolution except that concerning his own
appointment.
(d) If a question arises at a meeting of Directors or of a committee of the
Directors as to the materiality of a Director's interest or as to the right
of any Director to vote and such question
22
<PAGE>
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 and their ruling in relation to any Director other
than himself shall be final and conclusive, in the event of an equality of
votes the chairman of the Meeting shall have a second or casting vote.
(e) The Company may by ordinary resolution suspend or relax the provisions of
this Article to any extent or ratify any transaction not duly authorised by
reason of a contravention of this Article.
(f) For the purposes of this Article, an interest of a person who is the spouse
or a minor child of a Director shall be treated as an interest of the
Director and in relation to an alternate Director, an interest of his
appointor shall be treated as an interest of the alternate Director.
82. Entitled to Grant Pensions
--------------------------
The Directors may provide benefits, whether by way of pensions, gratuities
or otherwise for any Director, former Director or other officer or former
officer of the Company or to any person who holds or has held any
employment with the Company or with any body corporate which is or has been
a subsidiary or associated company of the Company or a predecessor in
business of the Company or of any such subsidiary or associated company and
to any member of his family or any person who is or was dependent on him
and may set up, establish, support, alter, maintain and continue any scheme
for providing such benefits and for such purposes any Director may
accordingly be, become or remain a member of, or rejoin any scheme and
receive or retain for his own benefit all benefits to which he may be or
become entitled thereunder. The Directors may pay out of the funds of the
Company any premiums, contributions or sums payable by the Company under
the provisions of any such scheme in respect of any of the persons or class
of persons above referred to who are or may be or become members thereof.
PART XV - PROCEEDINGS OF DIRECTORS
----------------------------------
83. Regulation and Convening of Directors' Meetings
-----------------------------------------------
Subject to the provisions of these Articles the Directors may regulate
their proceedings as they think fit. A Director may, and the Secretary at
the request of a Director shall, call a meeting of the Directors. Any
Director may waive notice of any meeting and any such waiver may be
retrospective. If the Directors so resolve, it shall not be necessary to
give notice of a meeting of Directors to any Director or alternate Director
who, being a resident in the State, is for the time being absent from the
State.
84. Voting at Directors' Meetings
-----------------------------
Questions arising at any meeting of Directors shall be decided by a
majority of votes. Where there is an equality of votes, the chairman of
the meeting shall have a second or casting vote. A Director who is also an
alternate Director for one or more Directors shall be entitled in the
absence of any such appointor from a meeting to a separate vote at such
meeting on behalf of each such appointor in addition to his own vote.
23
<PAGE>
85. Quorum for Directors' Meetings
------------------------------
(a) The quorum for the transaction of the business of the Directors may be
fixed by the Directors and unless so fixed at any other number shall be
two. A person who holds office only as an alternate Director shall, if his
appointor is not present, be counted in the quorum but notwithstanding that
such person may act as alternate Director for more than one Director he
shall not count as more than one for the purposes of determining whether a
quorum is present.
(b) The continuing Directors or a sole Director may act notwithstanding any
vacancies in their number but, if the number of Directors is less than the
number fixed as the quorum, they may act only for the purpose of filling
vacancies or of calling a general meeting.
86. Telecommunication Meetings
--------------------------
Any Director or alternate Director may participate in a meeting of the
Directors or any committee of the Directors by means of conference
telephone or other telecommunications equipment by means of which all
persons participating in the meeting can hear each other and such
participation in a meeting shall constitute presence in person at the
meeting.
87. Chairman of Board of Directors
------------------------------
Subject to any appointment to the office of chairman made pursuant to these
Articles the Directors may elect a chairman of their meetings and determine
the period for which he is to hold office, but if no such chairman is
elected, or, if at any meeting the chairman is unwilling to act or is not
present within ten minutes after the time appointed for holding the same,
the Directors present may choose one of their number to be chairman of the
meeting.
88. Validity of Acts of Directors
-----------------------------
All acts done by any meeting of the Directors or of a committee of the
Directors or by any person acting as a Director shall, notwithstanding that
it be afterwards discovered that there was some defect in the appointment
of any such Director or person acting as aforesaid, or that they or any of
them were disqualified from holding office or had vacated office, be as
valid as if every such person had been duly appointed and was qualified and
had continued to be a Director and had been entitled to vote.
89. Directors' Resolutions in Writing
---------------------------------
A resolution in writing signed by all the Directors entitled to receive
notice of a meeting of Directors or of a committee of Directors shall be as
valid as if it had been passed at a meeting of Directors or (as the case
may be) a committee of Directors duly convened and held and may consist of
several documents in the like form each signed by one or more Directors but
a resolution signed by an alternate Director need not also be signed by his
appointor and, if it is signed by a Director who has appointed an alternate
Director, it need not be signed by an alternate Director in that capacity.
PART XVI - THE SECRETARY
------------------------
24
<PAGE>
90. Appointment of Secretary
------------------------
The Secretary shall be appointed by the Directors for such term, at such
remuneration and upon such conditions as they may think fit and any
Secretary so appointed may be removed by them.
91. Assistant Secretary
-------------------
The Directors may appoint an assistant or deputy secretary and any
provision in these Articles requiring or authorising a thing to be done by
or to the Secretary shall be satisfied by it being done by or to the
assistant or deputy secretary. A provision of the Acts or these
regulations requiring or authorising a thing to be done by or to a Director
and the Secretary shall not be satisfied by its being done by or to the
same person acting both as Director and as, or in the place of, the
Secretary.
PART XVII - THE SEAL
--------------------
92. Use of Seal
-----------
The Directors shall ensure that the common seal of the Company kept
pursuant to the Acts shall only be used by the authority of the Directors
or of a committee authorised by the Directors.
93. Seal for Use Abroad
-------------------
The Company may exercise the powers conferred by the Acts with regard to
having an official seal for use abroad and such powers shall be vested in
the Directors.
94. Signature of Sealed Instruments
-------------------------------
Every instrument to which either such seal shall be affixed shall be signed
by a Director and shall also be signed by the Secretary or by a second
Director or by some other person appointed by the Directors for the purpose
save that as regards any certificates for shares or debentures or other
securities of the Company the Directors may by resolution determine that
such signatures or either of them shall be dispensed with, printed thereon
or affixed thereto by any method or system of mechanical signature.
PART XVIII - DIVIDENDS AND RESERVES
-----------------------------------
95. Declaration of Dividends
------------------------
Subject to the provisions of the Acts, the Company may by ordinary
resolution declare dividends in accordance with the respective rights of
the members, but no dividend shall exceed the amount recommended by the
Directors. Any dividend recommended by the Directors and declared by the
Company may be in Irish Punts or, in whole or in part, in such other
currency or currencies as the Directors may from time to time decide.
96. Interim and Fixed Dividends
---------------------------
25
<PAGE>
Subject always to the provisions of the Acts, the Directors may pay interim
dividends if it appears to them that they are justified by the profits of
the Company available for distribution. Subject always to the provisions
of the Acts, if the share capital is divided into different classes, the
Directors may pay interim dividends on shares which confer deferred or non-
preferred rights with regard to dividend as well as on shares which confer
preferential rights with regard to dividend, but no interim dividend shall
be paid on shares carrying deferred or non-preferred rights if, at the time
of payment, any preferential dividend is in arrears. Subject as aforesaid
the Directors may also pay at intervals settled by them any dividend
payable at a fixed rate if it appears to them that the profits available
for distribution justify the payment. Interim dividends may be paid in
Irish Punts or, in whole or in part, in such other currency or currencies
as the Directors may from time to time decide. Provided the Directors act
in good faith they shall not incur any liability to the holders of shares
conferring preferred rights for any loss they may suffer by the lawful
payment of an interim dividend on any shares having deferred or non-
preferred rights.
97. Payment of Dividends
--------------------
Except as otherwise provided by the rights attaching to shares, all
dividends shall be declared and paid according to the amounts paid up on
the shares on which the dividend is paid. Subject as aforesaid, all
dividends shall be apportioned and paid proportionately to the amounts paid
or credited as paid on the shares during any portion or portions of the
period in respect of which the dividend is paid but if any share is issued
on terms providing that it shall rank for dividend as from a particular
date, such share shall rank for dividend accordingly. All dividends shall
be paid in the currency or currencies in which they have been declared,
save as the Directors may otherwise decide from time to time.
98. Deductions from Dividends
-------------------------
The Directors may deduct from any dividend or other moneys payable to any
member in respect of a share any moneys presently payable by him to the
Company in respect of that share on account of calls or otherwise in
relation to the shares of the Company.
99. Dividends in Specie
-------------------
A general meeting declaring a dividend may, upon the recommendation of the
Directors, direct that it shall be satisfied wholly or partly by the
distribution of assets (and, in particular, of paid up shares, debentures
or debenture stock of any other company or in any one or more of such ways)
and the Directors shall give effect to such resolution. Where any
difficulty arises in regard to the distribution, the Directors may settle
the same as they think expedient, and in particular may issue fractional
certificates and fix the value for distribution of such specific assets or
any part thereof and may determine that cash payments shall be made to any
members upon the footing of the value so fixed in order to adjust the
rights of all the parties and may vest any such specific assets in
trustees.
100. Payment of Dividends by Post
----------------------------
Any dividend or other moneys payable in respect of any share may be paid by
cheque or warrant sent by post to the registered address of the holder or,
where there are joint holders,
26
<PAGE>
to the registered address of that one of the joint holders who is first
named on the Register or to such person and to such address as the holder
or joint holders may in writing direct. Every such cheque or warrant shall
be made payable to the order of the person to whom it is sent and payment
of the cheque or warrant shall be a good discharge to the Company. Any
joint holder or other person jointly entitled to a share as aforesaid may
give receipts for any dividend or other moneys payable in respect of the
share.
101. Dividends Not to Bear Interest
------------------------------
No dividend or other moneys payable in respect of a share shall bear
interest against the Company unless otherwise provided by the rights
attached to the shares.
102. Payment to Holders on a Particular Date
---------------------------------------
Any resolution declaring a dividend on shares of any class, whether a
resolution of the Company in general meeting or a resolution of the
Directors, may specify that the same may be payable to the persons
registered as the holders of such shares at the close of business on a
particular date, notwithstanding that it may be a date prior to that on
which the resolution is passed, and thereupon the dividend shall be payable
to them in accordance with their respective holdings so registered, but
without prejudice to the rights inter se in respect of such dividend of
transferors and transferees of any such shares. The provisions of this
Article shall mutatis mutandis apply to capitalisations to be effected
pursuant to these Articles.
103. Unclaimed Dividends
-------------------
Any dividend which has remained unclaimed for twelve years from the date of
its declaration shall, if the Directors so resolve, be forfeited and cease
to remain owing by the Company. The payment by the Directors of any
unclaimed dividend or other moneys payable in respect of a share into a
separate account shall not constitute the Company a trustee in respect
thereof.
PART XIX - CAPITALISATION OF PROFITS OR RESERVES.
------------------------------------------------
104. Capitalisation of Distributable Profits and Reserves
----------------------------------------------------
The Company in general meeting may, upon the recommendation of the
Directors, resolve that any sum for the time being standing to the credit
of any of the Company's reserves (including any capital redemption reserve
fund or share premium account) or to the credit of the profit and loss
account be capitalised and applied on behalf of the members who would have
been entitled to receive that sum if it had been distributed by way of
dividend and in the same proportions either in or towards paying up amounts
for the time being unpaid on any shares held by them respectively, or in
paying up in full unissued shares or debentures of the Company of a nominal
amount equal to the sum capitalised (such shares or debentures to be
allotted and distributed credited as fully paid up to and amongst such
holders in the proportions aforesaid) or partly in one way and partly in
another, so however, that the only purpose for which sums standing to the
credit of the capital redemption reserve fund or the share premium account
shall be applied shall be those permitted by the Acts.
27
<PAGE>
105. Capitalisation of Non-Distributable Profits and Reserves
--------------------------------------------------------
The Company in general meeting may, on the recommendation of the Directors
resolve that it is desirable to capitalise any part of the amount for the
time being standing to the credit of any of the Company's reserve accounts
or to the credit of the profit and loss account which is not available for
distribution by applying such sum in paying up in full unissued shares to
be allotted as fully paid bonus shares to those members of the Company who
would have been entitled to that sum if it were distributable and had been
distributed by way of dividend (and in the same proportions) and the
Directors shall give effect to such resolution.
106. Implementation of Capitalisation Issues
---------------------------------------
Whenever such a resolution is passed in pursuance of either of the two
immediately preceding Articles the Directors shall make all appropriations
and applications of the undivided profits resolved to be capitalised
thereby and all allotments and issues of fully paid shares or debentures,
if any, and generally shall do all acts and things required to give effect
thereto with full power to the Directors to make such provisions as they
shall think fit for the case of shares or debentures becoming distributable
in fractions (and, in particular, without prejudice to the generality of
the foregoing, either to disregard such fractions or to sell the shares or
debentures represented by such fractions and distribute the net proceeds of
such sale to and for the benefit of the Company or to and for the benefit
of the members otherwise entitled to such fractions in due proportions) and
also to authorise any person to enter on behalf of all the members
concerned into an agreement with the Company providing for the allotment to
them respectively credited as fully paid up, of any further shares or
debentures to which they may become entitled on such capitalisation or, as
the case may require, for the payment up by the application thereto of
their respective proportions of the profits resolved to be capitalised of
the amounts remaining unpaid on their existing shares and any agreement
made under such authority shall be binding on all such members.
PART XX - NOTICES
-----------------
107. Notice in Writing
-----------------
Any notice to be given, served or delivered pursuant to these Articles
shall be in writing.
108. Service of Notices.
------------------
(a) A notice or document (including a share certificate) to be given, served or
delivered in pursuance of these Articles may be given to, served on or
delivered by the Company to any member:
(i) by handing the same to him or his authorised agent;
(ii) by leaving the same at his registered address;
(iii) by sending the same by facsimile transmission; or
(iv) by sending the same by post in a pre-paid envelope addressed to him
at his registered address.
28
<PAGE>
(b) Where a notice or document is given, served or delivered pursuant to sub-
paragraphs (a)(i), (ii) or (iii) of this Article, the giving, service or
delivery thereof shall be deemed to have been effected at the time the same
was handed to the member or his authorised agent or left at his registered
address or upon receipt by facsimile (as the case may be).
(c) Where a notice or document is given, served or delivered pursuant to sub-
paragraph (a)(iv) of this Article the giving, service or delivery thereof
shall be deemed to have been effected at the expiration of twenty-four
hours after the envelope containing it was posted. In proving such service
or delivery it shall be sufficient to prove that such envelope was properly
addressed, stamped and posted.
(d) Without prejudice to the provisions of sub-paragraphs (a)(i), (a)(ii) and
(a)(iii) of this Article, if at any time by reason of the suspension or
curtailment of postal services within the State, the Company is unable
effectively to convene a general meeting by notices sent through the post,
a general meeting may be convened by a notice advertised on the same date
in at least one national daily newspaper in the State (and one national
daily newspaper in the United Kingdom and the Wall Street Journal in the
United States of America) and such notice shall be deemed to have been duly
served on all members entitled thereto at noon on the day on which the said
advertisement shall appear. In any such case the Company shall send
confirmatory copies of the notice through the post to those members whose
registered addresses are outside the State (if or to the extent that in the
opinion of the Directors it is practical so to do) or are in areas of the
State unaffected by such suspension or curtailment of postal services and
if at least ninety-six hours prior to the time appointed for the holding of
the meeting the posting of notices to members in the State or any part
thereof which was previously effected, has again in the opinion of the
Directors, become practical the Directors shall forthwith send confirmatory
copies of the notice by post to such members. The accidental omission to
give any such confirmatory copy of a notice of a meeting to, or the non-
receipt of any such confirmatory copy by, any person entitled to receive
the same shall not invalidate the proceedings at the meeting.
(e) Notwithstanding anything contained in this Article the Company shall not be
obliged to take account of or make any investigations as to the existence
of any suspension or curtailment of postal services within or in relation
to all or any part of any jurisdiction or other area other than the State.
109. Service on Joint Holders
------------------------
A notice may be given by the Company to the joint holders of a share by
giving the notice to the joint holder whose name stands first in the
Register in respect of the share and notice so given shall be sufficient
notice to all the joint holders.
110. Service on Transfer or Transmission of Shares
---------------------------------------------
(a) Every person who becomes entitled to a share shall be bound by any notice
in respect of that share which, before his name is entered in the Register
in respect of the share, has been duly given to a person from whom he
derives his title.
29
<PAGE>
(b) Without prejudice to the provisions of these Articles allowing a meeting to
be convened by newspaper advertisement a notice may be given by the Company
to the persons entitled to a share in consequence of the death or
bankruptcy of a member by sending or delivering it, in any manner
authorised by these Articles for the giving of notice to a member,
addressed to them at the address, if any, supplied by them for that
purpose. Until such an address has been supplied, a notice may be given in
any manner in which it might have been given if the death or bankruptcy had
not occurred.
111. Signature to Notices
--------------------
The signature to any notice to be given by the Company may be written or
printed.
112. Deemed Receipt of Notices
-------------------------
A member present, either in person or by proxy, at any meeting of the
Company or the holders of any class of shares in the Company shall be
deemed to have received notice of the meeting and, where requisite, of the
purposes for which it was called.
PART XXI - WINDING UP
---------------------
113. Distribution on Winding up
--------------------------
If the Company shall be wound up and the assets available for distribution
among the members shall be insufficient to repay the whole of the paid up
or credited as paid up share capital, such assets shall be distributed so
that, as nearly as may be, the losses shall be borne by the members in
proportion to the capital paid up or credited as paid up at the
commencement of the winding up on the shares hold by them respectively. If
on a winding up the assets available for distribution among the members
shall be more than sufficient to repay the whole of the share capital paid
up or credited as paid up at the commencement of the winding up, the excess
shall be distributed among the members in proportion to the capital at the
commencement of the winding up paid up or credited as paid up on the said
shares held by them respectively. Provided that this Article shall not
affect the rights of the holders of shares issued upon special terms and
conditions.
114. Distribution in Specie
----------------------
If the Company is wound up, the Liquidator may with the sanction of a
special resolution of the Company and any other sanction required by the
Acts, divide among the members in specie or kind the whole or any part of
the assets of the Company (whether they shall consist of property of the
same kind or not) and may, for such purpose, value any assets and determine
how the division shall be carried out as between the members or different
classes of members. The Liquidator may, with the like sanction, vast the
whole or any part of such assets in trustees upon such trusts for the
benefit of the contributories as he, with the like sanctions determines,
but so that no member shall be compelled to accept any assets upon which
there is a liability.
PART XXII - MISCELLANEOUS
-------------------------
30
<PAGE>
115. Inspection of Books Etc. by Members
-----------------------------------
The Directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions or regulations the
accounts and books of the Company or any of them shall be open to the
inspection of members, not being Directors, and non members (not being a
Director) shall not have any right of inspecting any account or book or
document of the Company except as conferred by the Acts or authorised by
the Directors or by the Company in general meeting and no member, not being
a Director, shall be entitled to require or receive any information
concerning the business, trading or customers of the Company or any trade
secret or secret process of or used by the Company.
116. Destruction of Records
----------------------
The Company shall be entitled to destroy all instruments of transfer which
have been registered at any time after the expiration of six years from the
date of registration thereof, all notifications of change of address at any
time after the expiration of two years from the date of recording thereof
and all share certificates and dividend mandates which have been cancelled
or ceased to have effect at any time after the expiration of one year from
the date of such cancellation or cessation. It shall be conclusively
presumed in favour of the Company that every entry in the Register
purporting to have been made on the basis of an instrument of transfer or
other document so destroyed was duly and properly made and every instrument
duly and properly registered and every share certificate so destroyed was a
valid and effective document duly and properly cancelled and every other
document hereinbefore mentioned so destroyed was a valid and effective
document in accordance with the recorded particulars thereof in the books
or records of the Company. Provided always that:
(a) the provision aforesaid shall apply only to the destruction of a document
in good faith and without notice of any claim (regardless of the parties
thereto) to which the document might be relevant;
(b) nothing herein contained shall be construed as imposing upon the company
any liability in respect of the destruction of any document earlier than as
aforesaid or in any other circumstances which would not attach to the
Company in the absence of this Article; and
(c) reference herein to the destruction of any document include references to
the disposal thereof in any manner.
117 Untraced Shareholders
---------------------
(a) The Company shall be entitled to sell at the best price reasonably
obtainable any share of a holder or any share to which a person is entitled
by transmission if and provided that:
(i) for a period of twelve years no cheque or warrant sent by the
Company through the post in a pre-paid letter addressed to the
holder or to the person entitled by transmission to the share at his
address on the Register or other the last known address given by the
holder or the person entitled by transmission to which cheques and
warrants are to be sent has been cashed and no communication has
been received by the Company from the holder or the person entitled
by transmission (provided that
31
<PAGE>
during such twelve year period at least three dividends shall have
become payable in respect of such share);
(ii) the Company has at the expiration of the said period of twelve years
by advertisement in a national newspaper in both the State and the
United Kingdom and in a newspaper circulated in the area in which
the address referred to in sub-paragraph (a)(i) of this Article is
located given notice of its intention to sell such share;
(iii) the Company has not during the further period of three months after
the date of the advertisement and prior to the exercise of the power
of sale received any communication from the holder or person
entitled by transmission.
(b) To give effect to any such sale the Company may appoint any person to
execute as transferor an instrument of transfer of such share and such
instrument of transfer shall be as effective as if it had been executed by
the holder or the person entitled by transmission to such share. The
transferee shall be entered in the Register as the holder of the shares
comprised in any such transfer and he shall not be bound to see to the
application of the purchase moneys nor shall his title to the shares be
affected by any irregularity in or invalidity of the proceedings in
reference to the sale.
(c) The Company shall account to the holder or other person entitled to such
share for the net proceeds of such sale by carrying all moneys in respect
thereof to a separate account which shall be a debt of the Company and the
Company shall be deemed to be a debtor and not a trustee in respect thereof
for such holder or other person. Moneys carried to such separate account
may either be employed in the business of the Company or invested in such
investments as the Directors may from time to time think fit.
(d) Any such amount carried to a separate account which has remained unclaimed
for twelve years from the date it was carried to such account shall, if the
Directors so resolve, be forfeited and cease to remain owing by the
Company.
118. Indemnity
---------
Subject to the provisions of and so far as may be allowed by the Acts,
every Director, Managing Director, Auditor, Secretary or other officer of
the Company shall be entitled to be indemnified by the Company against all
costs, charges, losses, expenses and liabilities incurred by him in the
execution and discharge of his duties or in relation thereto including any
liability incurred by him in defending any proceedings, civil or criminal,
which relate to anything done or omitted or alleged to have been done or
omitted by him as an officer or employee of the Company and in which
judgment is given in his favour (or the proceedings are otherwise disposed
of without any finding or admission of any material breach of duty on his
part) or in which he is acquitted or in connection with any application
under any statute for relief from liability in respect of any such act or
omission in which relief is granted to him by the Court.
32
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- --------------------------------------------------------------------------------
NAMES, ADDRESSES AND DESCRIPTIONS of SUBSCRIBERS
- --------------------------------------------------------------------------------
Bridget Trant,
Highdown Hill,
Newcastle,
County Dublin
Formations Manager
Susan Lawless,
14 Springhill Park,
Blackrock,
County Dublin
Systems Manager
Dated this 25th day of July 1989
Witness to the above signatures: Geraldine Reynolds
39 Birchwood Heights
Dublin 24
Secretary
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PART I - PRELIMINARY................................................ 1
1. Interpretation............................................ 1
PART II - SHARE CAPITAL AND RIGHTS.................................. 2
2. Share Capital............................................. 2
3. Rights of Shares on Issue................................. 2
4. Redeemable Shares......................................... 3
5. Purchase of Own Shares.................................... 3
6. Variation of Rights....................................... 3
7. Trusts not Recognised..................................... 3
8. Allotment of Shares....................................... 4
9. Payment of Commission..................................... 4
10. Financial Assistance...................................... 4
PART III - SHARE CERTIFICATES....................................... 4
11. Issue of Certificates..................................... 4
12. Balance and Exchange Certificates......................... 5
13. Renewal of Certificates................................... 5
PART IV - LIEN ON SHARES............................................ 5
14. Extent of Lien............................................ 5
15. Power of Sale............................................. 5
16. Power to Effect Transfer.................................. 5
17. Proceeds of Sale.......................................... 6
PART V - CALLS ON SHARES AND FORFEITURE............................. 6
18. Making of Calls........................................... 6
19. Time of Call.............................................. 6
20. Liability of Joint Holders................................ 6
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21. Interest on Calls......................................... 6
22. Instalments Treated as Calls.............................. 6
23. Power to Differentiate.................................... 7
24. Notice Requiring Payment.................................. 7
25. Forfeiture................................................ 7
26. Power of Disposal......................................... 7
27. Effect of Forfeiture...................................... 7
28. Statutory Declaration..................................... 8
PART VI - TRANSFER OF SHARES........................................ 8
29. Instrument of Transfer.................................... 8
30. Refusal to Register Transfer.............................. 8
31. Procedure on Refusal...................................... 8
32. Closing of Transfer Books................................. 8
33. Absence of Registration Fees.............................. 8
34. Retention of Transfer Instruments......................... 9
PART VII - TRANSMISSION OF SHARES................................... 9
35. Death of Member........................................... 9
36. Transmission on Death or Bankruptcy....................... 9
37. Rights before Registration................................ 9
PART VIII - ALTERATION OF SHARE CAPITAL............................. 9
38. Increase of Capital....................................... 9
39. Consolidation, Sub-Division and Cancellation of Capital... 9
40. Fractions on Consolidation................................ 10
41. Reduction of Capital...................................... 10
PART IX - GENERAL MEETINGS.......................................... 10
42. Annual General Meetings................................... 10
43. Extraordinary General Meeting............................. 10
44. Convening General Meetings................................ 10
45. Notice of General Meetings................................ 11
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PART X - PROCEEDINGS AT GENERAL MEETINGS............................ 11
46. Quorum for General Meetings............................... 11
47. Chairman of General Meetings.............................. 11
48. Directors and Auditors Right to Attend General Meetings... 12
49. Adjournment of General Meetings........................... 12
50. Determination of Resolutions.............................. 12
51. Entitlement to Demand a Poll.............................. 12
52. Taking of a Poll.......................................... 13
53. Written Resolution of Members............................. 13
54. Votes of Members.......................................... 13
55. Chairman's Casting Vote................................... 13
56. Voting by Joint Holders................................... 14
57. Voting by Incapacitated Holders........................... 14
58. Default in Payment of Calls............................... 14
59. Time for Objection to Voting.............................. 14
60. Proxy Voting.............................................. 14
61. Deposit of Proxy Instruments............................. 14
62. Effect of Proxy Instruments............................... 15
63. Effect of Revocation of Proxy............................. 15
PART XI - DIRECTORS................................................. 15
64. Number of Directors....................................... 15
65. Ordinary Remuneration of Directors........................ 15
66. Special Remuneration of Directors......................... 15
67. Expenses of Directors..................................... 16
68. Shareholding Qualification................................ 16
69. Alternative Directors..................................... 16
PART XII - POWERS OF DIRECTORS...................................... 17
70. Director's Powers......................................... 17
71. Power to Delegate......................................... 17
72. Appointment of Attorneys.................................. 17
73. Local Management.......................................... 17
74. Borrowing Powers.......................................... 18
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PART XIII - APPOINTMENT, RETIREMENT AND DISQUALIFICATION OF DIRECTORS 19
75. Eligibility for Appointment............................... 19
76. Appointment of Additional Directors....................... 19
77. Retirement by Rotation.................................... 19
78. Disqualification of Directors............................. 20
PART XIV - DIRECTORS' OFFICERS AND INTERESTS........................ 20
79. Executive Officers........................................ 21
80. Directors' Interests...................................... 21
81. Restriction on Director's Voting.......................... 21
82. Entitled to Grant Pensions................................ 23
PART XV - PROCEEDINGS OF DIRECTORS.................................. 23
83. Regulation and Convening of Directors' Meetings........... 23
84. Voting at Directors' Meetings............................. 23
85. Quorum for Directors' Meetings............................ 24
86. Telecommunication Meetings................................ 24
87. Chairman of Board of Directors............................ 24
88. Validity of Acts of Directors............................. 24
89. Directors' Resolutions in Writing......................... 24
PART XVI - THE SECRETARY............................................ 24
90. Appointment of Secretary.................................. 25
91. Assistant Secretary....................................... 25
PART XVII - THE SEAL................................................ 25
92. Use of Seal............................................... 25
93. Seal for Use Abroad....................................... 25
94. Signature of Sealed Instruments........................... 25
PART XVIII - DIVIDENDS AND RESERVES................................. 25
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95. Declaration of Dividends.................................. 25
96. Interim and Fixed Dividends............................... 25
97. Payment of Dividends...................................... 26
98. Deductions from Dividends................................. 26
99. Dividends in Specie....................................... 26
100. Payment of Dividends by Post.............................. 26
101. Dividends Not to Bear Interest............................ 27
102. Payment to Holders on a Particular Date................... 27
103. Unclaimed Dividends....................................... 27
PART XIX - CAPITALISATION OF PROFITS OR RESERVES.................... 27
104. Capitalisation of Distributable Profits and Reserves...... 27
105. Capitalisation of Non-Distributable Profits and Reserves.. 28
106. Implementation of Capitalisation Issues................... 28
PART XX - NOTICES................................................... 28
107. Notice in Writing......................................... 28
108. Service of Notices........................................ 28
109. Service on Joint Holders.................................. 29
110. Service on Transfer or Transmission of Shares............. 29
111. Signature to Notices...................................... 30
112. Deemed Receipt of Notices................................. 30
PART XXI - WINDING UP............................................... 30
113. Distribution on Winding up................................ 30
114. Distribution in Specie.................................... 30
PART XXII - MISCELLANEOUS........................................... 30
115. Inspection of Books Etc. by Members....................... 31
116. Destruction of Records.................................... 31
117. Untraced Shareholders..................................... 31
118. Indemnity................................................. 32
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EXHIBIT 4.2
-----------
_________________________________________________________
CBT GROUP PLC
AND
THE BANK OF NEW YORK
As Depositary
AND
OWNERS AND BENEFICIAL OWNERS OF RESTRICTED
AMERICAN DEPOSITARY RECEIPTS
Amended and Restated Restricted Deposit Agreement
Dated as of November 30, 1995
(as amended and restated as of April 11, 1996)
(as further amended and restated as of March 9, 1998)
(as further amended and restated as of May 22, 1998)
____________________________________________________________
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Page
PARTIES.................................................................. 1
RECITALS................................................................. 1
ARTICLE 1
DEFINITIONS............................ 1
SECTION 1.01. ADR Deposit Agreement..................................... 1
SECTION 1.02. ADSs; ADRs................................................ 2
SECTION 1.03. Beneficial Owner.......................................... 2
SECTION 1.04. Commission................................................ 2
SECTION 1.05. Company................................................... 2
SECTION 1.06. Custodian................................................. 2
SECTION 1.07. Depositary; Corporate Trust Office........................ 2
SECTION 1.08. Deposited Securities...................................... 2
SECTION 1.09. Dollars; Pounds........................................... 2
SECTION 1.10. Exchange.................................................. 2
SECTION 1.11. Foreign Registrar......................................... 3
SECTION 1.12. Owner..................................................... 3
SECTION 1.13. Receipts.................................................. 3
SECTION 1.14. Registrar................................................. 3
SECTION 1.15. Restricted American Depositary Shares..................... 3
SECTION 1.16. Restricted Deposit Agreement.............................. 3
SECTION 1.17. Rule 144.................................................. 3
SECTION 1.18. Rule 145.................................................. 3
SECTION 1.19. Securities Act............................................ 3
SECTION 1.20. Securities Exchange Act................................... 4
SECTION 1.21. Shares.................................................... 4
SECTION 1.22. United States............................................. 4
ARTICLE 2
FORM OF RECEIPTS, DEPOSIT OF SHARES, EXECUTION AND
DELIVERY, TRANSFER AND SURRENDER OF RECEIPTS............ 4
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SECTION 2.01. Form and Transferability of Receipts...................... 4
SECTION 2.02. Deposit of Shares......................................... 6
SECTION 2.03. Execution and Delivery of Receipts........................ 8
SECTION 2.04. Transfer of Receipts; Combination and Split-up of
Receipts................................................. 8
SECTION 2.05. Surrender of Receipts and Withdrawal of Shares............ 9
SECTION 2.06. Limitations on Execution and Delivery, Transfer and
Surrender of Receipts.................................... 11
SECTION 2.07. Lost Receipts, etc........................................ 11
SECTION 2.08. Cancellation and Destruction of Surrendered Receipts...... 11
SECTION 2.09. Exchange of Restricted American Depositary Shares for
ADSs..................................................... 12
ARTICLE 3
CERTAIN OBLIGATIONS OF OWNERS AND BENEFICIAL
OWNERS OF RECEIPTS......................... 12
SECTION 3.01. Filing Proofs, Certificates and Other Information......... 13
SECTION 3.02. Liability of Owner or Beneficial Owner for Taxes.......... 13
SECTION 3.03. Warranties on Deposit of Shares........................... 13
ARTICLE 4
THE DEPOSITED SECURITIES...................... 13
SECTION 4.01. Cash Distributions........................................ 14
SECTION 4.02. Distributions Other Than Cash, Shares or Rights........... 14
SECTION 4.03. Distributions in Shares................................... 15
SECTION 4.04. Rights.................................................... 15
SECTION 4.05. Conversion of Foreign Currency............................ 17
SECTION 4.06. Fixing of Record Date..................................... 18
SECTION 4.07. Voting of Deposited Securities............................ 18
SECTION 4.08. Changes Affecting Deposited Securities.................... 21
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SECTION 4.09. Reports................................................... 22
SECTION 4.10. Lists of Owners........................................... 22
SECTION 4.11. Withholding............................................... 22
ARTICLE 5
THE DEPOSITARY, THE CUSTODIANS AND THE COMPANY........... 22
SECTION 5.01. Maintenance of Office and Transfer Books by the
Depositary............................................... 22
SECTION 5.02. Prevention or Delay in Performance by the Depositary or
the Company.............................................. 23
SECTION 5.03. Obligations of the Depositary, the Custodian and the
Company.................................................. 24
SECTION 5.04. Resignation and Removal of the Depositary................. 25
SECTION 5.05. The Custodians............................................ 25
SECTION 5.06. Notices and Reports....................................... 26
SECTION 5.07. Distribution of Additional Shares, Rights, etc............ 26
SECTION 5.08. Indemnification........................................... 27
SECTION 5.09. Charges of Depositary..................................... 27
SECTION 5.10. Retention of Depositary Documents......................... 28
SECTION 5.11. Exclusivity............................................... 28
ARTICLE 6
AMENDMENT AND TERMINATION..................... 28
SECTION 6.01. Amendment................................................. 28
SECTION 6.02. Termination............................................... 29
ARTICLE 7
MISCELLANEOUS........................... 30
SECTION 7.01. Counterparts.............................................. 30
SECTION 7.02. No Third Party Beneficiaries.............................. 30
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SECTION 7.03. Severability.............................................. 30
SECTION 7.04. Owners and Beneficial Owners as Parties; Binding Effect... 30
SECTION 7.05. Notices................................................... 30
SECTION 7.06. Governing Law............................................. 31
ANNEX I
Certification and Agreement of Acquirors of
Receipts Upon Deposit of Shares Pursuant to
Section 2.02 of the Restricted Deposit Agreement
ANNEX II
Certification and Agreement of Certain Persons
Transferring Receipts Pursuant to
Sections 2.01 and 2.04 of
the Restricted Deposit Agreement
ANNEX III
Certification and Agreement of Persons Receiving
Deposited Securities Upon Withdrawal
Pursuant to Section 2.05 of
the Restricted Deposit Agreement
EXHIBIT A
FORM OF RESTRICTED AMERICAN DEPOSITARY RECEIPT
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AMENDED AND RESTATED RESTRICTED DEPOSIT AGREEMENT
AMENDED AND RESTATED RESTRICTED DEPOSIT AGREEMENT dated as of November
30, 1995 as amended and restated as of April 11, 1996, as further amended and
restated as of March 9, 1998, and as further amended and restated as of May 22,
1998, among CBT GROUP PLC, incorporated under the laws of The Republic of
Ireland (herein called the Company), THE BANK OF NEW YORK, a New York banking
corporation (herein called the Depositary), and all Owners and Beneficial Owners
from time to time of Restricted American Depositary Receipts issued hereunder.
W I T N E S S E T H :
WHEREAS, the Company desires to provide, as hereinafter set forth in
this Restricted Deposit Agreement, for the deposit of Shares (as hereinafter
defined) of the Company from time to time with the Depositary or with the
Custodian (as hereinafter defined) as agent of the Depositary for the purposes
set forth in this Restricted Deposit Agreement, for the creation of Restricted
American Depositary Shares representing the Shares so deposited, subject to the
terms and conditions of this Restricted Deposit Agreement, and for the execution
and delivery of Restricted American Depositary Receipts evidencing the
Restricted American Depositary Shares; and
WHEREAS, the Restricted American Depositary Receipts are to be
substantially in the form of Exhibit A annexed hereto, with appropriate
insertions, modifications and omissions, as hereinafter provided in this
Restricted Deposit Agreement;
NOW, THEREFORE, in consideration of the premises, it is agreed by and
between the parties hereto as follows:
ARTICLE 1
DEFINITIONS
The following definitions shall for all purposes, unless otherwise
clearly indicated, apply to the respective terms used in this Restricted Deposit
Agreement:
SECTION 1.01. ADR Deposit Agreement. The term "ADR Deposit
---------------------
Agreement" shall mean the unrestricted deposit agreement, dated as of April 13,
1995, among The Bank of New York, as depositary thereunder, the Company and the
owners and beneficial owners of ADRs issued thereunder, as the same may be
amended from time to time.
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SECTION 1.02. ADSs; ADRs. The term "ADSs" shall mean the
----------
unrestricted American Depositary Shares issued pursuant to the ADR Deposit
Agreement. The term "ADRs" shall mean the unrestricted American Depositary
Receipts evidencing the ADSs.
SECTION 1.03. Beneficial Owner. The term "Beneficial Owner" shall
----------------
mean each person owning from time to time any beneficial interest in the
Restricted American Depositary Shares evidenced by any Receipt.
SECTION 1.04. Commission. The term "Commission" shall mean the
----------
Securities and Exchange Commission of the United States or any successor
governmental agency in the United States.
SECTION 1.05. Company. The term "Company" shall mean CBT Group PLC,
-------
incorporated under the laws of The Republic of Ireland, and its successors.
SECTION 1.06. Custodian. The term "Custodian" shall mean AIB
---------
Custodial Services, currently located at Carrisbrook House, Ballsbridge, Dublin
4, Ireland, as agent of the Depositary for the purposes of this Restricted
Deposit Agreement, and any other firm or corporation which may hereafter be
appointed by the Depositary pursuant to the terms of Section 5.05, as substitute
or additional custodian or custodians hereunder, as the context shall require
and shall also mean all of them collectively.
SECTION 1.07. Depositary; Corporate Trust Office. The term
----------------------------------
"Depositary" shall mean The Bank of New York, a New York banking corporation,
and any successor as depositary hereunder. The term "Corporate Trust Office",
when used with respect to the Depositary, shall mean the office of the
Depositary which at the date of this Agreement is 101 Barclay Street, New York,
New York 10286.
SECTION 1.08. Deposited Securities. The term "Deposited Securities"
--------------------
as of any time shall mean Shares at such time deposited or deemed to be
deposited under this Restricted Deposit Agreement and any and all other
securities, property and cash received by the Depositary or the Custodian in
respect thereof and at such time held hereunder, subject as to cash to the
provisions of Section 4.05.
SECTION 1.09. Dollars; Pounds. The term "Dollars" shall mean United
---------------
States dollars. The term "Pounds" or "(Pounds) shall mean Irish pounds and the
------ --------
term "p" or "pence" shall mean Irish pence.
- -----
SECTION 1.10. Exchange. The term "Exchange" shall mean an exchange
--------
of Restricted American Depositary Shares for ADSs, in accordance with Section
2.10 hereof.
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SECTION 1.11. Foreign Registrar. The term "Foreign Registrar" shall
-----------------
mean Allied Irish Banks, p.l.c., Registrars & New Issues Department or any
successor entity carries out the duties of registrar for the Shares or any other
appointed agent of the Company for the transfer and registration of Shares.
SECTION 1.12. Owner. The term "Owner" shall mean the person in whose
-----
name a Receipt is registered on the books of the Depositary maintained for such
purpose.
SECTION 1.13. Receipts. The term "Receipts" shall mean the
--------
Restricted American Depositary Receipts issued hereunder evidencing Restricted
American Depositary Shares.
SECTION 1.14. Registrar. The term "Registrar" shall mean any bank or
---------
trust company having an office in the Borough of Manhattan, The City of New
York, which shall be appointed to register Receipts and transfers of Receipts as
herein provided.
SECTION 1.15. Restricted American Depositary Shares. The term
-------------------------------------
"Restricted American Depositary Shares" shall mean the restricted securities
representing the interests in the Deposited Securities and evidenced by the
Receipts issued hereunder. Each Restricted American Depositary Share shall
represent one Share or the right to receive one Share, until there shall occur a
distribution upon Deposited Securities covered by Section 4.03 or a change in
Deposited Securities covered by Section 4.08 with respect to which additional
Receipts are not executed and delivered, and thereafter Restricted American
Depositary Shares shall evidence the amount of Shares or Deposited Securities
specified in such Sections.
SECTION 1.16. Restricted Deposit Agreement. The term "Restricted
----------------------------
Deposit Agreement" shall mean this Restricted Deposit Agreement, including the
Annexes hereto, as the same may be amended from time to time in accordance with
the provisions hereof.
SECTION 1.17. Rule 144. The term "Rule 144" shall mean Rule 144, as
--------
from time to time amended, under the Securities Act.
SECTION 1.18. Rule 145. The term "Rule 145" shall mean Rule 145, as
--------
from time to time amended, under the Securities Act.
SECTION 1.19. Securities Act. The term "Securities Act" shall mean
--------------
the United States Securities Act of 1933, as from time to time amended.
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SECTION 1.20. Securities Exchange Act. The term "Securities Exchange
-----------------------
Act" shall mean the United States Securities Exchange Act of 1934, as from time
to time amended.
SECTION 1.21. Shares. The term "Shares" shall mean ordinary shares
------
in registered form of the Company, nominal value 9.375 pence each, heretofore
validly issued and outstanding and fully paid, nonassessable and free of any
pre-emptive rights of the holders of outstanding Shares or hereafter validly
issued and outstanding and fully paid, nonassessable and free of any pre-emptive
rights of the holders of outstanding Shares or interim certificates representing
such Shares.
SECTION 1.22. United States. The term "United States" shall, except
-------------
as otherwise provided in this Restricted Deposit Agreement or the Receipts, mean
the United States of America, its territories and possessions, any State of the
United States, and the District of Columbia.
ARTICLE 2
FORM OF RECEIPTS, DEPOSIT OF SHARES, EXECUTION AND
DELIVERY, TRANSFER AND SURRENDER OF RECEIPTS
SECTION 2.01. Form and Transferability of Receipts. (a) Definitive
------------------------------------
Receipts shall be entitled "Restricted American Depositary Receipts" and shall
be substantially in the form set forth in Exhibit A annexed to this Restricted
Deposit Agreement, with appropriate insertions, modifications and omissions, as
hereinafter provided. The Depositary shall maintain books on which each Receipt
so executed and delivered as hereinafter provided and the transfer of each such
Receipt shall be registered. Each Receipt (i) shall be in physical form and
legended, (ii) shall be registered in the name of the beneficial owner
furnishing a Depositor Certificate, in substantially the form attached as Annex
I hereto, pursuant to Section 2.02 of this Restricted Deposit Agreement, (iii)
shall not be eligible for acceptance in any book-entry settlement system, and
(iv) may only be transferred in accordance with Section 2.04 of this Restricted
Deposit Agreement.
No Receipt shall be entitled to any benefits under this Restricted
Deposit Agreement or be valid or obligatory for any purpose, unless such Receipt
shall have been executed by the Depositary by the manual signature of a duly
authorized signatory of the Depositary; provided, however, that such signature
-------- -------
may be a facsimile if a Registrar for the Receipts shall have been appointed and
such Receipts are countersigned by the manual signature of a duly authorized
officer of the Registrar. Receipts bearing the manual or facsimile signature of
a duly authorized signatory of the Depositary who was at
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any time a proper signatory of the Depositary shall bind the Depositary,
notwithstanding that such signatory has ceased to hold such office prior to the
execution and delivery of such Receipts by the Registrar or did not hold such
office on the date of issuance of such Receipts.
Each Receipt shall bear the following legend:
THIS RESTRICTED AMERICAN DEPOSITARY RECEIPT, THE RESTRICTED AMERICAN
DEPOSITARY SHARES EVIDENCED HEREBY AND THE ORDINARY SHARES OF CBT GROUP PLC
(THE "ORDINARY SHARES") WHICH MAY BE RECEIVED UPON SURRENDER OF THIS
RESTRICTED AMERICAN DEPOSITARY RECEIPT OR CANCELLATION OF THE RESTRICTED
AMERICAN DEPOSITARY SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED
UNDER THE SECURITIES ACT OR UNLESS AN EXEMPTION FROM REGISTRATION IS
AVAILABLE. EACH PERSON DEPOSITING ORDINARY SHARES AGREES THAT THIS
RESTRICTED AMERICAN DEPOSITARY RECEIPT, THE RESTRICTED AMERICAN DEPOSITARY
SHARES EVIDENCED HEREBY AND THE ORDINARY SHARES REPRESENTED THEREBY MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE
WITH PARAGRAPHS (c), (e), (f), (g) AND, IF APPLICABLE, (h) OF RULE 144
UNDER THE SECURITIES ACT, PURSUANT TO EITHER RULE 144 OR RULE 145 UNDER THE
SECURITIES ACT, WITHOUT REGARD TO ANY TERMINATION OF CERTAIN RESTRICTIONS
BY OPERATION OF PARAGRAPH (K) OF RULE 144 UNDER THE SECURITIES ACT, (A) IN
EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE UNITED
STATES AND ANY STATE OF THE UNITED STATES, (B) IN EACH CASE, UPON THE
DELIVERY OF A SATISFACTORY WRITTEN OPINION FROM U.S. COUNSEL, AND (C) IN
EACH CASE UPON THE DELIVERY OF A TRANSFER CERTIFICATE SUBSTANTIALLY IN THE
FORM ATTACHED TO THE RESTRICTED DEPOSIT AGREEMENT AS ANNEX II DULY EXECUTED
AND COMPLETED BY THE TRANSFEROR. THE BENEFICIAL OWNER OF ORDINARY SHARES
RECEIVED UPON CANCELLATION OF ANY RESTRICTED AMERICAN DEPOSITARY RECEIPTS
MAY NOT DEPOSIT OR CAUSE TO BE DEPOSITED SUCH ORDINARY
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SHARES INTO ANY DEPOSITARY RECEIPT FACILITY ESTABLISHED OR MAINTAINED BY A
DEPOSITARY BANK (INCLUDING ANY SUCH FACILITY MAINTAINED BY THE DEPOSITARY
FOR THE RESTRICTED AMERICAN DEPOSITARY RECEIPTS), OTHER THAN A RESTRICTED
DEPOSITARY RECEIPT FACILITY, SO LONG AS SUCH ORDINARY SHARES ARE
"RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144(a)(3) UNDER THE
SECURITIES ACT OR ARE OTHERWISE SUBJECT TO THE TRANSFER RESTRICTIONS OF
RULE 144 OR RULE 145 UNDER THE SECURITIES ACT. EACH OWNER AND BENEFICIAL
OWNER, BY ITS ACCEPTANCE OF THIS RESTRICTED AMERICAN DEPOSITARY RECEIPT,
REPRESENTS AND AGREES THAT IT UNDERSTANDS AND WILL COMPLY WITH THE
FOREGOING RESTRICTIONS.
In addition to the foregoing, the Receipts may be endorsed with or
have incorporated in the text thereof such legends or recitals or modifications
not inconsistent with the provisions of this Restricted Deposit Agreement as may
be required by the Depositary or required to comply with any applicable law or
regulations thereunder or with the rules and regulations of any securities
exchange upon which Restricted American Depositary Shares may be listed or to
conform with any usage with respect thereto, or to indicate any special
limitations or restrictions to which any particular Receipts are subject by
reason of the date of issuance of the underlying Deposited Securities or
otherwise.
The Receipts shall bear a CUSIP number that is different from any
CUSIP number that is or may be assigned any other depositary receipt facility
relating to the Shares.
(b) Title to a Receipt (and to the Restricted American Depositary
Shares evidenced thereby), when properly endorsed or accompanied by proper
instruments of transfer, and transferred in accordance with the terms of this
Restricted Deposit Agreement, including without limitation Sections 2.04, 2.06
and 2.09, shall be transferable by delivery with the same effect as in the case
of a negotiable instrument under the laws of New York; provided, however, that
-------- -------
the Depositary, notwithstanding any notice to the contrary, may treat the Owner
thereof as the absolute owner thereof for the purpose of determining the person
entitled to distribution of dividends or other distributions or to any notice
provided for in this Restricted Deposit Agreement and for all other purposes.
SECTION 2.02. Deposit of Shares. (a) Subject to the terms and
-----------------
conditions of this Restricted Deposit Agreement, Shares may be deposited under
this
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Restricted Deposit Agreement by delivery thereof to any Custodian hereunder,
accompanied by any appropriate instrument or instruments of transfer, or
endorsement, in form satisfactory to the Custodian, together with a duly
executed and completed written certification and agreement ("Depositor
Certificate"), in substantially the form attached as Annex I hereto, by the
beneficial owner of the Restricted American Depositary Shares to be issued upon
deposit of such Shares, and all such certifications or opinions of counsel as
may be required by the Depositary or the Custodian in accordance with the
provisions of this Restricted Deposit Agreement, and, if the Depositary
requires, together with a written order directing the Depositary to execute and
deliver to, or upon the written order of, the person or persons stated in such
order (which shall be the beneficial owner furnishing the Depositor
Certificate), a Receipt or Receipts for the number of Restricted American
Depositary Shares representing such deposit.
No Share shall be accepted for deposit unless accompanied by evidence
satisfactory to the Depositary that any necessary approval has been granted by
any governmental body in The Republic of Ireland which is then performing the
function of the regulation of currency exchange. If required by the Depositary,
Shares presented for deposit at any time, whether or not the transfer books of
the Company or the Foreign Registrar, if applicable, are closed, shall also be
accompanied by an agreement or assignment, or other instrument satisfactory to
the Depositary, which will provide for the prompt transfer to the Custodian of
any dividend, or right to subscribe for additional Shares or to receive other
property which any person in whose name the Shares are or have been recorded may
thereafter receive upon or in respect of such deposited Shares, or in lieu
thereof, such agreement of indemnity or other agreement as shall be satisfactory
to the Depositary.
At the request and risk and expense of any person proposing to deposit
Shares, and for the account of such person, the Depositary may receive
certificates for Shares to be deposited, together with the other instruments
herein specified, for the purpose of forwarding such Share certificates to the
Custodian for deposit hereunder.
Upon each delivery to a Custodian of a certificate or certificates for
Shares to be deposited hereunder, together with the other documents above
specified, such Custodian shall, as soon as transfer and recordation can be
accomplished, present such certificate or certificates to the Company or the
Foreign Registrar, if applicable, for transfer and recordation of the Shares
being deposited in the name of the Depositary or its nominee or such Custodian
or its nominee.
(b) Deposited Securities shall be held by the Depositary or by a
Custodian for the account and to the order of the Depositary or at such other
place or places as the Depositary shall determine. The Depositary agrees to
instruct the Custodian to place all Shares accepted for deposit under this
Restricted Deposit Agreement into segregated
-7-
<PAGE>
accounts separate from any Shares of the Company that may be held by such
Custodian under any other depositary receipt facility relating to the Shares.
SECTION 2.03. Execution and Delivery of Receipts. Upon receipt by
----------------------------------
any Custodian of any deposit pursuant to Section 2.02 hereunder (and in
addition, if the transfer books of the Company or the Foreign Registrar, if
applicable, are open, the Depositary may in its sole discretion require a proper
acknowledgment or other evidence from the Company that any Deposited Securities
have been recorded upon the books of the Company or the Foreign Registrar, if
applicable, in the name of the Depositary or its nominee or such Custodian or
its nominee), together with the other documents required as above specified,
such Custodian shall notify the Depositary of such deposit and the person or
persons to whom or upon whose written order a Receipt or Receipts are
deliverable in respect thereof and the number of Restricted American Depositary
Shares to be evidenced thereby. Such notification shall be made by letter or,
at the request, risk and expense of the person making the deposit, by cable,
telex or facsimile transmission. Upon receiving such notice from such
Custodian, or upon the receipt of Shares by the Depositary, in either case
together with a duly executed and completed Depositor Certificate in
substantially the form attached hereto as Annex I, the Depositary, subject to
the terms and conditions of this Restricted Deposit Agreement, shall execute and
deliver at its Corporate Trust Office, to or upon the order of the person or
persons named in the notice delivered to the Depositary (which shall be the
beneficial owner furnishing the Depositor Certificate), a Receipt or Receipts,
registered in the name or names and evidencing any authorized number of
Restricted American Depositary Shares requested by such person or persons, but
only upon payment to the Depositary of the fees and expenses of the Depositary
for the execution and delivery of such Receipt or Receipts as provided in
Section 5.09, and of all taxes and governmental charges and fees payable in
connection with such deposit and the transfer of the Deposited Securities.
SECTION 2.04. Transfer of Receipts; Combination and Split-up of
-------------------------------------------------
Receipts. Upon receipt by the Depositary of (a) a written opinion of U.S.
- --------
counsel satisfactory to the Depositary in connection with a transfer in
accordance with paragraphs (c), (e), (f), (g) and, if applicable, (h) of Rule
144 under the Securities Act, pursuant to either Rule 144 or Rule 145 under the
Securities Act, without regard to any termination of certain restrictions by
operation of paragraph (k) of that rule, and (b) a duly executed and completed
written certification and agreement ("Transfer Certificate"), in substantially
the form attached as Annex II hereto and as hereinafter described, in connection
with a transfer in accordance with paragraphs (c), (e), (f), (g) and, if
applicable, (h) of Rule 144 under the Securities Act, without regard to any
termination of certain restrictions by operation of paragraph (k) of that rule,
the Depositary, subject to the terms and conditions of this Restricted Deposit
Agreement, including payment of the fees of the Depositary as provided in
Section 5.09, shall exchange, upon any surrender of a Receipt, by the Owner in
person or by a duly authorized attorney, properly endorsed or
-8-
<PAGE>
accompanied by proper instruments of transfer, and duly stamped as may be
required by the laws of the State of New York and of the United States of
America, the Receipts evidencing Restricted American Depositary Shares for ADRs
evidencing ADSs issued pursuant to the ADR Deposit Agreement, subject to the
provisions of Section 2.09 of this Restricted Deposit Agreement. The Depositary
shall not be required to register any transfer of a Receipt unless it shall have
received from the Beneficial Owner a duly executed and completed Transfer
Certificate, in form and substance satisfactory to the Depositary.
The Depositary, subject to the terms and conditions of this Restricted
Deposit Agreement, including, if the Depositary shall so require, delivery of a
written opinion of U.S. counsel and a duly executed and completed Transfer
Certificate substantially in the form of Annex II hereto, shall upon surrender
of a Receipt or Receipts for the purpose of effecting a split-up or combination
of such Receipt or Receipts, execute and deliver a new Receipt or Receipts for
any authorized number of Restricted American Depositary Shares requested,
evidencing the same aggregate number of Restricted American Depositary Shares as
the Receipt or Receipts surrendered.
The representations and warranties included within the Transfer
Certificate in the form of Annex II to be delivered shall survive such transfer,
surrender and withdrawal, split-up or combination of the Shares or Receipts.
The Depositary may appoint one or more co-transfer agents for the
purpose of effecting transfers, combinations and split-ups of Receipts at
designated transfer offices on behalf of the Depositary. In carrying out its
functions, a co-transfer agent may require evidence of authority and compliance
with applicable laws and other requirements by Owners or persons entitled to
Receipts and will be entitled to protection and indemnity to the same extent as
the Depositary.
SECTION 2.05. Surrender of Receipts and Withdrawal of Shares. Upon
----------------------------------------------
surrender of a Receipt at the Corporate Trust Office of the Depositary for the
purpose of withdrawal of the Deposited Securities represented by the Restricted
American Depositary Shares evidenced by such Receipt, and upon payment of the
fee of the Depositary for the surrender of Receipts as provided in Section 5.09
and payment of all taxes and governmental charges payable in connection with
such surrender and withdrawal of the Deposited Securities, and subject to the
terms and conditions of this Restricted Deposit Agreement, the Owner of such
Receipt shall be entitled to delivery, to him or upon his order, of the amount
of Deposited Securities at the time represented by the Restricted American
Depositary Shares evidenced by such Receipt. Delivery of such Deposited
Securities may be made by the delivery of (a) certificates in the name of such
Owner or as ordered by him or certificates properly endorsed or accompanied by
proper instruments of transfer to such Owner or as ordered by him and (b) any
other securities,
-9-
<PAGE>
property and cash to which such Owner is then entitled in respect of such
Receipts to such Owner or as ordered by him. Such delivery shall be made, as
hereinafter provided, without unreasonable delay.
Notwithstanding the foregoing, no Deposited Securities may be
withdrawn upon the surrender of a Receipt unless at or prior to the time of
surrender, the Depositary shall have received (a) a written opinion of U.S.
counsel satisfactory to the Depositary, and (b) a duly executed and completed
written certificate and agreement ("Withdrawal Certificate"), in substantially
the form attached as Annex III hereto, by or on behalf of the person
surrendering such Receipt who after such withdrawal will be the beneficial owner
of such Deposited Securities; provided, however, that no Withdrawal Certificate
-------- -------
shall be required for a withdrawal in connection with a transfer in accordance
with paragraphs (c), (e), (f), (g) and, if applicable, (h) of Rule 144 under the
Securities Act, pursuant to either Rule 144 or Rule 145 under the Securities
Act, without regard to any termination of certain restrictions by operation of
paragraph (k) of that Rule, in which case the terms and provisions of Section
2.09 of this Restricted Deposit Agreement shall apply.
A Receipt surrendered for such purposes may be required by the
Depositary to be properly endorsed in blank or accompanied by proper instruments
of transfer in blank, and if the Depositary so requires, the Owner thereof shall
execute and deliver to the Depositary a written order directing the Depositary
to cause the Deposited Securities being withdrawn to be delivered to or upon the
written order of a person or persons designated in such order. Thereupon the
Depositary shall direct the Custodian to deliver at the Dublin, Ireland office
of such Custodian, subject to Sections 2.06, 3.01 and 3.02 and to the other
terms and conditions of this Restricted Deposit Agreement, to or upon the
written order of the person or persons designated in the order delivered to the
Depositary as above provided, the amount of Deposited Securities represented by
the Restricted American Depositary Shares evidenced by such Receipt, except that
the Depositary may make delivery to such person or persons at the Corporate
Trust Office of the Depositary of any dividends or distributions with respect to
the Deposited Securities represented by the Restricted American Depositary
Shares evidenced by such Receipt, or of any proceeds of sale of any dividends,
distributions or rights, which may at the time be held by the Depositary.
At the request, risk and expense of any Owner so surrendering a
Receipt, and for the account of such Owner, the Depositary shall direct the
Custodian to forward any cash or other property (other than rights) comprising,
and forward a certificate or certificates and other proper documents of title
for, the Deposited Securities represented by the Restricted American Depositary
Shares evidenced by such Receipt to the Depositary for delivery at the Corporate
Trust Office of the Depositary. Such direction shall be given by letter or, at
the request, risk and expense of such Owner, by cable, telex or facsimile
transmission.
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<PAGE>
Notwithstanding the foregoing, each Owner acknowledges that, and each
of the Depositary and Custodian agrees that, neither the Custodian nor the
Depositary will make any actual delivery of Shares to any Owner at an address
within the United States.
SECTION 2.06. Limitations on Execution and Delivery, Transfer and
---------------------------------------------------
Surrender of Receipts. As a condition precedent to the execution and delivery,
- ---------------------
registration of transfer, split-up, combination or surrender of any Receipt or
withdrawal of any Deposited Securities, the Depositary, Custodian or Registrar
may require payment from the depositor of Shares or the presenter of the Receipt
of a sum sufficient to reimburse it for any tax or other governmental charge and
any stock transfer or registration fee with respect thereto (including any such
tax or charge and fee with respect to Shares being deposited or withdrawn) and
payment of any applicable fees as herein provided, may require the production of
proof satisfactory to it as to the identity and genuineness of any signature and
may also require compliance with any regulations the Depositary may establish
consistent with the provisions of this Restricted Deposit Agreement, including,
without limitation, this Section 2.06.
The delivery of Receipts against deposit of Shares generally or
against deposit of particular Shares may be suspended, or the transfer of
Receipts in particular instances may be refused, or the registration of transfer
of outstanding Receipts generally may be suspended, during any period when the
transfer books of the Depositary are closed, or if any such action is deemed
necessary or advisable by the Depositary or the Company at any time or from time
to time because of any requirement of law or of any government or governmental
body or commission, or under any provision of this Restricted Deposit Agreement,
or for any other reason.
SECTION 2.07. Lost Receipts, etc. In case any Receipt shall be
-------------------
mutilated, destroyed, lost or stolen, the Depositary shall execute and deliver a
new Receipt of like tenor in exchange and substitution for such mutilated
Receipt upon cancellation thereof, or in lieu of and in substitution for such
destroyed, lost or stolen Receipt. Before the Depositary shall execute and
deliver a new Receipt in substitution for a destroyed, lost or stolen Receipt,
the Owner thereof shall have (a) filed with the Depositary (i) a request for
such execution and delivery before the Depositary has notice that the Receipt
has been acquired by a bona fide purchaser and (ii) a sufficient indemnity bond
and (b) satisfied any other reasonable requirements imposed by the Depositary.
SECTION 2.08. Cancellation and Destruction of Surrendered Receipts.
----------------------------------------------------
All Receipts surrendered to the Depositary shall be cancelled by the Depositary.
The Depositary is authorized to destroy Receipts so cancelled.
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<PAGE>
SECTION 2.09. Exchange of Restricted American Depositary Shares for
-----------------------------------------------------
ADSs.
- ----
(a) Subject to applicable law and the terms and conditions of this
Restricted Deposit Agreement, upon receipt by the Depositary of a written
opinion of U.S. counsel satisfactory to the Depositary and a duly executed and
completed Transfer Certificate pursuant to Section 2.04 of this Restricted
Deposit Agreement, Restricted American Depositary Shares sold or otherwise
transferred in accordance with paragraphs (c), (e), (f), (g) and, if applicable,
(h) of Rule 144 under the Securities Act, pursuant to either Rule 144 or Rule
145 under the Securities Act, without regard to any termination of certain
restrictions by operation of paragraph (k) of that Rule, shall be exchanged for
ADSs issued pursuant to the ADR Deposit Agreement. In connection therewith, the
Depositary shall (i) cancel such Restricted American Depositary Shares issued
hereunder and issue a corresponding number of ADSs pursuant to the ADR Deposit
Agreement to the Owners entitled thereto and (ii) make arrangements to transfer
any position held under the CUSIP number relating to the Restricted American
Depositary Shares issued hereunder to the CUSIP number relating to such ADSs
issued under the ADR Deposit Agreement. The Depositary shall further instruct
the Custodian to deliver all such Deposited Securities held by it hereunder to
the custodian under the ADR Deposit Agreement for deposit thereunder. The
transferees of interests of Owners and Beneficial Owners of Receipts hereunder
shall thereafter be owners and beneficial owners of ADRs issued pursuant to the
ADR Deposit Agreement and shall have all of the rights and obligations set forth
under the ADR Deposit Agreement and the ADRs. In connection with an Exchange,
all Owners and Beneficial Owners of Receipts issued hereunder shall be deemed to
have made the representations and warranties set forth in Section 3.03 of the
ADR Deposit Agreement.
(b) Each Owner and Beneficial Owner acknowledges and agrees that
there can be no assurance that applicable laws will permit the Depositary to
effect an Exchange as described in paragraph (a) above. In the event that the
Depositary determines in its sole discretion that an Exchange cannot be so
effected, the Depositary and the Company shall negotiate in good faith to amend
the Restricted Deposit Agreement as they deem necessary to either (i) permit an
Exchange on such terms as they may agree in accordance with applicable law or
(ii) make such other arrangements as they deem desirable.
ARTICLE 3
CERTAIN OBLIGATIONS OF OWNERS AND BENEFICIAL
OWNERS OF RECEIPTS
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<PAGE>
SECTION 3.01. Filing Proofs, Certificates and Other Information. Any
-------------------------------------------------
person presenting Shares for deposit or any Owner or Beneficial Owner of a
Receipt may be required from time to time to file with the Depositary or the
Custodian such proof of citizenship or residence, exchange control approval, or
such information relating to the registration on the books of the Company or the
Foreign Registrar, if applicable, to execute such certificates and to make such
representations and warranties, as the Depositary may deem necessary or proper.
The Depositary may withhold the delivery or registration of transfer of any
Receipt or the distribution of any dividend or sale or distribution of rights or
of the proceeds thereof or the delivery of any Deposited Securities until such
proof or other information is filed or such certificates are executed or such
representations and warranties made. The Depositary shall, at the request of
the Company, advise the Company of the availability of any such proofs,
certificates or other information and shall provide copies thereof to the
Company as promptly as practicable upon request by the Company, unless such
disclosure is prohibited by law.
SECTION 3.02. Liability of Owner or Beneficial Owner for Taxes. If
------------------------------------------------
any tax or other governmental charge shall become payable by the Custodian or
the Depositary with respect to any Receipt or any Deposited Securities
represented by any Receipt, such tax or other governmental charge shall be
payable by the Owner or Beneficial Owner of such Receipt to the Depositary. The
Depositary may refuse to effect any transfer of such Receipt or any withdrawal
of Deposited Securities represented by Restricted American Depositary Shares
evidenced by such Receipt until such payment is made, and may withhold any
dividends or other distributions, or may sell for the account of the Owner or
Beneficial Owner thereof any part or all of the Deposited Securities represented
by the Restricted American Depositary Shares evidenced by such Receipt, and may
apply such dividends or other distributions or the proceeds of any such sale in
payment of such tax or other governmental charge and the Owner or Beneficial
Owner of such Receipt shall remain liable for any deficiency.
SECTION 3.03. Warranties on Deposit of Shares. Every person
-------------------------------
depositing Shares under this Restricted Deposit Agreement shall be deemed
thereby to represent and warrant, in addition to such representations and
warranties as are set forth in the Depositor Certificate, that such Shares and
each certificate therefor are validly issued, fully paid, nonassessable and free
of any preemptive rights of the holders of outstanding Shares and that the
person making such deposit is duly authorized so to do. Such representations
and warranties shall survive the deposit of Shares and issuance of Receipts.
ARTICLE 4
THE DEPOSITED SECURITIES
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<PAGE>
SECTION 4.01. Cash Distributions. Whenever the Depositary shall
------------------
receive any cash dividend or other cash distribution on any Deposited
Securities, the Depositary shall, subject to the provisions of Section 4.05,
convert such dividend or distribution into Dollars and shall distribute the
amount thus received (net of the fees and expenses of the Depositary as provided
in Section 5.09) to the Owners entitled thereto, in proportion to the number of
Restricted American Depositary Shares representing such Deposited Securities
held by them respectively; provided, however, that in the event that the Company
-------- -------
or the Depositary shall be required to withhold and does withhold from such cash
dividend or such other cash distribution an amount on account of taxes, the
amount distributed to the Owner of the Receipts evidencing Restricted American
Depositary Shares representing such Deposited Securities shall be reduced
accordingly. The Depositary shall distribute only such amount, however, as can
be distributed without attributing to any Owner a fraction of one cent. Any
such fractional amounts shall be rounded to the nearest whole cent and so
distributed to Owners entitled thereto. The Company or its agent will remit to
the appropriate governmental agency in The Republic of Ireland all amounts
withheld and owing to such agency. The Depositary will forward to the Company
or its agent such information from its records as the Company may reasonably
request to enable the Company or its agent to file necessary reports with
governmental agencies, and the Depositary or the Company or its agent may file
any such reports necessary to obtain benefits under the applicable tax treaties
for the Owners of Receipts.
SECTION 4.02. Distributions Other Than Cash, Shares or Rights.
-----------------------------------------------
Subject to the provisions of Sections 4.11 and 5.09, whenever the Depositary
shall receive any distribution other than a distribution described in Section
4.01, 4.03 or 4.04, the Depositary shall cause the securities or property
received by it to be distributed to the Owners entitled thereto, after deduction
or upon payment of any fees and expenses of the Depositary or any taxes or other
governmental charges, in proportion to the number of Restricted American
Depositary Shares representing such Deposited Securities held by them
respectively, in any manner that the Depositary may deem equitable and
practicable for accomplishing such distribution; provided, however, that if in
-------- -------
the opinion of the Depositary such distribution cannot be made proportionately
among the Owners entitled thereto, or if for any other reason (including, but
not limited to, any requirement that the Company or the Depositary withhold an
amount on account of taxes or other governmental charges or that such securities
must be registered under the Securities Act in order to be distributed to Owners
or Beneficial Owners) the Depositary deems such distribution not to be feasible,
the Depositary may adopt such method as it may deem equitable and practicable
for the purpose of effecting such distribution, including, but not limited to,
the public or private sale of the securities or property thus received, or any
part thereof, and the net proceeds of any such sale (net of the fees and
expenses of the Depositary as provided in Section 5.09) shall be distributed by
the Depositary to the Owners entitled thereto, all in the manner and subject to
the conditions described in
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<PAGE>
Section 4.01. Each beneficial owner of Receipts or Shares so distributed shall
be deemed to have acknowledged that the Shares have not been registered under
the Securities Act and to have agreed to comply with the restrictions on
transfer described in the form of legend set forth in Section 2.01 hereof.
SECTION 4.03. Distributions in Shares. If any distribution upon any
-----------------------
Deposited Securities consists of a dividend in, or free distribution of, Shares,
the Depositary may distribute to the Owners of outstanding Receipts entitled
thereto, in proportion to the number of Restricted American Depositary Shares
representing such Deposited Securities held by them respectively, additional
Receipts evidencing an aggregate number of Restricted American Depositary Shares
representing the amount of Shares received as such dividend or free
distribution, subject to the terms and conditions of the Restricted Deposit
Agreement with respect to the deposit of Shares and the issuance of Restricted
American Depositary Shares evidenced by Receipts, including the withholding of
any tax or other governmental charge as provided in Section 4.11 and the payment
of the fees and expenses of the Depositary as provided in Section 5.09. The
Depositary may withhold any such distribution of Receipts if it has not received
satisfactory assurances from the Company that such distribution does not require
registration under the Securities Act or is exempt from registration under the
provisions of such Act. In lieu of delivering Receipts for fractional
Restricted American Depositary Shares in any such case, the Depositary shall
sell the amount of Shares represented by the aggregate of such fractions and
distribute the net proceeds, all in the manner and subject to the conditions
described in Section 4.01. If additional Receipts are not so distributed, each
Restricted American Depositary Share shall thenceforth also represent the
additional Shares distributed upon the Deposited Securities represented thereby.
Each beneficial owner of Receipts or Shares so distributed shall be deemed to
have acknowledged that the Shares have not been registered under the Securities
Act and to have agreed to comply with the restrictions on transfer described in
the form of legend set forth in Section 2.01 hereof.
SECTION 4.04. Rights. In the event that the Company shall offer or
------
cause to be offered to the holders of any Deposited Securities any rights to
subscribe for additional Shares or any rights of any other nature, the
Depositary shall have discretion as to the procedure to be followed in making
such rights available to any Owners or in disposing of such rights on behalf of
any Owners and making the net proceeds available to such Owners or, if by the
terms of such rights offering or for any other reason, the Depositary may not
either make such rights available to any Owners or dispose of such rights and
make the net proceeds available to such Owners, then the Depositary shall allow
the rights to lapse. If at the time of the offering of any rights the
Depositary determines in its discretion that it is lawful and feasible to make
such rights available to all or certain Owners but not to other Owners, the
Depositary may distribute to any Owner to whom it determines the distribution to
be lawful and feasible, in proportion to
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<PAGE>
the number of Restricted American Depositary Shares held by such Owner, warrants
or other instruments therefor in such form as it deems appropriate.
In circumstances in which rights would otherwise not be distributed,
if an Owner of Receipts requests the distribution of warrants or other
instruments in order to exercise the rights allocable to the Restricted American
Depositary Shares of such Owner hereunder, the Depositary will make such rights
available to such Owner upon written notice from the Company to the Depositary
that (a) the Company has elected in its sole discretion to permit such rights to
be exercised and (b) such Owner has executed such documents as the Company has
determined in its sole discretion are reasonably required under applicable law.
If the Depositary has distributed warrants or other instruments for
rights to all or certain Owners, then upon instruction from such an Owner
pursuant to such warrants or other instruments to the Depositary from such Owner
to exercise such rights, upon payment by such Owner to the Depositary for the
account of such Owner of an amount equal to the purchase price of the Shares to
be received upon the exercise of the rights, and upon payment of the fees and
expenses of the Depositary and any other charges as set forth in such warrants
or other instruments, the Depositary shall, on behalf of such Owner, exercise
the rights and purchase the Shares, and the Company shall cause the Shares so
purchased to be delivered to the Depositary on behalf of such Owner. As agent
for such Owner, the Depositary will cause the Shares so purchased to be
deposited pursuant to Section 2.02 of this Restricted Deposit Agreement, and
shall, pursuant to Section 2.03 of this Restricted Deposit Agreement, execute
and deliver Receipts to such Owner. In the case of a distribution pursuant to
the second paragraph of this section, such Receipts shall be legended in
accordance with applicable U.S. laws, and shall be subject to the appropriate
restrictions on sale, deposit, cancellation, and transfer under such laws.
If the Depositary determines in its discretion that it is not lawful
and feasible to make such rights available to all or certain Owners, it may sell
the rights, warrants or other instruments in proportion to the number of
Restricted American Depositary Shares held by the Owners to whom it has
determined it may not lawfully or feasibly make such rights available, and
allocate the net proceeds of such sales (net of the fees and expenses of the
Depositary as provided in Section 5.09 and all taxes and governmental charges
payable in connection with such rights and subject to the terms and conditions
of this Restricted Deposit Agreement) for the account of such Owners otherwise
entitled to such rights, warrants or other instruments, upon an averaged or
other practical basis without regard to any distinctions among such Owners
because of exchange restrictions or the date of delivery of any Receipt or
otherwise.
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
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<PAGE>
Securities Act with respect to a distribution to all Owners or are registered
under the provisions of such Act; provided, that nothing in this Restricted
--------
Deposit Agreement shall create, any obligation on the part of the Company to
file a registration statement with respect to such rights or underlying
securities or to endeavor to have such a registration statement declared
effective. If an Owner of Receipts requests the distribution of warrants or
other instruments, notwithstanding that there has been no such registration
under such Act, the Depositary shall not effect such distribution unless it has
received an opinion from recognized counsel in the United States for the Company
upon which the Depositary may rely that such distribution to such Owner is
exempt from such registration.
The Depositary shall not be responsible for any failure to determine
that it may be lawful or feasible to make such rights available to Owners in
general or any Owner in particular.
SECTION 4.05. Conversion of Foreign Currency. Whenever the
------------------------------
Depositary or the Custodian shall receive foreign currency, by way of dividends
or other distributions or the net proceeds from the sale of securities, property
or rights, and if at the time of the receipt thereof the foreign currency so
received can in the judgment of the Depositary be converted on a reasonable
basis into Dollars and the resulting Dollars transferred to the United States,
the Depositary shall convert or cause to be converted, by sale or in any other
manner that it may determine, such foreign currency into Dollars, and such
Dollars shall be distributed to the Owners entitled thereto or, if the
Depositary shall have distributed any warrants or other instruments which
entitle the holders thereof to such Dollars, then to the holders of such
warrants and/or instruments upon surrender thereof for cancellation. Such
distribution may be made upon an averaged or other practicable basis without
regard to any distinctions among Owners on account of exchange restrictions, the
date of delivery of any Receipt or otherwise and shall be net of any expenses of
conversion into Dollars incurred by the Depositary as provided in Section 5.09.
If such conversion or distribution can be effected only with the
approval or license of any government or agency thereof, the Depositary shall
file such application for approval or license, if any, as it may deem desirable.
If at any time the Depositary shall determine that in its judgment any
foreign currency received by the Depositary or the Custodian is not convertible
on a reasonable basis into Dollars transferable to the United States, or if any
approval or license of any government or agency thereof which is required for
such conversion is denied or in the opinion of the Depositary is not obtainable,
or if any such approval or license is not obtained within a reasonable period as
determined by the Depositary, the Depositary may distribute the foreign currency
(or an appropriate document evidencing
-17-
<PAGE>
the right to receive such foreign currency) received by the Depositary to, or in
its discretion may hold such foreign currency uninvested and without liability
for interest thereon for the respective accounts of, the Owners entitled to
receive the same.
If any such conversion of foreign currency, in whole or in part,
cannot be effected for distribution to some of the Owners entitled thereto, the
Depositary may in its discretion make such conversion and distribution in
Dollars to the extent permissible to the Owners entitled thereto and may
distribute the balance of the foreign currency received by the Depositary to, or
hold such balance uninvested and without liability for interest thereon for the
respective accounts of, the Owners entitled thereto.
SECTION 4.06. Fixing of Record Date. Whenever any cash dividend or
---------------------
other cash distribution shall become payable or any distribution other than cash
shall be made, or whenever rights shall be issued with respect to the Deposited
Securities, or whenever the Depositary shall receive notice of any meeting of
holders of Shares or other Deposited Securities, or whenever for any reason the
Depositary causes a change in the number of Shares that are represented by each
Restricted American Depositary Share, or whenever the Depositary shall find it
necessary or convenient, the Depositary shall fix a record date, which shall be
the record date, if any, established by the Company for such purpose or, if
different, as close thereto as practicable, (a) for the determination of the
Owners who shall be (i) entitled to receive such dividend, distribution or
rights or the net proceeds of the sale thereof or (ii) entitled to give
instructions for the exercise of voting rights at any such meeting, or (b) on or
after which each Restricted American Depositary Share will represent the changed
number of Shares. Subject to the provisions of Sections 4.01 through 4.05 and
to the other terms and conditions of this Restricted Deposit Agreement, the
Owners on such record date shall be entitled, as the case may be, to receive the
amount distributable by the Depositary with respect to such dividend or other
distribution or such rights or the net proceeds of sale thereof in proportion to
the number of Restricted American Depositary Shares held by them respectively
and to give voting instructions and to act in respect of any other such matter.
SECTION 4.07. Voting of Deposited Securities. Upon receipt of
------------------------------
notice of any meeting of holders of Shares or other Deposited Securities, if
requested in writing by the Company, the Depositary shall, as soon as
practicable thereafter, mail to the Owners a notice, the form of which notice
shall be in the sole discretion of the Depositary, which shall contain (a) all
of the information contained in such notice of meeting received by the
Depositary from the Company, (b) a statement that the Owners as of the close of
business on a specified record date will be entitled, subject to any applicable
provision of Irish law and of the Memorandum and Articles of Association of the
Company, to instruct the Depositary as to the exercise of the voting rights, if
any, pertaining to the amount of Shares or other Deposited Securities
represented by their respective Restricted American Depositary Shares, (c) a
statement that Owners who
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instruct the Depositary as to the exercise of their voting rights will be deemed
to have instructed the Depositary or its authorized representative to call for a
poll with respect to each matter for which such instructions are given, subject
to any applicable provisions of Irish law and of the Memorandum and Articles of
Association of the Company and (d) if applicable, a statement as to the manner
in which such instructions may be given, including an express indication that
instructions may be given or deemed given in accordance with the last sentence
of this paragraph if no instruction is received, to the Depositary to give a
discretionary proxy to a person designated by the Company. Upon the written
request of an Owner on such record date, received on or before the date
established by the Depositary for such purpose, the Depositary shall endeavor,
in so far as practicable, to vote or cause to be voted the amount of Shares or
other Deposited Securities represented by the American Depositary Shares
evidenced by such Receipt in accordance with the instructions set forth in such
request. Accordingly, pursuant to the Company's Memorandum and Articles of
Association and applicable Irish law, the Depositary will cause its authorized
representative to attend each meeting of holders of Shares and call for a poll
as instructed in accordance with clause (c) above for the purpose of effecting
such vote. The Depositary shall not vote or attempt to exercise the right to
vote that attaches to the Shares or other Deposited Securities, other than in
accordance with such instructions or deemed instructions. If no instructions are
received by the Depositary from any Owner with respect to any of the Deposited
Securities represented by the American Depositary Shares evidenced by such
Owner's Receipts on or before the date established by the Depositary for such
purpose, the Depositary will deem such Owner to have instructed the Depositary
to give a discretionary proxy to a person designated by the Company with respect
to such Deposited Securities and the Depositary will give a discretionary proxy
to a person designated by the Company to vote such Deposited Securities;
provided, that no such instructions will be deemed given and no such
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discretionary proxy will be given when the Company notifies the Depositary (and
the Company agrees to provide such notice as promptly as practicable in writing)
that the matter to be voted upon is one of the following:
1. is a matter not submitted to shareholders by means of a proxy
statement comparable to that specified in Schedule 14-A of the
Commission;
2. is the subject of a counter-solicitation, or is part of a proposal
made by a shareholder which is being opposed by management (i.e., a
- -
contest);
3. relates to a merger or consolidation (except when the Company's
proposal is to merge with its own wholly-owned subsidiary, provided
its shareholders dissenting thereto do not have rights of appraisal);
4. involves right of appraisal;
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5. authorizes mortgaging of property;
6. authorizes or creates indebtedness or increases the authorized
amount of indebtedness;
7. authorizes or creates preferred shares or increases the authorized
amount of existing preferred shares;
8. alters the terms or conditions of any shares of the Company's
stock then outstanding or existing indebtedness;
9. involves waiver or modification of preemptive rights (except when
the Company's proposal is to waive such rights with respect to
ordinary shares being offered pursuant to stock option or purchase
plans involving the additional issuance of not more than 5% of the
Company's outstanding ordinary shares (see Item 12 below));
10. alters voting provisions or the proportionate voting power of a
class of shares, or the number of its votes per share (except where
cumulative voting provisions govern the number of votes per share for
election of directors and the Company's proposal involves a change in
the number of its directors by not more than 10% or not more than
one);
11. changes existing quorum requirements with respect to shareholder
meetings;
12. authorizes issuance of ordinary shares, or options to purchase
ordinary shares, to directors, officers, or employees in an amount
which exceeds 5% of the total amount of the class outstanding (when no
plan is amended to extend its duration, the Company shall factor into
the calculation the number of ordinary shares that remain available
for issuance, the number of ordinary shares subject to outstanding
options and any ordinary shares being added; should there be more than
one plan being considered at the same meeting, all ordinary shares are
aggregated);
13. authorizes
(a) a new profit-sharing or special remuneration plan, or a new
retirement plan, the annual cost of which will amount to more
than 10% of average annual income before taxes for the preceding
five years; or
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(b) the amendment of an existing plan which would bring its costs
above 10% of such average annual income before taxes (should
there be more than one plan being considered at the same meeting,
all costs are aggregated; exceptions may be made in cases of (a)
retirement plans based on agreement or negotiations with labor
unions (or which have been or are to be approved by such unions);
and (b) any related retirement plan for benefit of non-union
employees having terms substantially equivalent to the terms of
such union-negotiated plan, which is submitted for action of
stockholders concurrently with such union-negotiated plan);
14. changes the purposes or powers of the Company to an extent which
would permit it to change a materially different line of business and
it is the Company's stated intention to make such a change;
15. authorizes the acquisition of property, assets, or a company,
where the consideration to be given has a fair value of 20% or more of
the market value of the previously outstanding shares;
16. authorizes the sale or other disposition of assets or earning
power of 20% or more of those existing prior to the transaction;
17. authorizes a transaction not in the ordinary course of business
in which an officer, director or substantial security holder has a
direct or indirect interest;
18. reduces earned surplus by 51% or more, or reduces earned surplus
to an amount less than the aggregate of three years' ordinary share
dividends computed at the current dividend rate.
SECTION 4.08. Changes Affecting Deposited Securities. In
--------------------------------------
circumstances where the provisions of Section 4.03 do not apply, upon any change
in nominal value, change in par value, split-up, consolidation or any other
reclassification of Deposited Securities, or upon any recapitalization,
reorganization, merger or consolidation or sale of assets affecting the Company
or to which it is a party, any securities which shall be received by the
Depositary or a Custodian in exchange for or in conversion of or in respect of
Deposited Securities, shall be treated as new Deposited Securities under this
Restricted Deposit Agreement, and Restricted American Depositary Shares shall
thenceforth represent, in addition to the existing Deposited Securities, the
right to receive the new Deposited Securities so received in exchange or
conversion, unless additional Receipts are delivered pursuant to the following
sentence. In any such
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case the Depositary may execute and deliver additional Receipts as in the case
of a dividend in Shares, or call for the surrender of outstanding Receipts to be
exchanged for new Receipts specifically describing such new Deposited
Securities.
SECTION 4.09. Reports. The Depositary shall make available for
-------
inspection by Owners at its Corporate Trust Office any reports and
communications, including any proxy soliciting material, received from the
Company which are both (a) received by the Depositary as the holder of the
Deposited Securities and (b) made generally available to the holders of such
Deposited Securities by the Company. The Depositary shall also send to the
Owners copies of such reports when furnished by the Company pursuant to Section
5.06. Any such reports and communications, including any such proxy soliciting
material, furnished to the Depositary by the Company shall be furnished in
English, to the extent such materials are required to be translated into English
pursuant to any regulations of the Commission.
SECTION 4.10. Lists of Owners. Promptly upon request by the
---------------
Company, the Depositary shall, at the expense of the Company, furnish to it a
list, as of a recent date, of the names, addresses and holdings of Restricted
American Depositary Shares by all persons in whose names Receipts are registered
on the books of the Depositary.
SECTION 4.11. Withholding. In the event that the Depositary
-----------
determines that any distribution in property (including Shares and rights to
subscribe therefor) is subject to any tax or other governmental charge which the
Depositary is obligated to withhold, the Depositary may by public or private
sale dispose of all or a portion of such property (including Shares and rights
to subscribe therefor) in such amounts and in such manner as the Depositary
deems necessary and practicable to pay such taxes or charges and the Depositary
shall distribute the net proceeds of any such sale after deduction of such taxes
or charges to the Owners entitled thereto in proportion to the number of
Restricted American Depositary Shares held by them respectively.
ARTICLE 5
THE DEPOSITARY, THE CUSTODIANS AND THE COMPANY
SECTION 5.01. Maintenance of Office and Transfer Books by the
-----------------------------------------------
Depositary. Until termination of this Restricted Deposit Agreement in
- ----------
accordance with its terms, the Depositary shall maintain in the Borough of
Manhattan, The City of New York, facilities for the execution and delivery,
registration, registration of transfers and surrender of Receipts in accordance
with the provisions of this Restricted Deposit Agreement.
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<PAGE>
The Depositary shall keep books, at its Corporate Trust Office, for
the registration of Receipts and transfers of Receipts which at all reasonable
times shall be open for inspection by the Owners, provided that such inspection
shall not be for the purpose of communicating with Owners in the interest of a
business or object other than the business of the Company or a matter related to
this Restricted Deposit Agreement or the Receipts.
The Depositary may close the transfer books, at any time or from time
to time, when deemed expedient by it in connection with the performance of its
duties hereunder.
If any Receipts or the Restricted American Depositary Shares evidenced
thereby are listed on one or more stock exchanges in the United States, the
Depositary shall act as Registrar or appoint a Registrar or one or more co-
registrars for registry of such Receipts in accordance with any requirements of
such exchange or exchanges.
SECTION 5.02. Prevention or Delay in Performance by the Depositary or
-------------------------------------------------------
the Company. Neither the Depositary nor the Company nor any of their
- -----------
respective directors, employees, agents or affiliates shall incur any liability
to any Owner or Beneficial Owner of any Receipt, if by reason of any provision
of any present or future law or regulation of the United States or any other
country, or of any governmental or regulatory authority or stock exchange, or by
reason of any provision, present or future, of the Memorandum and Articles of
Association of the Company, or by reason of any provision of any securities
issued or distributed by the Company, or any offering or distribution thereof,
or by reason of any act of God or war or other circumstances beyond its control,
the Depositary or the Company shall be prevented, delayed or forbidden from, or
be subject to any civil or criminal penalty on account of, doing or performing
any act or thing which by the terms of this Restricted Deposit Agreement or
Deposited Securities it is provided shall be done or performed; nor shall the
Depositary or the Company or any of their respective directors, employees,
agents or affiliates incur any liability to any Owner or Beneficial Owner of any
Receipt by reason of any nonperformance or delay, caused as aforesaid, in the
performance of any act or thing which by the terms of this Restricted Deposit
Agreement it is provided shall or may be done or performed, or by reason of any
exercise of, or failure to exercise, any discretion provided for in this
Restricted Deposit Agreement. Where, by the terms of a distribution pursuant to
Section 4.01, 4.02, or 4.03 of the Restricted Deposit Agreement, or an offering
or distribution pursuant to Section 4.04 of the Restricted Deposit Agreement, or
for any other reason, such distribution or offering may not be made available to
Owners, and the Depositary may not dispose of such distribution or offering on
behalf of such Owners and make the net proceeds available to such Owners, then
the Depositary shall not make such distribution or offering, and shall allow any
rights, if applicable, to lapse.
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<PAGE>
SECTION 5.03. Obligations of the Depositary, the Custodian and the
----------------------------------------------------
Company. The Company assumes no obligation nor shall it be subject to any
- -------
liability under this Restricted Deposit Agreement to Owners or Beneficial
Owners, except that it agrees to perform its obligations specifically set forth
in this Restricted Deposit Agreement without negligence or bad faith.
The Depositary assumes no obligation nor shall it be subject to any
liability under this Restricted Deposit Agreement to any Owner or Beneficial
Owner (including, without limitation, liability with respect to the validity or
worth of the Deposited Securities), except that it agrees to perform its
obligations specifically set forth in this Restricted Deposit Agreement without
negligence or bad faith.
Neither the Depositary nor the Company shall be under any obligation
to appear in, prosecute or defend any action, suit or other proceeding in
respect of any Deposited Securities or in respect of the Receipts, which in its
opinion may involve it in expense or liability, unless indemnity satisfactory to
it against all expense and liability shall be furnished as often as may be
required, and the Custodian shall not be under any obligation whatsoever with
respect to such proceedings, the responsibility of the Custodian being solely to
the Depositary.
Neither the Depositary nor the Company shall be liable for any action
or nonaction by it in reliance upon the advice of or information from legal
counsel, accountants, any person presenting Shares for deposit, any Owner or any
other person believed by it in good faith to be competent to give such advice or
information.
The Depositary shall not be liable for any acts or omissions made by a
successor depositary whether in connection with a previous act or omission of
the Depositary or in connection with any matter arising wholly after the
removal or resignation of the Depositary, provided that in connection with the
issue out of which such potential liability arises the Depositary performed its
obligations without negligence or bad faith while it acted as Depositary.
The Depositary shall not be responsible for any failure to carry out
any instructions to vote any of the Deposited Securities, or for the manner in
which any such vote is cast or the effect of any such vote, provided that any
such action or nonaction is in good faith.
No disclaimer of liability under the Securities Act is intended by any
provision of this Restricted Deposit Agreement.
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<PAGE>
SECTION 5.04. Resignation and Removal of the Depositary. The
-----------------------------------------
Depositary may at any time resign as Depositary hereunder by written notice of
its election so to do delivered to the Company, such resignation to take effect
upon the appointment of a successor depositary and its acceptance of such
appointment as hereinafter provided.
The Depositary may at any time be removed by the Company by written
notice of such removal effective upon the appointment of a successor depositary
and its acceptance of such appointment as hereinafter provided.
In case at any time the Depositary acting hereunder shall resign or be
removed, the Company shall use its best efforts to appoint a successor
depositary, which shall be a bank or trust company having an office in the
Borough of Manhattan, The City of New York. Every successor depositary shall
execute and deliver to its predecessor and to the Company an instrument in
writing accepting its appointment hereunder, and thereupon such successor
depositary, without any further act or deed, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor; but such
predecessor, nevertheless, upon payment of all sums due it and on the written
request of the Company shall execute and deliver an instrument transferring to
such successor all rights and powers of such predecessor hereunder, shall duly
assign, transfer and deliver all right, title and interest in the Deposited
Securities to such successor, and shall deliver to such successor a list of the
Owners of all outstanding Receipts. Any such successor depositary shall
promptly mail notice of its appointment to the Owners.
Any corporation into or with which the Depositary may be merged or
consolidated shall be the successor of the Depositary without the execution or
filing of any document or any further act.
SECTION 5.05. The Custodians. The Custodian shall be subject at all
--------------
times and in all respects to the directions of the Depositary and shall be
responsible solely to it. Any Custodian may resign and be discharged from its
duties hereunder by written notice of such resignation delivered to the
Depositary at least 30 days prior to the date on which such resignation is to
become effective. If upon such resignation there shall be no Custodian acting
hereunder, the Depositary shall, promptly after receiving such notice, appoint a
substitute custodian or custodians, each of which shall thereafter be a
Custodian hereunder. Whenever the Depositary in its discretion determines that
it is in the best interest of the Owners to do so, it may appoint a substitute
or additional custodian or custodians, each of which shall thereafter be one of
the Custodians hereunder. Upon demand of the Depositary any Custodian shall
deliver such of the Deposited Securities held by it as are requested of it to
any other Custodian or such substitute or additional custodian or custodians.
Each such substitute or additional custodian shall deliver to the
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<PAGE>
Depositary, forthwith upon its appointment, an acceptance of such appointment
satisfactory in form and substance to the Depositary.
Upon the appointment of any successor depositary hereunder, each
Custodian then acting hereunder shall forthwith become, without any further act
or writing, the agent hereunder of such successor depositary and the appointment
of such successor depositary shall in no way impair the authority of each
Custodian hereunder; but the successor depositary so appointed shall,
nevertheless, on the written request of any Custodian, execute and deliver to
such Custodian all such instruments as may be proper to give to such Custodian
full and complete power and authority as agent hereunder of such successor
depositary.
SECTION 5.06. Notices and Reports. On or before the first date on
-------------------
which the Company gives notice, by publication or otherwise, of any meeting of
holders of Shares or other Deposited Securities, or of any adjourned meeting of
such holders, or of the taking of any action in respect of any cash or other
distributions or the offering of any rights, the Company agrees to transmit to
the Depositary and the Custodian a copy of the notice thereof in the form given
or to be given to holders of Shares or other Deposited Securities.
The Company will arrange for the translation into English, if not
already in English, to the extent required pursuant to any regulations of the
Commission, and the prompt transmittal by the Company to the Depositary and the
Custodian of such notices and any other reports and communications which are
made generally available by the Company to holders of its Shares. If requested
in writing by the Company, the Depositary will arrange for the mailing, at the
Company's expense, of copies of such notices, reports and communications to all
Owners. The Company will timely provide the Depositary with the quantity of
such notices, reports, and communications, as requested by the Depositary from
time to time, in order for the Depositary to effect such mailings.
SECTION 5.07. Distribution of Additional Shares, Rights, etc. The
-----------------------------------------------
Company agrees that in the event of any issuance or distribution of (1)
additional Shares, (2) rights to subscribe for Shares, (3) securities
convertible into Shares, or (4) rights to subscribe for such securities (each a
"Distribution"), the Company will promptly furnish to the Depositary a written
opinion from U.S. counsel for the Company, which counsel shall be satisfactory
to the Depositary, stating whether or not the Distribution requires a
Registration Statement under the Securities Act to be in effect prior to making
such Distribution available to Owners entitled thereto. If in the opinion of
such counsel a Registration Statement is required, such counsel shall furnish to
the Depositary a written opinion as to whether or not there is a Registration
Statement in effect which will cover such Distribution.
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<PAGE>
The Company agrees with the Depositary that neither the Company nor
any person controlled by, controlling or under common control with the Company
will at any time deposit any Shares, either originally issued or previously
issued and reacquired by the Company or any such affiliate, unless a
Registration Statement is in effect as to such Shares under the Securities Act.
SECTION 5.08. Indemnification. The Company agrees to indemnify the
---------------
Depositary, its directors, employees, agents and affiliates and any Custodian
against, and hold each of them harmless from, any liability or expense
(including, but not limited to, the fees and expenses of counsel) which may
arise out of acts performed or omitted, in accordance with the provisions of
this Restricted Deposit Agreement and of the Receipts, as the same may be
amended, modified or supplemented from time to time, (i) by either the
Depositary or a Custodian or their respective directors, employees, agents and
affiliates, except for any liability or expense arising out of the negligence or
bad faith of either of them, or (ii) by the Company or any of its directors,
employees, agents and affiliates.
The Depositary agrees to indemnify the Company, its directors,
employees, agents and affiliates and hold them harmless from any liability or
expense which may arise out of acts performed or omitted by the Depositary or
its Custodian or their respective directors, employees, agents and affiliates
due to their negligence or bad faith.
SECTION 5.09. Charges of Depositary. The Company agrees to pay the
---------------------
fees, reasonable expenses and out-of-pocket charges of the Depositary and those
of any Registrar only in accordance with agreements in writing entered into
between the Depositary and the Company from time to time. The Depositary shall
present its statement for such charges and expenses to the Company once every
three months. The charges and expenses of the Custodian are for the sole
account of the Depositary.
The following charges shall be incurred by any party depositing or
withdrawing Shares or by any party surrendering Receipts or to whom Receipts are
issued (including, without limitation, issuance pursuant to a stock dividend or
stock split declared by the Company or an exchange of stock regarding the
Receipts or Deposited Securities or a distribution of Receipts pursuant to
Section 4.03), whichever applicable: (1) taxes and other governmental charges,
(2) such registration fees as may from time to time be in effect for the
registration of transfers of Shares generally on the Share register of the
Company or Foreign Registrar and applicable to transfers of Shares to the name
of the Depositary or its nominee or the Custodian or its nominee on the making
of deposits or withdrawals hereunder, (3) such cable, telex and facsimile
transmission expenses as are expressly provided in this Restricted Deposit
Agreement, (4) such expenses as are
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<PAGE>
incurred by the Depositary in the conversion of foreign currency pursuant to
Section 4.05, (5) a fee of $5.00 or less per 100 Restricted American Depositary
Shares (or portion thereof) for the execution and delivery of Receipts pursuant
to Section 2.03, 4.03 or 4.04 and the surrender of Receipts pursuant to Section
2.05 or 6.02, (6) a fee of $.02 or less per Restricted American Depositary Share
(or portion thereof) for any cash distribution made pursuant to the Restricted
Deposit Agreement, including, but not limited to Sections 4.01 through 4.04
hereof, (7) a fee for the distribution of securities pursuant to Section 4.02,
such fee being in an amount equal to the fee for the execution and delivery of
Restricted American Depositary Shares referred to above which would have been
charged as a result of the deposit of such securities (for purposes of this
clause 7 treating all such securities as if they were Shares) but which
securities are instead distributed by the Depositary to Owners and (8) a fee not
in excess of $1.50 per certificate for a Receipt or Receipts for transfers made
pursuant to the terms of the Restricted Deposit Agreement.
The Depositary, subject to Section 2.09 hereof, may own and deal in
any class of securities of the Company and its affiliates and in Receipts.
SECTION 5.10. Retention of Depositary Documents. The Depositary is
---------------------------------
authorized to destroy those documents, records, bills and other data compiled
during the term of this Restricted Deposit Agreement at the times permitted by
the laws or regulations governing the Depositary unless the Company requests
that such papers be retained for a longer period or turned over to the Company
or to a successor depositary.
SECTION 5.11. Exclusivity. The Company agrees not to appoint any
-----------
other depositary for issuance of Restricted American Depositary Receipts so long
as The Bank of New York is acting as Depositary hereunder.
ARTICLE 6
AMENDMENT AND TERMINATION
SECTION 6.01. Amendment. The form of the Receipts and any
---------
provisions of this Restricted Deposit Agreement may at any time and from time to
time be amended by agreement between the Company and the Depositary without the
consent of Owners or Beneficial Owners of Receipts in any respect which they may
deem necessary or desirable, including, without limitation, amendments agreed
upon pursuant to Section 2.09(b) hereof. Any amendment which shall impose or
increase any fees or charges (other than taxes and other governmental charges,
registration fees, cable, telex or facsimile transmission costs, delivery costs
or other such expenses), or which shall otherwise prejudice any substantial
existing right of Owners, shall, however, not become effective as to outstanding
Receipts until the expiration of thirty days after notice of such amendment
shall have been given to the Owners of outstanding Receipts. Every Owner,
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<PAGE>
at the time any amendment so becomes effective, shall be deemed, by continuing
to hold such Receipt, to consent and agree to such amendment and to be bound by
the Restricted Deposit Agreement as amended thereby. In no event shall any
amendment impair the right of the Owner of any Receipt to surrender such Receipt
and receive therefor the Deposited Securities represented thereby, except in
order to comply with mandatory provisions of applicable law.
SECTION 6.02. Termination. The Depositary shall, at any time at the
-----------
direction of the Company, terminate this Restricted Deposit Agreement by mailing
notice of such termination to the Owners of all Receipts then outstanding at
least 90 days prior to the date fixed in such notice for such termination. The
Depositary may likewise terminate this Restricted Deposit Agreement by mailing
notice of such termination to the Company and the Owners of all Receipts then
outstanding, if at any time 90 days shall have expired after the Depositary
shall have delivered to the Company a written notice of its election to resign
and a successor depositary shall not have been appointed and accepted its
appointment as provided in Section 5.04. On and after the date of termination,
the Owner of a Receipt will, upon (a) surrender of such Receipt at the Corporate
Trust Office of the Depositary, (b) payment of the fee of the Depositary for the
surrender of Receipts referred to in Section 2.05, and (c) payment of any
applicable taxes or governmental charges, be entitled to delivery, to him or
upon his order, of the amount of Deposited Securities represented by the
American Depositary Shares evidenced by such Receipt. If any Receipts shall
remain outstanding after the date of termination, the Depositary thereafter
shall discontinue the registration of transfers of Receipts, shall suspend the
distribution of dividends to the Owners thereof, and shall not give any further
notices or perform any further acts under this Restricted Deposit Agreement,
except that the Depositary shall continue to collect dividends and other
distributions pertaining to Deposited Securities, shall sell rights and other
property as provided in this Restricted Deposit Agreement, and shall continue to
deliver Deposited Securities, together with any dividends or other distributions
received with respect thereto and the net proceeds of the sale of any rights or
other property, in exchange for Receipts surrendered to the Depositary (after
deducting, in each case, the fee of the Depositary for the surrender of a
Receipt, any expenses for the account of the Owner of such Receipt in accordance
with the terms and conditions of this Restricted Deposit Agreement, and any
applicable taxes or governmental charges). At any time after the expiration of
one year from the date of termination, the Depositary may sell the Deposited
Securities then held hereunder and may thereafter hold uninvested the net
proceeds of any such sale, together with any other cash then held by it
hereunder, unsegregated and without liability for interest, for the pro rata
benefit of the Owners of Receipts which have not theretofore been surrendered,
such Owners thereupon becoming general creditors of the Depositary with respect
to such net proceeds. After making such sale, the Depositary shall be
discharged from all obligations under this Restricted Deposit Agreement, except
to account for such net proceeds and
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<PAGE>
other cash (after deducting, in each case, the fee of the Depositary for the
surrender of a Receipt, any expenses for the account of the Owner of such
Receipt in accordance with the terms and conditions of this Restricted Deposit
Agreement, and any applicable taxes or governmental charges). Upon the
termination of this Restricted Deposit Agreement, the Company shall be
discharged from all obligations under this Restricted Deposit Agreement except
for its obligations to the Depositary under Sections 5.08 and 5.09 hereof.
ARTICLE 7
MISCELLANEOUS
SECTION 7.01. Counterparts. This Restricted Deposit Agreement may
------------
be executed in any number of counterparts, each of which shall be deemed an
original and all of such counterparts shall constitute one and the same
instrument. Copies of this Restricted Deposit Agreement shall be filed with the
Depositary and the Custodians and shall be open to inspection by any Owner or
Beneficial Owner of a Receipt during business hours.
SECTION 7.02. No Third Party Beneficiaries. This Restricted Deposit
----------------------------
Agreement is for the exclusive benefit of the parties hereto and shall not be
deemed to give any legal or equitable right, remedy or claim whatsoever to any
other person.
SECTION 7.03. Severability. In case any one or more of the
------------
provisions contained in this Restricted Deposit Agreement or in the Receipts
should be or become invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein or therein shall in no way be affected, prejudiced or disturbed thereby.
SECTION 7.04. Owners and Beneficial Owners as Parties; Binding
------------------------------------------------
Effect. The Owners and Beneficial Owners of Receipts from time to time shall be
- ------
parties to this Restricted Deposit Agreement and shall be bound by all of the
terms and conditions hereof and of the Receipts by acceptance thereof.
SECTION 7.05. Notices. Any and all notices to be given to the
-------
Company shall be deemed to have been duly given if personally delivered or sent
by mail or cable, telex or facsimile transmission confirmed by letter, addressed
to CBT Group PLC, 2(c) Clonskeagh Square, Dublin 14, The Republic of Ireland,
Attention: President, or any other place to which the Company may have
transferred its principal office.
-30-
<PAGE>
Any and all notices to be given to the Depositary shall be deemed to
have been duly given if in English and personally delivered or sent by mail or
cable, telex or facsimile transmission confirmed by letter, addressed to The
Bank of New York, 101 Barclay Street, New York, New York 10286, Attention:
Restricted American Depositary Receipt Administration, or any other place to
which the Depositary may have transferred its Corporate Trust Office.
Any and all notices to be given to any Owner shall be deemed to have
been duly given if personally delivered or sent by mail or cable, telex or
facsimile transmission confirmed by letter, addressed to such Owner at the
address of such Owner as it appears on the transfer books for Receipts of the
Depositary, or, if such Owner shall have filed with the Depositary a written
request that notices intended for such Owner be mailed to some other address, at
the address designated in such request.
Delivery of a notice sent by mail or cable, telex or facsimile
transmission shall be deemed to be effective at the time when a duly addressed
letter containing the same (or a confirmation thereof in the case of a cable,
telex or facsimile transmission) is deposited, postage prepaid, in a post-office
letter box. The Depositary or the Company may, however, act upon any cable,
telex or facsimile transmission received by it, notwithstanding that such cable,
telex or facsimile transmission shall not subsequently be confirmed by letter as
aforesaid.
SECTION 7.06. Governing Law. This Restricted Deposit Agreement and
-------------
the Receipts shall be interpreted and all rights hereunder and thereunder and
provisions hereof and thereof shall be governed by the laws of the State of New
York.
-31-
<PAGE>
IN WITNESS WHEREOF, CBT GROUP PLC and THE BANK OF NEW YORK have duly
executed this Restricted Deposit Agreement as of the day and year first set
forth above and all Owners and Beneficial Owners shall become parties hereto
upon acceptance by them of Receipts issued in accordance with the terms hereof.
CBT GROUP PLC
By: /s/ Elizabeth K. Roemer
_______________________________________
Name: Elizabeth K. Roemer
Title: Vice President and General Council
THE BANK OF NEW YORK,
as Depositary
By: /s/ The Bank of New York
_______________________________________
The Bank of New York
-32-
<PAGE>
Annex I
-------
Certification and Agreement of Acquirors of
Receipts Upon Deposit of Shares Pursuant to
Section 2.02 of the Restricted Deposit Agreement
We refer to the Restricted Deposit Agreement, dated as of November 30,
1995, as amended and restated as of April 11, 1996, as further amended and
restated as of March 9, 1998, and as further amended and restated as of May 22,
1998 (the "Restricted Deposit Agreement"), among CBT GROUP PLC (the "Company"),
THE BANK OF NEW YORK, as Depositary, and Owners and Beneficial Owners of
Restricted American Depositary Receipts (the "Receipts") issued thereunder.
Capitalized terms used but not defined herein shall have the meanings given them
in the Restricted Deposit Agreement.
1. This certification and agreement is furnished in connection with
the deposit of Shares and issuance of Restricted American Depositary Shares to
be evidenced by one or more Receipts pursuant to Section 2.02 of the Restricted
Deposit Agreement.
2. We represent that, if the Shares being deposited were not
registered under the Securities Act of 1933, as amended (the "Act"), we acquired
the Shares in a transaction exempt from registration under the Act.
3. We acknowledge that the offer and sale of the Receipts, the
Restricted American Depositary Shares evidenced thereby and the Shares which may
be received upon surrender of Receipts or cancellation of American Depositary
Shares have not been and will not be registered under the Securities Act of
1933, as amended (the "Act") and may not be offered, sold, pledged or otherwise
transferred unless registered under the Act or unless an exemption from
registration is available.
4. We acknowledge that each Receipt (i) will be in physical form and
legended, (ii) will be registered in the name of the beneficial owner furnishing
this Deposit Certificate, (iii) will not be eligible for acceptance in any book-
entry settlement system, and (iv) may only be transferred in accordance with
Section 2.04 of the Restricted Deposit Agreement.
5. We acknowledge that the Receipts, the Restricted American
Depositary Shares evidenced thereby, and the Shares which may be received upon
surrender of Receipts or cancellation of American Depositary Shares may be
subject to different and less favorable restrictions on transfer than those
applicable to the Shares hereby being deposited, including, without limitation,
the unavailability of transfer based on the satisfaction of a holding period
pursuant to paragraphs (d) or (k) of Rule 144 under the Securities Act.
Annex I-1
<PAGE>
6. We certify that either:
[CHECK ONE]
[_] A. the Shares are not "restricted securities" within the meaning of Rule
144 under the Securities Act, we are an affiliate of the Company
within the meaning of Rule 144, and the Shares were not acquired by us
in a transaction specified in paragraph (a) of Rule 145 under the
Securities Act;
OR
--
[_] B. the Shares were acquired by us in a transaction specified in paragraph
(a) of Rule 145 under the Securities Act and we are not an affiliate
of the Company within the meaning of Rule 144 or Rule 145 under the
Securities Act.
OR
--
[_] C. the Shares have been or are subject to restrictions on transfer by us
pursuant to the holding period requirements of Rule 144(d) under the
Securities Act; we have held the Shares for a period satisfying such
holding period; and we have attached an opinion of counsel
satisfactory to the Depositary stating that after deposit of the
Shares, all of the Receipts, the American Depositary Shares, and all
other deposited Shares may after the deposit of our Shares still be
withdrawn, transferred or resold pursuant to only the restrictions
described by paragraphs (c), (e), (f), (g), and (h) of Rule 144 under
the Securities Act, without any need to satisfy any further holding
period.
7. We certify that we are or at the time the Shares are deposited and
at the time the Receipts are issued will be, the beneficial owner of the Shares
and of the Restricted American Depositary Shares evidenced by such Receipt or
Receipts and (i) if the Shares were acquired in a transaction exempt from the
registration requirements of the Act under Regulation S of the Act, we are not a
U.S. person (as defined in Regulation S) and we are located outside the United
States (within the meaning of Regulation S under the Act) and acquired, or have
agreed to acquire and will have acquired, the Shares to be deposited outside the
United States (within the meaning of Regulation S).
8. We agree that the Receipts, the Restricted American Depositary
Shares evidenced thereby and the Shares represented thereby may not be offered,
sold, pledged or otherwise transferred except in accordance with the transfer
restrictions imposed by paragraphs (c), (e), (f), (g) and, if applicable, (h) of
Rule 144 under the Act, without
Annex I-2
<PAGE>
reliance on any termination of any such restriction by operation of paragraph
(k) of Rule 144, in each case (i) in accordance with the applicable securities
laws of any state of the United States, (ii) upon the delivery of a satisfactory
written opinion from U.S. counsel and (iii) upon the delivery of a duly executed
and completed Transfer Certificate in the form attached to the Restricted
Deposit Agreement as Annex II in accordance with the provisions of Section 2.04
of the Restricted Deposit Agreement.
Very truly yours,
______________________________
[NAME OF CERTIFYING ENTITY]
By:___________________________
Name:
Dated:
Annex I-3
<PAGE>
Annex II
--------
Certification and Agreement of Certain Persons
Transferring Receipts Pursuant to
Sections 2.01 and 2.04 of
the Restricted Deposit Agreement
We refer to the Restricted Deposit Agreement, dated as of November 30,
1995, as amended and restated as of April 11, 1996, as further amended and
restated as of March 9, 1998, and as further amended and restated as of May 22,
1998 (the "Restricted Deposit Agreement"), among CBT GROUP PLC (the "Company"),
THE BANK OF NEW YORK, as Depositary thereunder (the "Depositary"), and Owners
and Beneficial Owners of Restricted American Depositary Receipts (the
"Receipts") issued thereunder. Capitalized terms used but not defined herein
shall have the meanings given them in the Restricted Deposit Agreement.
1. The undersigned Beneficial Owner is surrendering a Receipt or
Receipts in accordance with the terms of the Restricted Deposit Agreement for
the purpose of transferring its beneficial interest in Restricted American
Depositary Shares pursuant to Section 2.04 and 2.09 of the Restricted Deposit
Agreement.
2. The undersigned Beneficial Owner acknowledges that the Receipts,
the Restricted American Depositary Shares evidenced thereby and the ordinary
shares of the Company which may be received upon surrender of this Receipt or
cancellation of the Restricted American Depositary Shares have not been and will
not be registered under the Securities Act of 1933, as amended (the "Act") and
may not be offered, sold, pledged or otherwise transferred unless registered
under the Act or unless an exemption from registration is available.
3. The undersigned Beneficial Owner certifies that we have sold or
otherwise transferred, or agreed to sell or otherwise transfer, the Shares in
accordance with paragraphs (c), (e), (f), (g) and, if applicable, (h) of Rule
144 under the Act, without regard to any termination of any such restriction by
operation of paragraph (k) of Rule 144, in accordance with any applicable
securities laws of any state of the United States, and are surrendering a
Receipt or Receipts for the purpose of cancellation thereof. In connection
therewith and as a condition precedent thereto, we have delivered to the
Depositary a written opinion of U.S. counsel satisfactory to the Depositary.
The Depositary, subject to applicable law and the terms and conditions of the
Restricted Deposit Agreement, shall exchange Receipts evidencing Restricted
American Depositary Shares surrendered hereunder in connection with a transfer
in accordance with in accordance with paragraphs (c), (e), (f), (g) and, if
applicable, (h) of Rule 144 under the Act, for ADRs evidencing ADSs issued
pursuant to the ADR Agreement.
Annex II-1
<PAGE>
3. The undersigned Beneficial Owner certifies that we have no reason
to believe that the person to whom a beneficial interest in Restricted
Depositary Shares is hereby to be transferred is an affiliate of the Company,
within the meaning of Rule 144 under the Securities Act.
This certification and agreement may be signed in counterparts.
Very truly,
Date: __________________________________
Signature of Beneficial Owner
Print Name and Address of Owner:
__________________________________
__________________________________
__________________________________
Annex II-2
<PAGE>
Annex III
---------
Certification and Agreement of Persons Receiving
Deposited Securities Upon Withdrawal
Pursuant to Section 2.05 of
the Restricted Deposit Agreement
We refer to the Restricted Deposit Agreement, dated as of November 30,
1995, as amended and restated as of April 11, 1996, as further amended and
restated as of March 9, 1998, and as further amended and restated as of May 22,
1998 (the "Restricted Deposit Agreement"), among CBT GROUP PLC (the "Company"),
THE BANK OF NEW YORK, as Depositary thereunder, and Owners and Beneficial Owners
of Restricted American Depositary Receipts (the "Receipts") issued thereunder.
Capitalized terms used but not defined herein shall have the meanings given them
in the Restricted Deposit Agreement.
1. We are surrendering a Receipt or Receipts in accordance with the
terms of the Restricted Deposit Agreement for the purpose of withdrawal of the
Deposited Securities represented by the Restricted American Depositary Shares
evidenced by such Receipt or Receipts (the "Shares") pursuant to Section 2.05 of
the Restricted Deposit Agreement.
2. We acknowledge that the Shares have not been and will not be
registered under the Securities Act of 1933, as amended (the "Act") and may not
be offered, sold, pledged or otherwise transferred unless registered under the
Act or unless an exemption from registration is available.
3. We certify, represent, acknowledge and agree that:
(i) We will be the beneficial owner of the Shares upon withdrawal,
and
(ii) The Shares (i) will be in physical form and legended, (ii) will
be registered in the name of the beneficial owner furnishing
this Withdrawal Certificate as an initial depositor, (iii) will
be subject to, and we will continue to be bound by, the
restrictions set forth in the Restricted Deposit Agreement and
in the Depositor Certificate, dated ____________, 1995,
executed by us, and
(iii) We agree that the Shares may not be offered, sold, pledged or
otherwise transferred except in accordance with paragraphs (c),
Annex III-1
<PAGE>
(e), (f), (g), and, if applicable (h) of Rule 144 under the
Act, without regard to any termination of certain restrictions
by operation of paragraph (k) of Rule 144 under the Act,
pursuant to either Rule 144 or Rule 145 under the Act, in each
case (x) in accordance with any applicable securities laws of
any state of the United States, (y) above upon the delivery of
a satisfactory written opinion from U.S. counsel, and (z) upon
the delivery of a duly executed and completed Transfer
Certificate, substantially in the form attached to the
Restricted Deposit Agreement as Annex II, and
(iv) We will not deposit or cause to be deposited such Shares into
any depositary receipt facility established or maintained by a
depositary bank (including any such facility maintained by the
Depositary), other than a restricted depositary receipt
facility, so long as such Shares are "restricted securities"
within the meaning of Rule 144(a)(3) under the Act or are
otherwise subject to transfer restrictions pursuant to Rule 144
or Rule 145 under the Act.
Very truly,
[NAME OF CERTIFYING ENTITY]
By: _________________________
Name:
Dated:
Annex III-2
<PAGE>
EXHIBIT A
RESTRICTED AMERICAN
DEPOSITARY SHARES
(Each Restricted
American Depositary
Share represents
one deposited Share)
THIS RESTRICTED AMERICAN DEPOSITARY RECEIPT, THE RESTRICTED AMERICAN
DEPOSITARY SHARES EVIDENCED HEREBY AND THE ORDINARY SHARES OF CBT GROUP PLC
(THE "ORDINARY SHARES") WHICH MAY BE RECEIVED UPON SURRENDER OF THIS
RESTRICTED AMERICAN DEPOSITARY RECEIPT OR CANCELLATION OF THE RESTRICTED
AMERICAN DEPOSITARY SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED
UNDER THE SECURITIES ACT OR UNLESS AN EXEMPTION FROM REGISTRATION IS
AVAILABLE. EACH PERSON DEPOSITING ORDINARY SHARES AGREES THAT THIS
RESTRICTED AMERICAN DEPOSITARY RECEIPT, THE RESTRICTED AMERICAN DEPOSITARY
SHARES EVIDENCED HEREBY AND THE ORDINARY SHARES REPRESENTED THEREBY MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE
WITH PARAGRAPHS (c), (e), (f), (g) AND, IF APPLICABLE, (h) OF RULE 144
UNDER THE SECURITIES ACT, PURSUANT TO EITHER RULE 144 OR RULE 145 UNDER THE
SECURITIES ACT, WITHOUT REGARD TO ANY TERMINATION OF CERTAIN RESTRICTIONS
BY OPERATION OF PARAGRAPH (k) OF RULE 144 UNDER THE SECURITIES ACT, (A) IN
EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE UNITED
STATES AND ANY STATE OF THE UNITED STATES, (B) IN EACH CASE, UPON THE
DELIVERY OF A SATISFACTORY WRITTEN OPINION FROM U.S. COUNSEL, AND (C) IN
EACH CASE UPON THE DELIVERY OF A TRANSFER CERTIFICATE SUBSTANTIALLY IN
<PAGE>
THE FORM ATTACHED TO THE RESTRICTED DEPOSIT AGREEMENT AS ANNEX II DULY
EXECUTED AND COMPLETED BY THE TRANSFEROR. THE BENEFICIAL OWNER OF ORDINARY
SHARES RECEIVED UPON CANCELLATION OF ANY AMERICAN DEPOSITARY RECEIPTS MAY
NOT DEPOSIT OR CAUSE TO BE DEPOSITED SUCH ORDINARY SHARES INTO ANY
DEPOSITARY RECEIPT FACILITY ESTABLISHED OR MAINTAINED BY A DEPOSITARY BANK
(INCLUDING ANY SUCH FACILITY MAINTAINED BY THE DEPOSITARY FOR THE
RESTRICTED AMERICAN DEPOSITARY RECEIPTS), OTHER THAN A RESTRICTED
DEPOSITARY RECEIPT FACILITY, SO LONG AS SUCH ORDINARY SHARES ARE
"RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144(a)(3) UNDER THE
SECURITIES ACT OR ARE OTHERWISE SUBJECT TO THE TRANSFER RESTRICTIONS OF
RULE 144 OR RULE 145 UNDER THE SECURITIES ACT. EACH OWNER AND BENEFICIAL
OWNER, BY ITS ACCEPTANCE OF THIS RESTRICTED AMERICAN DEPOSITARY RECEIPT,
REPRESENTS AND AGREES THAT IT UNDERSTANDS AND WILL COMPLY WITH THE
FOREGOING RESTRICTIONS.
A-2
<PAGE>
THE BANK OF NEW YORK
RESTRICTED AMERICAN DEPOSITARY RECEIPT
FOR ORDINARY SHARES OF
THE NOMINAL VALUE OF IR9.375p EACH OF
CBT GROUP PLC
(INCORPORATED UNDER THE LAWS OF THE REPUBLIC OF IRELAND)
The Bank of New York, as depositary (hereinafter called the
"Depositary"), hereby certifies that___________
____________________________________________, or registered assigns IS THE OWNER
OF _____________________________
RESTRICTED AMERICAN DEPOSITARY SHARES
representing deposited ordinary shares (herein called "Shares") of CBT Group
PLC, incorporated under the laws of The Republic of Ireland (herein called the
"Company"). At the date hereof, each Restricted American Depositary Share
represents one Share deposited or subject to deposit under the Restricted
Deposit Agreement (as such term is hereinafter defined) at the Dublin, Ireland
office of AIB Custodial Services (herein called the "Custodian"). The
Depositary's Corporate Trust Office is located at a different address than its
principal executive office. Its Corporate Trust Office is located at 101
Barclay Street, New York, N.Y. 10286, and its principal executive office is
located at 48 Wall Street, New York, N.Y. 10286.
THE DEPOSITARY'S CORPORATE TRUST OFFICE ADDRESS IS
101 BARCLAY STREET, NEW YORK, N.Y. 10286
1. THE RESTRICTED DEPOSIT AGREEMENT.
This Restricted American Depositary Receipt is one of an issue (herein
called "Receipts"), all issued and to be issued upon the terms and conditions
set forth in the Restricted Deposit Agreement, dated as of November 30, 1995, as
amended and restated as of April 11, 1996, as further amended and restated as of
March 9, 1998, and as further amended and restated as of May 22, 1998 (herein
called the "Restricted Deposit Agreement"), by and among the Company, the
Depositary, and all Owners and Beneficial Owners from time to time of Receipts
issued thereunder, each of whom by accepting a Receipt agrees to become a party
thereto and become bound by all the terms and conditions thereof. The
Restricted Deposit Agreement sets forth the rights of Owners and Beneficial
Owners of the Receipts and the rights and duties of the Depositary in respect of
the Shares deposited thereunder and any and all other securities, property and
cash from time to time received in respect of such Shares and held thereunder
(such Shares, securities, property, and cash are herein called "Deposited
Securities"). Copies of the
A-3
<PAGE>
Restricted Deposit Agreement are on file at the Depositary's Corporate Trust
Office in New York City and at the office of the Custodian.
The statements made on the face and reverse of this Receipt are
summaries of certain provisions of the Restricted Deposit Agreement and are
qualified by and subject to the detailed provisions of the Restricted Deposit
Agreement, to which reference is hereby made. Capitalized terms defined in the
Restricted Deposit Agreement and not defined herein shall have the meanings set
forth in the Restricted Deposit Agreement.
2. SURRENDER OF RECEIPTS AND WITHDRAWAL OF SHARES.
Upon surrender at the Corporate Trust Office of the Depositary of this
Receipt, and upon payment of the fee of the Depositary provided in this Receipt,
and subject to the terms and conditions of the Restricted Deposit Agreement, the
Owner hereof is entitled to delivery, to him or upon his order, of the Deposited
Securities at the time represented by the Restricted American Depositary Shares
for which this Receipt is issued. Delivery of such Deposited Securities may be
made by the delivery of (a) certificates in the name of the Owner hereof or as
ordered by him or certificates properly endorsed or accompanied by proper
instruments of transfer and (b) any other securities, property and cash to which
such Owner is then entitled in respect of this Receipt. Such delivery will be
made at the option of the Owner hereof, either at the office of the Custodian or
at the Corporate Trust Office of the Depositary, provided that the forwarding of
certificates for Shares or other Deposited Securities for such delivery at the
Corporate Trust Office of the Depositary shall be at the risk and expense of the
Owner hereof. Notwithstanding anything to the contrary in the Restricted
Deposit Agreement, no Deposited Securities may be withdrawn upon the surrender
of this Receipt unless the Depositary shall have received (a) a written opinion
of U.S. counsel satisfactory to the Depositary in connection with a withdrawal
in accordance with Rule 144 or Rule 145 under the Securities Act, and (b) a duly
executed and completed written certificate and agreement, in substantially the
form annexed to the Restricted Deposit Agreement as Annex III, by or on behalf
of the person surrendering such Receipt who after such withdrawal will be the
beneficial owner of such Deposited Securities; provided, however, that no such
-------- -------
certificate and agreement shall be required for a withdrawal in connection with
a transfer in accordance with paragraphs (c), (e), (f), (g) and, if applicable,
(h) of Rule 144 under the Securities Act, without regard to any termination of
certain restrictions by operation of paragraph (k) of that Rule, in which case
the terms and provisions of Section 2.09 of the Restricted Deposit Agreement and
Article 4 hereof shall apply.
3. TRANSFERS, SPLIT-UPS, AND COMBINATIONS OF RECEIPTS.
Upon receipt by the Depositary of (a) a written opinion of U.S.
counsel satisfactory to the Depositary in connection with a transfer in
accordance with paragraphs
A-4
<PAGE>
(c), (e), (f), (g) and, if applicable, (h) of Rule 144 under the Securities Act,
pursuant to either Rule 144 or Rule 145 under the Securities Act, without regard
to any termination of certain restrictions by operation of paragraph (k) of that
Rule, and (b) a duly executed and completed written certification and agreement
("Transfer Certificate"), in substantially the form attached as Annex II to the
Restricted Deposit Agreement, upon surrender of this Receipt properly endorsed
for transfer or accompanied by proper instruments of transfer and funds
sufficient to pay any applicable transfer taxes and the expenses of the
Depositary as provided in Section 5.09 of the Restricted Deposit Agreement and
upon compliance with such regulations, if any, as the Depositary may establish
for such purpose the Depositary shall effect an exchange of this Receipt in
accordance with the terms and conditions of the Restricted Deposit Agreement.
This Receipt may be split into other such Receipts, or may be combined with
other such Receipts into one Receipt, evidencing the same aggregate number of
Restricted American Depositary Shares as the Receipt or Receipts surrendered. As
a condition precedent to the execution and delivery, registration of transfer,
split-up, combination, or surrender of any Receipt or withdrawal of any
Deposited Securities, the Depositary, the Custodian, or Registrar may require
payment from the depositor of the Shares or the presenter of the Receipt of a
sum sufficient to reimburse it for any tax or other governmental charge and any
stock transfer or registration fee with respect thereto (including any such tax
or charge and fee with respect to Shares being deposited or withdrawn) and
payment of any applicable fees as provided in this Receipt, may require the
production of proof satisfactory to it as to the identity and genuineness of any
signature and may also require compliance with any regulations the Depositary
may establish consistent with the provisions of the Restricted Deposit Agreement
or this Receipt, including, without limitation, this Article 3.
The representations and warranties included within the Transfer
Certificate in the form of Annex II to be delivered shall survive such transfer,
surrender and withdrawal, split-up or combination of the Shares and Receipts.
The delivery of Receipts against deposit of Shares generally or
against deposit of particular Shares may be suspended, or the transfer of
Receipts in particular instances may be refused, or the registration of transfer
of outstanding Receipts generally may be suspended, during any period when the
transfer books of the Depositary are closed, or if any such action is deemed
necessary or advisable by the Depositary or the Company at any time or from time
to time because of any requirement of law or of any government or governmental
body or commission, or under any provision of the Restricted Deposit Agreement
or this Receipt, or for any other reason.
4. EXCHANGE OF RESTRICTED AMERICAN DEPOSITARY SHARES FOR ADSs.
A-5
<PAGE>
Subject to applicable law and the terms and conditions of the
Restricted Deposit Agreement and this Receipt, upon receipt by the Depositary of
a written opinion of U.S. counsel satisfactory to the Depositary and a duly
executed and completed Transfer Certificate substantially in the form annexed to
the Restricted Deposit Agreement, Restricted American Depositary Shares sold or
otherwise transferred in accordance with paragraphs (c), (e), (f), (g) and, if
applicable (h) of Rule 144 under the Securities Act, pursuant to either Rule 144
or Rule 145 under the Securities Act, without regard to any termination of
certain restrictions by operation of paragraph (k) of that Rule, shall be
exchanged for ADSs issued pursuant to the ADR Deposit Agreement. The
transferees of the interests of Owners and Beneficial Owners of Receipts under
the Restricted Deposit Agreement shall thereafter be owners and beneficial
owners of ADRs issued pursuant to the ADR Deposit Agreement and shall have all
of the rights and obligations set forth under the ADR Deposit Agreement and the
ADRs. In connection with an Exchange, all Owners and Beneficial Owners of
Receipts issued under the Restricted Deposit Agreement shall be deemed to have
made the representations and warranties set forth in Section 3.03 of the ADR
Deposit Agreement. Each Owner and Beneficial Owner acknowledges and agrees that
there can be no assurance that applicable laws will permit the Depositary to
effect an Exchange as described herein and in the Restricted Deposit Agreement.
5. LIABILITY OF OWNER OR BENEFICIAL OWNER FOR TAXES.
If any tax or other governmental charge shall become payable by the
Custodian or the Depositary with respect to any Receipt or any Deposited
Securities represented hereby, such tax or other governmental charge shall be
payable by the Owner or Beneficial Owner hereof to the Depositary. The
Depositary may refuse to effect any transfer of this Receipt or any withdrawal
of Deposited Securities represented by Restricted American Depositary Shares
evidenced by such Receipt until such payment is made, and may withhold any
dividends or other distributions, or may sell for the account of the Owner or
Beneficial Owner hereof any part or all of the Deposited Securities represented
by the Restricted American Depositary Shares evidenced by this Receipt, and may
apply such dividends or other distributions or the proceeds of any such sale in
payment of such tax or other governmental charge and the Owner or Beneficial
Owner hereof shall remain liable for any deficiency.
6. WARRANTIES ON DEPOSIT OF SHARES.
Every person depositing Shares under the Restricted Deposit Agreement
shall be deemed thereby to represent and warrant, in addition to such
representations and warranties as may be required pursuant to Section 2.02 of
the Restricted Deposit Agreement, that such Shares and each certificate therefor
are validly issued, fully paid, non-assessable, and free of any preemptive
rights of the holders of outstanding Shares and that the person making such
deposit is duly authorized so to do. Such representations and warranties shall
survive the deposit of Shares and issuance of Receipts.
A-6
<PAGE>
7. FILING PROOFS, CERTIFICATES, AND OTHER INFORMATION.
Any person presenting Shares for deposit or any Owner or Beneficial
Owner of a Receipt may be required from time to time to file with the Depositary
or the Custodian such proof of citizenship or residence, exchange control
approval, or such information relating to the registration on the books of the
Company or the Foreign Registrar, if applicable, to execute such certificates
and to make such representations and warranties, as the Depositary may deem
necessary or proper. The Depositary may withhold the delivery or registration
of transfer of any Receipt or the distribution of any dividend or sale or
distribution of rights or of the proceeds thereof or the delivery of any
Deposited Securities until such proof or other information is filed or such
certificates are executed or such representations and warranties made. No Share
shall be accepted for deposit unless accompanied by evidence satisfactory to the
Depositary that any necessary approval has been granted by any governmental body
in The Republic of Ireland which is then performing the function of the
regulation of currency exchange.
8. CHARGES OF DEPOSITARY.
The Company agrees to pay the fees, reasonable expenses and out-of-
pocket charges of the Depositary and those of any Registrar only in accordance
with agreements in writing entered into between the Depositary and the Company
from time to time. The Depositary shall present its statement for such charges
and expenses to the Company once every three months. The charges and expenses
of the Custodian are for the sole account of the Depositary.
The following charges shall be incurred by any party depositing or
withdrawing Shares or by any party surrendering Receipts or to whom Receipts are
issued (including, without limitation, issuance pursuant to a stock dividend or
stock split declared by the Company or an exchange of stock regarding the
Receipts or Deposited Securities or a distribution of Receipts pursuant to
Section 4.03 of the Restricted Deposit Agreement), whichever applicable: (1)
taxes and other governmental charges, (2) such registration fees as may from
time to time be in effect for the registration of transfers of Shares generally
on the Share register of the Company or Foreign Registrar and applicable to
transfers of Shares to the name of the Depositary or its nominee or the
Custodian or its nominee on the making of deposits or withdrawals under the
terms of the Restricted Deposit Agreement, (3) such cable, telex and facsimile
transmission expenses as are expressly provided in the Restricted Deposit
Agreement, (4) such expenses as are incurred by the Depositary in the conversion
of foreign currency pursuant to Section 4.05 of the Restricted Deposit
Agreement, (5) a fee of $5.00 or less per 100 Restricted American Depositary
Shares (or portion thereof) for the execution and delivery of Receipts pursuant
to Section 2.03, 4.03 or 4.04 of the Restricted Deposit Agreement and the
surrender of Receipts pursuant to Section 2.05 or 6.02 of the Restricted Deposit
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Agreement, (6) a fee of $.02 or less per Restricted American Depositary Share
(or portion thereof) for any cash distribution made pursuant to Sections 4.01
through 4.04 of the Restricted Deposit Agreement and (7) a fee for the
distribution of securities pursuant to Section 4.02 of the Restricted Deposit
Agreement, such fee being in an amount equal to the fee for the execution and
delivery of Restricted American Depositary Shares referred to above which would
have been charged as a result of the deposit of such securities (for purposes of
this clause 7 treating all such securities as if they were Shares), but which
securities are instead distributed by the Depositary to Owners and (8) a fee not
in excess of $1.50 per certificate for a Receipt or Receipts for transfers made
pursuant to the terms of the Restricted Deposit Agreement.
The Depositary, subject to Article 8 hereof, may own and deal in any
class of securities of the Company and its affiliates and in Receipts.
9. TITLE TO RECEIPTS.
It is a condition of this Receipt and every successive Owner and
Beneficial Owner of this Receipt by accepting or holding the same consents and
agrees, that title to this Receipt when properly endorsed or accompanied by
proper instruments of transfer, including, without limitation, any
certifications and agreements and opinions of counsel as may be required
pursuant to the terms and conditions of certificates and opinions required under
the Restricted Deposit Agreement, is transferable by delivery with the same
effect as in the case of a negotiable instrument under the laws of New York;
provided, however, that the Depositary, notwithstanding any notice to the
- -------- -------
contrary, may treat the person in whose name this Receipt is registered on the
books of the Depositary as the absolute owner hereof for the purpose of
determining the person entitled to distribution of dividends or other
distributions or to any notice provided for in the Restricted Deposit Agreement
or for all other purposes.
10. VALIDITY OF RECEIPT.
This Receipt shall not be entitled to any benefits under the
Restricted Deposit Agreement or be valid or obligatory for any purpose, unless
this Receipt shall have been executed by the Depositary by the manual signature
of a duly authorized signatory of the Depositary; provided, however that such
-------- -------
signature may be a facsimile if a Registrar for the Receipts shall have been
appointed and such Receipts are countersigned by the manual or facsimile
signature of a duly authorized officer of the Registrar.
11. REPORTS; INSPECTION OF TRANSFER BOOKS.
The Depositary will make available for inspection by Owners of
Receipts at its Corporate Trust Office any reports and communications, including
any proxy soliciting material, received from the Company which are both (a)
received by the
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Depositary as the holder of the Deposited Securities and (b) made generally
available to the holders of such Deposited Securities by the Company. The
Depositary will also send to Owners of Receipts copies of such reports when
furnished by the Company pursuant to the Restricted Deposit Agreement. Any such
reports and communications, including any such proxy soliciting material,
furnished to the Depositary by the Company shall be furnished in English to the
extent such materials are required to be translated into English pursuant to any
regulations of the Commission.
The Depositary will keep books, at its Corporate Trust Office, for the
registration of Receipts and transfers of Receipts which at all reasonable times
shall be open for inspection by the Owners of Receipts provided that such
inspection shall not be for the purpose of communicating with Owners of Receipts
in the interest of a business or object other than the business of the Company
or a matter related to the Restricted Deposit Agreement or the Receipts.
12. DIVIDENDS AND DISTRIBUTIONS.
Whenever the Depositary receives any cash dividend or other cash
distribution on any Deposited Securities, the Depositary will, if at the time of
receipt thereof any amounts received in a foreign currency can in the judgment
of the Depositary be converted on a reasonable basis into United States dollars
transferable to the United States, and subject to the Restricted Deposit
Agreement, convert such dividend or distribution into dollars and will
distribute the amount thus received (net of the fees and expenses of the
Depositary as provided in Article 7 hereof and Section 5.09 of the Restricted
Deposit Agreement) to the Owners of Receipts entitled thereto; provided,
--------
however, that in the event that the Company or the Depositary is required to
- -------
withhold and does withhold from any cash dividend or other cash distribution in
respect of any Deposited Securities an amount on account of taxes, the amount
distributed to the Owners of the Receipts evidencing Restricted American
Depositary Shares representing such Deposited Securities shall be reduced
accordingly.
Subject to the provisions of Section 4.11 and 5.09 of the Restricted
Deposit Agreement, whenever the Depositary receives any distribution other than
a distribution described in Section 4.01, 4.03 or 4.04 of the Restricted Deposit
Agreement, the Depositary will cause the securities or property received by it
to be distributed to the Owners entitled thereto, in any manner that the
Depositary may deem equitable and practicable for accomplishing such
distribution; provided, however, that if in the opinion of the Depositary such
-------- -------
distribution cannot be made proportionately among the Owners of Receipts
entitled thereto, or if for any other reason the Depositary deems such
distribution not to be feasible, the Depositary may adopt such method as it may
deem equitable and practicable for the purpose of effecting such distribution,
including, but not limited to, the public or private sale of the securities or
property thus received, or any part thereof, and the net proceeds of any such
sale (net of the fees and expenses of the Depositary as
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provided in Article 7 hereof and Section 5.09 of the Restricted Deposit
Agreement) will be distributed by the Depositary to the Owners of Receipts
entitled thereto all in the manner and subject to the conditions described in
Section 4.01 of the Restricted Deposit Agreement.
If any distribution consists of a dividend in, or free distribution
of, Shares, the Depositary may distribute to the Owners of outstanding Receipts
entitled thereto, additional Receipts evidencing an aggregate number of
Restricted American Depositary Shares representing the amount of Shares received
as such dividend or free distribution subject to the terms and conditions of the
Restricted Deposit Agreement with respect to the deposit of Shares and the
issuance of Restricted American Depositary Shares evidenced by Receipts,
including the withholding of any tax or other governmental charge as provided in
Section 4.11 of the Restricted Deposit Agreement and the payment of the fees and
expenses of the Depositary as provided in Article 7 hereof and Section 5.09 of
the Restricted Deposit Agreement. The Depositary may withhold any such
distribution of Receipts under Section 4.03 of the Restricted Deposit Agreement
if it has not received satisfactory assurances from the Company that such
distribution does not require registration under the Securities Act or is exempt
from registration under the provisions of such Act. In lieu of delivering
Receipts for fractional Restricted American Depositary Shares in any such case,
the Depositary will sell the amount of Shares represented by the aggregate of
such fractions and distribute the net proceeds, all in the manner and subject to
the conditions described in Section 4.01 of the Restricted Deposit Agreement.
If additional Receipts are not so distributed, each Restricted American
Depositary Share shall thenceforth also represent the additional Shares
distributed upon the Deposited Securities represented thereby. Each beneficial
owner of Receipts or Shares so distributed shall be deemed to have acknowledged
that the Receipts or Shares have not been registered under the Securities Act
and to have agreed to comply with the restrictions on transfer set forth on the
face of this Receipt.
In the event that the Depositary determines that any distribution in
property (including Shares and rights to subscribe therefor) is subject to any
tax or other governmental charge which the Depositary is obligated to withhold,
the Depositary may by public or private sale dispose of all or a portion of such
property (including Shares and rights to subscribe therefor) in such amounts and
in such manner as the Depositary deems necessary and practicable to pay any such
taxes or charges, and the Depositary shall distribute the net proceeds of any
such sale after deduction of such taxes or charges to the Owners of Receipts
entitled thereto.
13. RIGHTS.
In the event that the Company shall offer or cause to be offered to
the holders of any Deposited Securities any rights to subscribe for additional
Shares or any rights of any other nature, the Depositary shall have discretion
as to the procedure to be followed in making such rights available to any Owners
or in disposing of such rights on
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behalf of any Owners and making the net proceeds available to such Owners or, if
by the terms of such rights offering or for any other reason, the Depositary may
not either make such rights available to any Owners or dispose of such rights
and make the net proceeds available to such Owners, then the Depositary shall
allow the rights to lapse. If at the time of the offering of any rights the
Depositary determines in its discretion that it is lawful and feasible to make
such rights available to all or certain Owners but not to other Owners, the
Depositary may distribute to any Owner to whom it determines the distribution to
be lawful and feasible, in proportion to the number of Restricted American
Depositary Shares held by such Owner, warrants or other instruments therefor in
such form as it deems appropriate.
In circumstances in which rights would otherwise not be distributed,
if an Owner of Receipts requests the distribution of warrants or other
instruments in order to exercise the rights allocable to the Restricted American
Depositary Shares of such Owner hereunder, the Depositary will make such rights
available to such Owner upon written notice from the Company to the Depositary
that (a) the Company has elected in its sole discretion to permit such rights to
be exercised and (b) such Owner has executed such documents as the Company has
determined in its sole discretion are reasonably required under applicable law.
If the Depositary has distributed warrants or other instruments for
rights to all or certain Owners, then upon instruction from such an Owner
pursuant to such warrants or other instruments to the Depositary from such Owner
to exercise such rights, upon payment by such Owner to the Depositary for the
account of such Owner of an amount equal to the purchase price of the Shares to
be received upon the exercise of the rights, and upon payment of the fees and
expenses of the Depositary and any other charges as set forth in such warrants
or other instruments, the Depositary shall, on behalf of such Owner, exercise
the rights and purchase the Shares, and the Company shall cause the Shares so
purchased to be delivered to the Depositary on behalf of such Owner. As agent
for such Owner, the Depositary will cause the Shares so purchased to be
deposited pursuant to Section 2.02 of the Restricted Deposit Agreement, and
shall, pursuant to Section 2.03 of the Restricted Deposit Agreement, execute and
deliver Receipts to such Owner. In the case of a distribution pursuant to the
second paragraph of this Article 13, such Receipts shall be legended in
accordance with applicable U.S. laws, and shall be subject to the appropriate
restrictions on sale, deposit, cancellation, and transfer under such laws.
If the Depositary determines in its discretion that it is not lawful
and feasible to make such rights available to all or certain Owners, it may sell
the rights, warrants or other instruments in proportion to the number of
Restricted American Depositary Shares held by the Owners to whom it has
determined it may not lawfully or feasibly make such rights available, and
allocate the net proceeds of such sales (net of the fees and expenses of the
Depositary as provided in Section 5.09 of the Restricted Deposit
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Agreement and all taxes and governmental charges payable in connection with such
rights and subject to the terms and conditions of the Restricted Deposit
Agreement) for the account of such Owners otherwise entitled to such rights,
warrants or other instruments, upon an averaged or other practical basis without
regard to any distinctions among such Owners because of exchange restrictions or
the date of delivery of any Receipt or otherwise.
The Depositary will not offer rights to Owners unless both the rights
and the securities to which such rights relate are either exempt from
registration under the Securities Act with respect to a distribution to all
Owners or are registered under the provisions of such Act; provided, that
--------
nothing in this Restricted Deposit Agreement shall create, any obligation on the
part of the Company to file a registration statement with respect to such rights
or underlying securities or to endeavor to have such a registration statement
declared effective. If an Owner of Receipts requests the distribution of
warrants or other instruments, notwithstanding that there has been no such
registration under such Act, the Depositary shall not effect such distribution
unless it has received an opinion from recognized counsel in the United States
for the Company upon which the Depositary may rely that such distribution to
such Owner is exempt from such registration.
The Depositary shall not be responsible for any failure to determine
that it may be lawful or feasible to make such rights available to Owners in
general or any Owner in particular.
14. CONVERSION OF FOREIGN CURRENCY.
Whenever the Depositary or the Custodian shall receive foreign
currency, by way of dividends or other distributions or the net proceeds from
the sale of securities, property or rights, and if at the time of the receipt
thereof the foreign currency so received can in the judgment of the Depositary
be converted on a reasonable basis into Dollars and the resulting Dollars
transferred to the United States, the Depositary shall convert or cause to be
converted, by sale or in any other manner that it may determine, such foreign
currency into Dollars, and such Dollars shall be distributed to the Owners
entitled thereto or, if the Depositary shall have distributed any warrants or
other instruments which entitle the holders thereof to such Dollars, then to the
holders of such warrants and/or instruments upon surrender thereof for
cancellation. Such distribution may be made upon an averaged or other
practicable basis without regard to any distinctions among Owners on account of
exchange restrictions, the date of delivery of any Receipt or otherwise and
shall be net of any expenses of conversion into Dollars incurred by the
Depositary as provided in Section 5.09 of the Restricted Deposit Agreement.
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If such conversion or distribution can be effected only with the
approval or license of any government or agency thereof, the Depositary shall
file such application for approval or license, if any, as it may deem desirable.
If at any time the Depositary shall determine that in its judgment any
foreign currency received by the Depositary or the Custodian is not convertible
on a reasonable basis into Dollars transferable to the United States, or if any
approval or license of any government or agency thereof which is required for
such conversion is denied or in the opinion of the Depositary is not obtainable,
or if any such approval or license is not obtained within a reasonable period as
determined by the Depositary, the Depositary may distribute the foreign currency
(or an appropriate document evidencing the right to receive such foreign
currency) received by the Depositary to, or in its discretion may hold such
foreign currency uninvested and without liability for interest thereon for the
respective accounts of, the Owners entitled to receive the same.
If any such conversion of foreign currency, in whole or in part,
cannot be effected for distribution to some of the Owners entitled thereto, the
Depositary may in its discretion make such conversion and distribution in
Dollars to the extent permissible to the Owners entitled thereto and may
distribute the balance of the foreign currency received by the Depositary to, or
hold such balance uninvested and without liability for interest thereon for the
respective accounts of, the Owners entitled thereto.
15. RECORD DATES.
Whenever any cash dividend or other cash distribution shall become
payable or any distribution other than cash shall be made, or whenever rights
shall be issued with respect to the Deposited Securities, or whenever the
Depositary shall receive notice of any meeting of holders of Shares or other
Deposited Securities, or whenever for any reason the Depositary causes a change
in the number of Shares that are represented by each Restricted American
Depositary Share, or whenever the Depositary shall find it necessary or
convenient, the Depositary shall fix a record date, which shall be the record
date, if any, established by the Company for such purpose or, if different, as
close thereto as practicable, (a) for the determination of the Owners of
Receipts who shall be (i) entitled to receive such dividend, distribution or
rights or the net proceeds of the sale thereof or (ii) entitled to give
instructions for the exercise of voting rights at any such meeting, or (b) on or
after which each Restricted American Depositary Share will represent the changed
number of Shares, subject to the provisions of the Restricted Deposit Agreement.
16. VOTING OF DEPOSITED SECURITIES.
Upon receipt of notice of any meeting of holders of Shares or other
Deposited Securities, if requested in writing by the Company, the Depositary
shall, as
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soon as practicable thereafter, mail to the Owners of Receipts a notice, the
form of which notice shall be in the sole discretion of the Depositary, which
shall contain (a) all of the information contained in such notice of meeting
received by the Depositary from the Company, (b) a statement that the Owners of
Receipts as of the close of business on a specified record date will be
entitled, subject to any applicable provision of law and of the Memorandum and
Articles of Association of the Company, to instruct the Depositary as to the
exercise of the voting rights, if any, pertaining to the amount of Shares or
other Deposited Securities represented by their respective Restricted American
Depositary Shares, (c) a statement that Owners who instruct the Depositary as to
the exercise of their voting rights will be deemed to have instructed the
Depositary or its authorized representative to call for a poll with respect to
each matter for which such instructions are given, subject to any applicable
provisions of Irish law and of the Memorandum and Articles of Association of the
Company and (d) if applicable, a statement as to the manner in which such
instructions may be given, including an express indication that instructions may
be given or deemed given in accordance with the last sentence of this paragraph
if no instruction is received, to the Depositary to give a discretionary proxy
to a person designated by the Company. Upon the written request of an Owner of a
Receipt on such record date, received on or before the date established by the
Depositary for such purpose, the Depositary shall endeavor insofar as
practicable to vote or cause to be voted the amount of Shares or other Deposited
Securities represented by such Restricted American Depositary Shares evidenced
by such Receipt in accordance with the instructions set forth in such request.
Accordingly, the Depositary will cause its authorized representative to attend
each meeting of holders of Shares and call for a poll as instructed in
accordance with clause (c) above for the purpose of effecting such vote. The
Depositary shall not vote or attempt to exercise the right to vote that attaches
to the Shares or other Deposited Securities, other than in accordance with such
instructions. If no instructions are received by the Depositary from any Owner
with respect to any of the Deposited Securities represented by the Restricted
American Depositary Shares evidenced by such Owner's Receipts on or before the
date established by the Depositary for such purpose, the Depositary will deem
such Owner to have instructed the Depositary to give a discretionary proxy to a
person designated by the Company with respect to such Deposited Securities and
the Depositary will give a discretionary proxy to a person designated by the
Company to vote such Deposited Securities; provided, that no such instructions
will be deemed given and no such discretionary proxy will be given when the
Company notifies the Depositary (and the Company agrees to provide such notice
as promptly as practicable in writing) that the matter to be voted upon is one
of the following:
1. is a matter not submitted to shareholders by means of a proxy
statement comparable to that specified in Schedule 14-A of the
Commission;
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2. is the subject of a counter-solicitation, or is part of a proposal
made by a shareholder which is being opposed by management (i.e., a
contest);
3. relates to a merger or consolidation (except when the Company's
proposal is to merge with its own wholly-owned subsidiary, provided
its shareholders dissenting thereto do not have rights of appraisal);
4. involves right of appraisal;
5. authorizes mortgaging of property;
6. authorizes or creates indebtedness or increases the authorized
amount of indebtedness;
7. authorizes or creates preferred shares or increases the authorized
amount of existing preferred shares;
8. alters the terms or conditions of any shares of the Company's
stock then outstanding or existing indebtedness;
9. involves waiver or modification of preemptive rights (except when
the Company's proposal is to waive such rights with respect to
ordinary shares being offered pursuant to stock option or purchase
plans involving the additional issuance of not more than 5% of the
Company's outstanding ordinary shares (see Item 12 below));
10. alters voting provisions or the proportionate voting power of a
class of shares, or the number of its votes per share (except where
cumulative voting provisions govern the number of votes per share for
election of directors and the Company's proposal involves a change in
the number of its directors by not more than 10% or not more than one)
11. changes existing quorum requirements with respect to shareholder
meetings;
12. authorizes issuance of ordinary shares, or options to purchase
ordinary shares, to directors, officers, or employees in an amount
which exceeds 5% of the total amount of the class outstanding (when no
plan is amended to extend its duration, the Company shall factor into
the calculation the number of ordinary shares that remain available
for issuance, the number of ordinary shares subject to outstanding
options and any ordinary shares being added; should there be more than
one plan being considered at the same meeting, all ordinary shares are
aggregated).
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13. authorizes
(a) a new profit-sharing or special remuneration plan, or a new
retirement plan, the annual cost of which will amount to more
than 10% of average annual income before taxes for the preceding
five years, or
(b) the amendment of an existing plan which would bring its costs
above 10% of such average annual income before taxes (should
there be more than one plan being considered at the same meeting,
all costs are aggregated; exceptions may be made in cases of (a)
retirement plans based on agreement or negotiations with labor
unions (or which have been or are to be approved by such unions);
and (b) any related retirement plan for benefit of non-union
employees having terms substantially equivalent to the terms of
such union-negotiated plan, which is submitted for action of
stockholders concurrently with such union-negotiated plan);
14. changes the purposes or powers of the Company to an extent which
would permit it to change a materially different line of business and
it is the Company's stated intention to make such a change;
15. authorizes the acquisition of property, assets, or a company,
where the consideration to be given has a fair value of 20% or more of
the market value of the previously outstanding shares;
16. authorizes the sale or other disposition of assets or earning
power of 20% or more of those existing prior to the transaction;
17. authorizes a transaction not in the ordinary course of business
in which an officer, director or substantial security holder has a
direct or indirect interest;
18. reduces earned surplus by 51% or more, or reduces earned surplus
to an amount less than the aggregate of three years' ordinary share
dividends computed at the current dividend rate.
17. CHANGES AFFECTING DEPOSITED SECURITIES.
In circumstances where the provisions of Section 4.03 of the
Restricted Deposit Agreement do not apply, upon any change in nominal value,
change in par value, split-up, consolidation, or any other reclassification of
Deposited Securities, or upon any
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recapitalization, reorganization, merger or consolidation, or sale of assets
affecting the Company or to which it is a party, any securities which shall be
received by the Depositary or a Custodian in exchange for or in conversion of or
in respect of Deposited Securities shall be treated as new Deposited Securities
under the Restricted Deposit Agreement, and Restricted American Depositary
Shares shall thenceforth represent, in addition to the existing Deposited
Securities, the right to receive the new Deposited Securities so received in
exchange or conversion, unless additional Receipts are delivered pursuant to the
following sentence. In any such case the Depositary may execute and deliver
additional Receipts as in the case of a dividend in Shares, or call for the
surrender of outstanding Receipts to be exchanged for new Receipts specifically
describing such new Deposited Securities.
18. LIABILITY OF THE COMPANY AND DEPOSITARY.
Neither the Depositary nor the Company nor any of their respective
directors, employees, agents or affiliates shall incur any liability to any
Owner or Beneficial Owner of any Receipt, if by reason of any provision of any
present or future law or regulation of the United States or any other country,
or of any other governmental or regulatory authority, or by reason of any
provision, present or future, of the Memorandum and Articles of Association of
the Company, or by reason of any provision of any securities issued or
distributed by the Company, or any offering or distribution thereof, or by
reason of any act of God or war or other circumstances beyond its control, the
Depositary or the Company shall be prevented, delayed or forbidden from or be
subject to any civil or criminal penalty on account of doing or performing any
act or thing which by the terms of the Restricted Deposit Agreement or Deposited
Securities it is provided shall be done or performed; nor shall the Depositary
or the Company or any of their respective directors, employees, agents or
affiliates incur any liability to any Owner or Beneficial Owner of a Receipt by
reason of any non-performance or delay, caused as aforesaid, in the performance
of any act or thing which by the terms of the Restricted Deposit Agreement it is
provided shall or may be done or performed, or by reason of any exercise of, or
failure to exercise, any discretion provided for in the Restricted Deposit
Agreement. Where, by the terms of a distribution pursuant to Section 4.01, 4.02
or 4.03 of the Restricted Deposit Agreement, or an offering or distribution
pursuant to Section 4.04 of the Restricted Deposit Agreement, such distribution
or offering may not be made available to Owners of Receipts, and the Depositary
may not dispose of such distribution or offering on behalf of such Owners and
make the net proceeds available to such Owners, then the Depositary shall not
make such distribution or offering, and shall allow any rights, if applicable,
to lapse. Neither the Company nor the Depositary assumes any obligation or
shall be subject to any liability under the Restricted Deposit Agreement to
Owners or Beneficial Owners of Receipts, except that they agree to perform their
obligations specifically set forth in the Restricted Deposit Agreement without
negligence or bad faith. The Depositary shall not be subject to any liability
with
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respect to the validity or worth of the Deposited Securities. Neither the
Depositary nor the Company shall be under any obligation to appear in, prosecute
or defend any action, suit, or other proceeding in respect of any Deposited
Securities or in respect of the Receipts, which in its opinion may involve it in
expense or liability, unless indemnity satisfactory to it against all expense
and liability shall be furnished as often as may be required, and the Custodian
shall not be under any obligation whatsoever with respect to such proceedings,
the responsibility of the Custodian being solely to the Depositary. Neither the
Depositary nor the Company shall be liable for any action or nonaction by it in
reliance upon the advice of or information from legal counsel, accountants, any
person presenting Shares for deposit, any Owner or Beneficial Owner of a
Receipt, or any other person believed by it in good faith to be competent to
give such advice or information. The Depositary shall not be responsible for
any failure to carry out any instructions to vote any of the Deposited
Securities, or for the manner in which any such vote is cast or the effect of
any such vote, provided that any such action or nonaction is in good faith. The
Depositary shall not be liable for any acts or omissions made by a successor
depositary whether in connection with a previous act or omission of the
Depositary or in connection with a matter arising wholly after the removal or
resignation of the Depositary, provided that in connection with the issue out of
which such potential liability arises, the Depositary performed its obligations
without negligence or bad faith while it acted as Depositary. The Company
agrees to indemnify the Depositary, its directors, employees, agents and
affiliates and any Custodian against, and hold each of them harmless from, any
liability or expense (including, but not limited to, the expenses of counsel)
which may arise out of acts performed or omitted, in accordance with the
provisions of the Restricted Deposit Agreement and of the Receipts, as the same
may be amended, modified, or supplemented from time to time, (i) by either the
Depositary or a Custodian or their respective directors, employees, agents and
affiliates, except for any liability or expense arising out of the negligence or
bad faith of either of them, or (ii) by the Company or any of its directors,
employees, agents and affiliates. No disclaimer of liability under the
Securities Act is intended by any provision of the Restricted Deposit Agreement.
19. RESIGNATION AND REMOVAL OF THE DEPOSITARY; APPOINTMENT OF
SUCCESSOR CUSTODIAN.
The Depositary may at any time resign as Depositary hereunder by
written notice of its election so to do delivered to the Company, such
resignation to take effect upon the appointment of a successor depositary and
its acceptance of such appointment as provided in the Restricted Deposit
Agreement. The Depositary may at any time be removed by the Company by written
notice of such removal, effective upon the appointment of a successor depositary
and its acceptance of such appointment as provided in the Restricted Deposit
Agreement. Whenever the Depositary in its discretion determines that it is in
the best interest of the Owners of Receipts to do so, it may appoint a
substitute or additional custodian or custodians.
A-18
<PAGE>
20. AMENDMENT.
The form of the Receipts and any provisions of the Restricted Deposit
Agreement may at any time and from time to time be amended by agreement between
the Company and the Depositary without the consent of Owners or Beneficial
Owners of Receipts in any respect which they may deem necessary or desirable,
including, without limitation, amendments agreed upon pursuant to Section 2.09
of the Restricted Deposit Agreement. Any amendment which shall impose or
increase any fees or charges (other than taxes and other governmental charges,
registration fees and cable, telex or facsimile transmission costs, delivery
costs or other such expenses), or which shall otherwise prejudice any
substantial existing right of Owners of Receipts, shall, however, not become
effective as to outstanding Receipts until the expiration of thirty days after
notice of such amendment shall have been given to the Owners of outstanding
Receipts. Every Owner of a Receipt at the time any amendment so becomes
effective shall be deemed, by continuing to hold such Receipt, to consent and
agree to such amendment and to be bound by the Restricted Deposit Agreement as
amended thereby. In no event shall any amendment impair the right of the Owner
of any Receipt to surrender such Receipt and receive therefor the Deposited
Securities represented thereby except in order to comply with mandatory
provisions of applicable law.
21. TERMINATION OF RESTRICTED DEPOSIT AGREEMENT.
The Depositary at any time at the direction of the Company, shall
terminate the Restricted Deposit Agreement by mailing notice of such termination
to the Owners of all Receipts then outstanding at least 90 days prior to the
date fixed in such notice for such termination. The Depositary may likewise
terminate the Restricted Deposit Agreement by mailing notice of such termination
to the Company and the Owners of all Receipts then outstanding if at any time 90
days shall have expired after the Depositary shall have delivered to the Company
a written notice of its election to resign and a successor depositary shall not
have been appointed and accepted its appointment as provided in the Restricted
Deposit Agreement. On and after the date of termination, the Owner of a Receipt
will, upon (a) surrender of such Receipt at the Corporate Trust Office of the
Depositary, (b) payment of the fee of the Depositary for the surrender of
Receipts referred to in Section 2.05 of the Restricted Deposit Agreement, and
(c) payment of any applicable taxes or governmental charges, be entitled to
delivery, to him or upon his order, of the amount of Deposited Securities
represented by the Restricted American Depositary Shares evidenced by such
Receipt. If any Receipts shall remain outstanding after the date of
termination, the Depositary thereafter shall discontinue the registration of
transfers of Receipts, shall suspend the distribution of dividends to the Owners
thereof, and shall not give any further notices or perform any further acts
under the Restricted Deposit Agreement, except that the Depositary shall
continue to collect dividends and other distributions pertaining to Deposited
Securities, shall sell rights and other property
A-19
<PAGE>
as provided in the Restricted Deposit Agreement, and shall continue to deliver
Deposited Securities, together with any dividends or other distributions
received with respect thereto and the net proceeds of the sale of any rights or
other property, in exchange for Receipts surrendered to the Depositary (after
deducting, in each case, the fee of the Depositary for the surrender of a
Receipt, any expenses for the account of the Owner of such Receipt in accordance
with the terms and conditions of the Restricted Deposit Agreement, and any
applicable taxes or governmental charges). At any time after the expiration of
one year from the date of termination, the Depositary may sell the Deposited
Securities then held under the Restricted Deposit Agreement and may thereafter
hold uninvested the net proceeds of any such sale, together with any other cash
then held by it thereunder, unsegregated and without liability for interest, for
the pro rata benefit of the Owners of Receipts which have not theretofore been
surrendered, such Owners thereupon becoming general creditors of the Depositary
with respect to such net proceeds. After making such sale, the Depositary shall
be discharged from all obligations under the Restricted Deposit Agreement,
except to account for such net proceeds and other cash (after deducting, in each
case, the fee of the Depositary for the surrender of a Receipt, any expenses for
the account of the Owner of such Receipt in accordance with the terms and
conditions of the Restricted Deposit Agreement, and any applicable taxes or
governmental charges). Upon the termination of the Restricted Deposit Agreement,
the Company shall be discharged from all obligations under the Restricted
Deposit Agreement except for its obligations to the Depositary with respect to
indemnification, charges, and expenses.
22. DISCLOSURE OF INTERESTS.
Notwithstanding any other provision of this Receipt or the Deposit
Agreement, each Owner and Beneficial Owner agrees to be bound by and subject to
Irish law and the Memorandum and Articles of Association of the Company (to the
same extent as if such Restricted American Depositary Shares evidenced by such
Receipt were the Shares represented by such Restricted American Depositary
Shares evidenced by such Receipt, provided, however, that such provisions shall
apply to such persons only to the extent feasible), and to provide such
information to the Company relating to ownership of the Shares as may be
required thereunder. Under Irish law, as in effect on the date of the Deposit
Agreement, a person who acquires an interest in 5% or more of the Shares, must
notify the Company within five business days of its interest and of certain
circumstances affecting that interest. In addition, such person must give notice
of any change in its interest above the 5% level and any reduction thereof below
the 5% level. Failure of an Owner or Beneficial Owner to provide the required
information within the prescribed time period and in the prescribed manner is an
offense under Irish law and will result in no right or interest in respect of
the relevant shares being enforceable by action or legal proceedings under Irish
law (including voting rights and certain rights as to dividends in respect of
the Shares represented by such American Depositary Shares).
A-20
<PAGE>
If the Company requests information from the Depositary or the
Custodian, as the registered owners of Shares, pursuant to Irish law or the
Memorandum and Articles of Association of the Company, the obligations of the
Depositary or the Custodian, as the case may be, shall be limited to disclosing
to the Company such information relating to the Shares in question as has in
each case been recorded by it pursuant to the terms of the Deposit Agreement.
A-21
<PAGE>
EXHIBIT 10.1
------------
AGREEMENT AND MUTUAL RELEASE
This Agreement and Mutual Release ("Agreement") is made by and between CBT
GROUP PUBLIC LIMITED COMPANY (together with its subsidiaries, the "Company"),
and Jeffrey N. Newton ("Newton").
WHEREAS, Newton has provided services to the Company since April of 1992, and
has served as Vice President of Business Development to the Company since March
of 1997;
WHEREAS, Newton desires to terminate employment with the Company for personal
reasons, and Newton and the Company desire to release each other from any
claims arising from or related to Newton's employment with the Company;
WHEREAS, the Company and Newton have entered into a Confidential Information
and Invention Assignment Agreement ( the "Confidentiality Agreement");
NOW THEREFORE, in consideration of the mutual promises made herein, the Company
and Newton (collectively referred to as "the Parties") hereby agree as follows:
1. RESIGNATION AND TERMINATION OF EMPLOYMENT. Newton will resign from his
-----------------------------------------
position as Vice President, Business Development and terminate employment
with the Company on June 30, 1998 (the "Resignation Date"). All
compensation due Newton, including salary, commissions and quarterly
bonus, will be payable within thirty (30) days of June 30, 1998. Newton
will submit all claims for reimbursement of employee expenses within the
same time frame.
2. CONSIDERATION. Newton agrees to remain available as a consultant
--------------
through October 31, 1999 (the "Consulting Period"). Newton agrees to
execute a consulting agreement in the form of Exhibit A (the "Consulting
Agreement") on the commencement of the Consulting Period. During the
Consulting Period and upon reasonable notice, Newton shall make himself
available for consultation and/or participation in conferences, up to a
maximum of thirty (30) hours per month. The Company will pay Newton a lump
sum of $15,000 by July 31, 1998 in consideration of his availability
through the Consulting Period and, in addition, the Company will pay Newton
an hourly rate of $100 for a minimum of ten (10) hours per month, for a
minimum monthly payment of $1,000. Newton will also continue to vest in
Company options during the Consulting Period as provided in paragraph 4
below.
3. RELATIONSHIP OF THE PARTIES DURING THE CONSULTING PERIOD. It is the
--------------------------------------------------------
express intention of the parties that Newton shall be an independent
contractor during the Consulting Period, and Newton acknowledges and agrees
that he will receive no Company-sponsored benefits either as a Consultant
or an employee after June 30, 1998, except those benefits mandated by
state or federal law upon termination of employment.
4. STOCK OPTIONS. Newton shall be allowed to continue to vest in options
-------------
("Options") to purchase American Depository Shares (ADSs") representing
the ordinary shares of the Company subject to share option agreements
dated July 8, 1994, April 13, 1995, January 16, 1996, April 12, 1996,
March 18, 1997 and January 13, 1998 (the "Option Agreements") through the
Consulting Period, which shall terminate on October 31, 1999. As of June
30, 1998, Newton will have fully vested in 23,339
1
<PAGE>
ADSs of the Company subject to the Options. To the extent Newton's
Options have not vested as of October 31, 1999, such Options shall
terminate, and all vested Options which have not been exercised at that
date shall also terminate as of the end of the Consulting Period, which
shall terminate on October 31, 1999. During the Consulting Period, Newton
shall have no right to additional option grants by the Company.
5. CONFIDENTIAL INFORMATION. Newton shall continue to maintain the
------------------------
confidentiality of all confidential and proprietary information of the
Company and shall continue to comply with the terms and conditions of the
Confidentiality Agreement between Newton and the Company. Newton shall
return all Company property and confidential and proprietary information in
his possession to the Company within five business days from the
termination of the Consulting Period, or upon the Company's earlier
request. The Parties hereto each agree to use their best efforts to
maintain in confidence the existence of this Agreement, the contents and
terms of this Agreement, and the consideration for this Agreement, except
to the extent disclosure is required by law or administrative regulation.
6. RELEASE OF CLAIMS. Newton agrees that the foregoing consideration
-----------------
represents settlement in full of all outstanding obligations owed to
Newton by the Company. Newton and the Company, on behalf of themselves,
and their respective heirs, family members, executors, officers,
directors, employees, investors, shareholders, administrators,
affiliates, divisions, subsidiaries, predecessor and successor
corporations, and assigns, hereby fully and forever release each other
and their respective heirs, family members, executors, officers,
directors, employees, investors, shareholders, administrators,
affiliates, divisions, subsidiaries, predecessor and successor
corporations, and assigns, from, and agree not to sue concerning, any
claim, duty, obligation or cause of action relating to any matters of any
kind, whether presently known or unknown, suspected or unsuspected, that
any of them may possess arising from any omissions, acts or facts that
have occurred up until and including the Effective Date (as hereafter
defined) of this agreement including, without limitation,
(a) any and all claims relating to or arising from Newton's employment and
the termination of that employment with the Company;
(b) any and all claims relating to, or arising from, Newton's right to
purchase, or actual purchase of shares of stock of the Company,
including, without limitation, any claims for fraud,
misrepresentation, breach of fiduciary duty, breach of duty under
applicable state corporate law, and securities fraud under any state
or federal law;
(c) any and all claims for wrongful discharge of employment; breach of
contract, both express and implied; breach of a covenant of good
faith and fair dealing, both express and implied; negligent or
intentional infliction of emotional distress; negligent or
intentional misrepresentation; negligent or intentional interference
with contract or prospective economic advantage; defamation;
negligence; personal injury; assault; battery; invasion of privacy;
false imprisonment; conversion;
(d) any and all claims for violation of any federal, state or municipal
statute, including, but not limited to, Title VII of the Civil
Rights Act of 1964, the Civil Rights Act of 1991,the Age
Discrimination in Employment Act of 1967, the Americans with
Disabilities Act of 1990, the Fair Labor Standards Act, the
California Fair Employment and Housing Act, Labor Code Section 201,
et seq.;
(e) any and all claims arising out of any other laws and regulations and
regulations
2
<PAGE>
relating to employment or employment discrimination; and
(f) any and all claims for attorneys' fees and/or costs.
The Company and Newton agree that the release set forth in this section
shall be and remain in effect in all respects as a complete general release
as to the matters released. This release does not extend to any
obligations incurred under this Agreement.
7. ACKNOWLEDGMENT OF WAIVER OF CLAIMS UNDER ADEA. Newton acknowledges that he
---------------------------------------------
is waiving and releasing any rights he may have under the Age
Discrimination in Employment Act of 1967 ("ADEA") and that this waiver
and release is knowing and voluntary. Newton and the Company agree that
this waiver and release does not apply to any rights or claims that may
arise under ADEA after the Effective Date of this Agreement. Newton
acknowledges that the consideration given for this waiver and release
Agreement is in addition to anything of value to which Newton was already
entitled. Newton further acknowledges that he has been advised by this
writing that (a) he should consult with an attorney prior to executing
this Agreement; (b) he has at least twenty-one (21) days within which to
consider this Agreement; (c) he has at least seven (7) days following the
execution of this Agreement by the parties to revoke the Agreement; and
(d) this Agreement shall not be effective until the revocation period has
expired.
8. CIVIL CODE SECTION 1542. The Parties represent that they are not aware of
-----------------------
any claim by either of them other than the claims that are released by this
Agreement. Newton and the Company acknowledge that they have been advised
by legal counsel and are familiar with the provisions of California Civil
Code Section 1542, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN
HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED
HIS SETTLEMENT WITH THE DEBTOR.
Newton and the Company, being aware of said code section, agree to
expressly waive any rights they may have thereunder, as well as under any
other statute or common law principles of similar effect.
9. NON-COMPETITION. Newton agrees that, during the Consulting Period and for
---------------
a period of two years after the termination of the Consulting Period, he
will not, directly or indirectly, own, manage, operate, join, control,
participate in or finance the ownership, management, operation or control
of, or be connected in any manner with a company whose primary business is
to provide interactive educational software for information technology
professionals, including but not limited to the following: NETG, Gartner
Group, WBT, Learning Tree, Harcourt, Mastering Computers, Global Knowledge
Network, Ziff Davis University, Data Tech, Knowledge Universe, Digital
Think, Knowledge Soft and any subsidiary or division of a development
partner of the Company (including but not limited to IBM Education, Oracle
Education, Lotus Education, Cisco Education and Novell Education). Newton
may accept other non-competitive employment while retaining consultancy
with the Company as long as he is able to meet the maximum 30 hour
commitment, if required, as specified above in Paragraph 2.
10. NON-SOLICITATION. Newton agrees that for a period of two (2) years,
----------------
during the Consulting Period and after the termination of the Consulting
Period, he will not either directly or indirectly solicit, induce,
3
<PAGE>
recruit or encourage any of the Company's employees to leave their
employment, or take away such employees, or attempt to solicit, induce,
recruit, encourage or take away employees of the Company, either for
himself or for any other person or entity; provided, however, that the
employment of employees of the Company by any employer, person, firm or
company with which I am connected or associated shall not in itself
breach or be deemed to be a breach of this clause.
11. ARBITRATION. The parties agree that any and all disputes arising out of
-----------
the terms of this Agreement, their interpretation, and any of the matters
herein released, shall be subject to binding arbitration in Santa Clara
County before the American Arbitration Association under its California
Employment Dispute Resolution Rules, or by a judge to be mutually agreed
upon. The Parties agree that the prevailing party in any arbitration
shall be entitled to injunctive relief in any court of competent
jurisdiction to enforce the arbitration award. The Parties agree that the
prevailing party in any arbitration shall be awarded its reasonable
attorney's fees and costs. NEWTON HAS READ AND UNDERSTANDS THIS
ARBITRATION PROVISION. NEWTON UNDERSTANDS THAT BY SIGNING THIS AGREEMENT,
HE AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN
CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY,
CONSTRUCTION PERFORMANCE, BREACH OR TERMINATION THEREOF, TO BINDING
ARBITRATION, EXCEPT AS PROVIDED IN THE LAST SENTENCE OF THIS SECTION, AND
THAT THIS ARBITRATION PROVISION CONSTITUTES A WAIVER OF NEWTON'S RIGHT TO
A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO
ALL ASPECTS OF THE RELATIONSHIP BETWEEN THE PARTIES. The parties may
apply to any court of competent jurisdiction for a temporary restraining
order, preliminary injunction, or other interim or conservatory relief,
as necessary without breach of this arbitration agreement and without
abridgement of the powers of the arbitrator.
12. NON-DISPARAGEMENT. Each party agrees to refrain from any disparagement,
-----------------
defamation, slander of the other, or tortious interference with the
contracts and relationships of the other. In addition, Newton
specifically also agrees not to disparage or to publicly express
disapproval of Company's employees, products or services. The parties
each acknowledge and agree that it would be impossible and inadequate to
measure actual damages if either party breaches its obligations under
this paragraph, and therefore the parties agree that $150,000 shall be
payable, as liquidated damages and not as a penalty, by the breaching
party to the non-breaching party. For purposes of this paragraph, the
"Company" shall be deemed to refer solely to directors and officers of
the Company. The parties agree that the damages specified are a good
faith estimate of the actual amount of damages which would be sustained
and that such damages are reasonable under the circumstances.
13. COSTS. The parties shall each bear his or its own costs, expert fees,
-----
attorneys' fees and other fees incurred in connection with this Agreement.
14. NO REPRESENTATIONS. Each party represents that it has had the opportunity
------------------
to consult with an attorney, and has carefully read and understands the
scope and effect of the provisions of this Agreement. Neither party has
relied upon any representations or statements made by the other party
hereto which are not specifically set forth in this Agreement.
15. SEVERABILITY. In the event that any provision hereof becomes or is
-------------
declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and
effect without said provision.
4
<PAGE>
16. ENTIRE AGREEMENT. This Agreement, the Option Agreements, the Consulting
----------------
Agreement and the Confidentiality Agreement, represent the entire
agreement and understanding between the Company and Newton concerning
Newton's separation from the Company, and supersede and replace any and all
prior agreements and understandings concerning Newton's relationship with
the Company and his compensation by the Company.
17. NO ORAL MODIFICATION. This Agreement may only be amended in writing signed
--------------------
by Newton and the Chief Executive Officer of the Company.
18. GOVERNING LAW. . This Agreement shall be governed by the internal laws of
-------------
the State of California, without regard to conflict of laws principles.
19. EFFECTIVE DATE. This Agreement is effective seven days after it has been
--------------
signed by both Parties ("the Effective Date").
20. COUNTERPARTS. This Agreement may be executed in counterparts, and each
------------
counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.
21. VOLUNTARY EXECUTION OF AGREEMENT. This Agreement is executed voluntarily
--------------------------------
and without any duress or undue influence on the part or behalf of the
Parties hereto, with the full intent of releasing all claims. The Parties
acknowledge that:
(a) They have read this Agreement;
(b) They have been represented in the preparation, negotiation, and
execution of this Agreement by legal counsel of their own choice or
that they have voluntarily declined to seek such counsel;
(c) They understand the terms and consequences of this Agreement and of
the releases it contains;
(d) They are fully aware of the legal and binding effect of this
Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective
dates set forth below.
CBT GROUP, PLC
Dated: June 3, 1998 By: /s/ James J. Buckley
--------------------
(Signature)
Title: Chief Executive and President
-----------------------------
5
<PAGE>
JEFFREY N. NEWTON, an individual
Dated: June 3, 1998 /s/ Jeffrey N. Newton
---------------------
(Signature)
6
<PAGE>
ADDENDUM A
----------
CONSULTING AGREEMENT
--------------------
This Consulting Agreement ("Agreement") is made and entered into as of the
30th day of June, 1998 by and between CBT Systems USA Ltd. (the "Company"), and
Jeffrey N. Newton ("Consultant"). The Company desires to retain Consultant as
an independent contractor to perform consulting services for the Company and
Consultant is willing to perform such services, on terms set forth more fully
below. In consideration of the mutual promises contained herein, the parties
agree as follows:
1. SERVICES AND COMPENSATION
-------------------------
(a) Services. Consultant agrees to perform for the Company the
--------
services ("Services") described in Addendum A, attached hereto.
(b) Compensation.
------------
(i) Company shall pay Consultant $100 per hour, for a minimum of
ten (10) hours per month. A monthly payment of $1,000 will be payable by
the end of every calendar month, beginning August 31, 1998.
(ii) The Company shall reimburse Consultant for all reasonable
travel and living expenses incurred by Consultant in performing Services
pursuant to this Agreement, provided Consultant receives written consent from
an authorized agent of the Company prior to incurring such expenses.
(iii) Consultant shall submit all statements for services and
expenses in a form prescribed by the Company every two weeks and such statement
shall be approved by the contact person listed on Addendum A or other designated
agent of the Company.
2. CONFIDENTIALITY
---------------
(a) Definition. "Confidential Information" means any Company
----------
proprietary information, technical data, trade secrets or know-how, including,
but not limited to, research, product plans, products, services, customers,
customer lists, markets, software, developments, inventions, processes,
formulas, technology, designs, drawings, engineering, hardware configuration
information, marketing, finances or other business information disclosed by the
Company either directly or indirectly in writing, orally or by drawings or
inspection of parts or equipment.
7
<PAGE>
(b) Non-Use and Non-Disclosure. Consultant will not, during or
--------------------------
subsequent to the term of this Agreement, use the Company's Confidential
Information for any purpose whatsoever other than the performance of the
Services on behalf of the Company or disclose the Company's Confidential
Information to any third party. It is understood that said Confidential
Information shall remain the sole property of the Company. Consultant further
agrees to take all reasonable precautions to prevent any unauthorized disclosure
of such Confidential Information including, but not limited to, having each
employee of Consultant, if any, with access to any Confidential Information,
execute a nondisclosure agreement containing provisions in the Company's favor
identical to Sections 2, 3 and 4 of this Agreement. Confidential Information
does not include information which (i) is known to Consultant at the time of
disclosure to Consultant by the Company as evidenced by written records of
Consultant, (ii) has become publicly known and made generally available through
no wrongful act of Consultant, or (iii) has been rightfully received by
Consultant from a third party who is authorized to make such disclosure. The
parties shall agree on any disclosure of the existence or the contents of this
Agreement. Consultant agrees not to make any disclosure of the existence or
contents of this Agreement which is inconsistent with the prior public
disclosure of the Company.
(c) Former Employer's Confidential Information. Consultant agrees
------------------------------------------
that Consultant will not, during the term of this Agreement, improperly use or
disclose any proprietary information or trade secrets of any former or current
employer or other person or entity with which Consultant has an agreement or
duty to keep in confidence information acquired by Consultant, if any, and that
Consultant will not bring onto the premises of the Company any unpublished
document or proprietary information belonging to such employer, person or entity
unless consented to in writing by such employer, person or entity. Consultant
will indemnify the Company and hold it harmless from and against all claims,
liabilities, damages and expenses, including reasonable attorneys fees and costs
of suit, arising out of or in connection with any violation or claimed violation
of a third party's rights resulting in whole or in part from the Company's use
of the work product of Consultant under this Agreement.
(d) Third Party Confidential Information. Consultant recognizes that
------------------------------------
the Company has received and in the future will receive from third parties their
confidential or proprietary information subject to a duty on the Company's part
to maintain the confidentiality of such information and to use it only for
certain limited purposes. Consultant agrees that Consultant owes the Company
and such third parties, during the term of this Agreement and thereafter, a duty
to hold all such confidential or proprietary information in the strictest
confidence and not to disclose it to any person, firm or corporation or to use
it except as necessary in carrying out the Services for the Company consistent
with the Company's agreement with such third party.
(e) Return of Materials. Upon the termination of this Agreement, or
-------------------
upon Company's earlier request, Consultant will deliver to the Company all of
the Company's property or Confidential Information that Consultant may have in
Consultant's possession or control.
3. OWNERSHIP
---------
(a) Assignment. Consultant agrees that all copyrightable material,
----------
notes,
8
<PAGE>
records, drawings, designs, inventions, improvements, developments,
discoveries and trade secrets (collectively, "Inventions") conceived, made or
discovered by Consultant, solely or in collaboration with others, during the
period of this Agreement and in the course of performing Services or services
as a director of the Company which relate in any manner to the business of the
Company that Consultant may be directed to undertake, investigate or
experiment with, or which Consultant may become associated with in work,
investigation or experimentation in the line of business of Company, are the
sole property of the Company. Consultant further agrees to assign (or cause to
be assigned) and does hereby assign fully to the Company all Inventions and
any copyrights, patents, mask work rights or other intellectual property
rights relating thereto.
(b) Further Assurances. Consultant agrees to assist Company, or its
------------------
designee, at the Company's expense, in every proper way to secure the Company's
rights in the Inventions and any copyrights, patents, mask work rights or other
intellectual property rights relating thereto in any and all countries,
including the disclosure to the Company of all pertinent information and data
with respect thereto, the execution of all applications, specifications, oaths,
assignments and all other instruments which the Company shall deem necessary in
order to apply for and obtain such rights and in order to assign and convey to
the Company, its successors, assigns and nominees the sole and exclusive right,
title and interest in and to such Inventions, and any copyrights, patents, mask
work rights or other intellectual property rights relating thereto. Consultant
further agrees that Consultant's obligation to execute or cause to be executed,
when it is in Consultant's power to do so, any such instrument or papers shall
continue after the termination of this Agreement.
(c) Pre-Existing Materials. Consultant agrees that if in the course
----------------------
of performing the Services, Consultant incorporates into any Invention developed
hereunder any invention, improvement, development, concept, discovery or other
proprietary information owned by Consultant or in which Consultant has an
interest, (i) Consultant shall inform Company, in writing before incorporating
such invention, improvement, development, concept, discovery or other
proprietary information into any Invention; and (ii) the Company is hereby
granted and shall have a nonexclusive, royalty-free, perpetual, irrevocable,
worldwide license to make, have made, modify, use and sell such item as part of
or in connection with such Invention. Consultant shall not incorporate any
invention, improvement, development, concept, discovery or other proprietary
information owned by any third party into any Invention without Company's prior
written permission.
(d) Attorney in Fact. Consultant agrees that if the Company is unable
----------------
because of Consultant's unavailability, dissolution, mental or physical
incapacity, or for any other reason, to secure Consultant's signature to apply
for or to pursue any application for any United States or foreign patents or
mask work or copyright registrations covering the Inventions assigned to the
Company above, then Consultant hereby irrevocably designates and appoints the
Company and its duly authorized officers and agents as Consultant's agent and
attorney in fact, to act for and in Consultant's behalf and stead to execute and
file any such applications and to do all other lawfully permitted acts to
further the prosecution and issuance of patents, copyright and mask work
registrations thereon with the same legal force and effect as if executed by
Consultant.
4. CONFLICTING OBLIGATIONS
-----------------------
9
<PAGE>
Consultant certifies that Consultant has no outstanding agreement or
obligation that is in conflict with any of the provisions of this Agreement, or
that would preclude Consultant from complying with the provisions hereof, and
further certifies that Consultant will not enter into any such conflicting
agreement during the term of this Agreement.
5. TERM AND TERMINATION
--------------------
(a) Term. This Agreement will commence on the date first written
----
above and will continue until October 31, 1998.
(b) Survival. Upon such termination all rights and duties of the
--------
parties toward each other shall cease except:
(i) that the Company shall be obliged to pay, within thirty (30)
days of the effective date of termination, all amounts owing to Consultant for
Services completed and accepted by the Company prior to the termination date
and related expenses, if any, in accordance with the provisions of Section 1
(Services and Compensation) hereof; and
(ii) Sections 2 (Confidentiality), 3 (Ownership) and 7
(Independent Contractors) shall survive termination of this Agreement.
6. ASSIGNMENT; SUCCESSORS
----------------------
(a) Assignment. Neither this Agreement nor any right hereunder or
----------
interest herein may be assigned or transferred by Consultant without the express
written consent of the Company.
(b) Company's Successors. Any successor to the Company (whether
--------------------
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and/or assets shall assume the obligations under this Agreement and agree
expressly to perform the obligations under this Agreement in the same manner and
to the same extent as the Company would be required to perform such obligations
in the absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and assets which
executes and delivers the assumption agreement described in this Section or
which becomes bound by the terms of this Agreement by operation of law.
(c) Consultant's Successors. The terms of this Agreement and all
-----------------------
rights of the Consultant hereunder shall inure to the benefit of, and be
enforceable by, the Consultant's legal representatives, executors,
administrators, successor, heirs, distributees, devisees or legatees.
7. INDEPENDENT CONTRACTOR
----------------------
It is the express intention of the parties that Consultant is an
independent contractor.
10
<PAGE>
Nothing in this Agreement shall in any way be construed to constitute
Consultant as an agent, employee or representative of the Company, but
Consultant shall perform the Services hereunder as an independent contractor.
Consultant agrees to furnish (or reimburse the Company for) all tools and
materials necessary to accomplish this contract, and shall incur all expenses
associated with performance, except as expressly provided on Addendum A of
this Agreement. Consultant acknowledges and agrees that Consultant is
obligated to report as income all compensation received by Consultant pursuant
to this Agreement, and Consultant agrees to and acknowledges the obligation to
pay all self-employment and other taxes thereon. Consultant further agrees to
indemnify and hold harmless the Company and its directors, officers, and
employees from and against all taxes, losses, damages, liabilities, costs and
expenses, including attorney's fees and other legal expenses, arising directly
or indirectly from (i) any negligent, reckless or intentionally wrongful act
of Consultant or Consultant's assistants, employees or agents, (ii) a
determination by a court or agency that the Consultant is not an independent
contractor, or (iii) any breach by the Consultant or Consultant's assistants,
employees or agents of any of the covenants contained in this Agreement.
8. BENEFITS
--------
Except as otherwise provided herein, Consultant acknowledges and
agrees and it is the intent of the parties hereto that Consultant receive no
Company-sponsored benefits from the Company either as a Consultant or employee.
Such benefits include, but are not limited to, paid vacation, sick leave,
medical insurance, and 401(k) participation. If Consultant is reclassified by a
state or federal agency or court as an employee, Consultant will become a
reclassified employee and will receive no benefits except those mandated by
state or federal law, even if by the terms of the Company's benefit plans in
effect at the time of such reclassification Consultant would otherwise be
eligible for such benefits.
9. ARBITRATION AND EQUITABLE RELIEF
--------------------------------
(a) Disputes. Except as provided in Section 9(d) below, the Company
--------
and Consultant agree that any dispute or controversy arising out of, relating to
or in connection with the interpretation, validity, construction, performance,
breach or termination of this Agreement shall be settled by binding arbitration
to be held in San Francisco County, California, in accordance with the
Commercial Arbitration Rules, supplemented by the Supplemental Procedures for
Large Complex Disputes, of the American Arbitration Association as then in
effect (the "Rules"). The arbitrator may grant injunctions or other relief in
such dispute or controversy. The decision of the arbitrator shall be final,
conclusive and binding on the parties to the arbitration. Judgment may be
entered on the arbitrator's decision in any court of competent jurisdiction.
(b) Consent to Personal Jurisdiction. The arbitrator(s) shall apply
--------------------------------
California law to the merits of any dispute or claim, without reference to
conflicts of law rules. Consultant hereby consents to the personal jurisdiction
of the state and federal courts located in California for any action or
proceeding arising from or relating to this Agreement or relating to any
arbitration in which the parties are participants.
11
<PAGE>
(c) Costs. The Company and Consultant shall each pay one-half of the
-----
costs and expenses of such arbitration, and each shall separately pay its
counsel fees and expenses unless otherwise required by law.
(d) Equitable Relief. The parties may apply to any court of competent
----------------
jurisdiction for a temporary restraining order, preliminary injunction, or other
interim or conservatory relief, as necessary, without breach of this arbitration
agreement and without abridgment of the powers of the arbitrator.
(e) Acknowledgment. CONSULTANT HAS READ AND UNDERSTANDS SECTION 9,
--------------
WHICH DISCUSSES ARBITRATION. CONSULTANT UNDERSTANDS THAT BY SIGNING THIS
AGREEMENT, CONSULTANT AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO,
OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY,
CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF, TO BINDING
ARBITRATION, EXCEPT AS PROVIDED IN SECTION 9 (d), AND THAT THIS ARBITRATION
CLAUSE CONSTITUTES A WAIVER OF CONSULTANT'S RIGHT TO A JURY TRIAL AND RELATES TO
THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE RELATIONSHIP
BETWEEN THE PARTIES.
10. GOVERNING LAW
-------------
This Agreement shall be governed by the internal substantive laws, but
not the choice of law rules, of the State of California.
11. ENTIRE AGREEMENT
----------------
This Agreement, the Stock Option Agreements (as defined below) and the
Agreement and Mutual Release, dated June 3, 1998 contain the entire
agreement of the parties and supersede any and all prior agreements between
them, whether written or oral, with respect to the subject matter hereof.
Stock Option Agreements mean the Share Option Agreements dated: (i) July 8,
1994, (ii) April 13, 1995, (iii) January 16, 1996, (iv) April 12, 1996, (v)
March 18, 1997, and (vi) January 13, 1998. No waiver, alteration, or
modification of any of the provisions of this Agreement shall be binding unless
in writing and signed by duly authorized representatives of the parties hereto.
The unvested portion of all stock options held by Consultant under the Stock
Option Agreements at the date of Consultant's termination as an employee of the
Company (the "Unvested Options") shall continue to vest during the term of this
Agreement according to the vesting schedule set forth in each Unvested Option's
respective Option Agreement.
12. ATTORNEY'S FEES
---------------
In any court action at law or equity which is brought by one of the
parties to enforce or interpret the provisions of this Agreement, the prevailing
party will be entitled to reasonable attorney's fees, in addition to any other
relief to which that party may be entitled.
12
<PAGE>
13. SEVERABILITY
------------
The invalidity or unenforceability of any provision of this Agreement,
or any terms thereof, shall not affect the validity of this Agreement as a
whole, which shall at all times remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
CONSULTANT
By:/s/ Jeffrey N. Newton
---------------------
Title:Consultant
----------
Address: 3793 Smallwood Court
--------------------
Pleasanton, CA 94566
--------------------
CBT SYSTEMS USA LTD.
By:/s/ James J. Buckley
--------------------
Title:Chief Executive and President
-----------------------------
Address: 1005 Hamilton Court, Menlo Park, CA
-----------------------------------
94025
-----
13
<PAGE>
ADDENDUM A
----------
SERVICES AND COMPENSATION
-------------------------
1. Contact. Consultant's principal Company contact:
-------
Name: James Buckley
Title: Chief Executive Officer
2. Services. Consultant will render to the Company services on
--------
projects as identified by James Buckley, the Chief Executive
Officer or his designee. Such projects are initially contemplated
to involve the transition of another Company officer or officers
into Consultant's former responsibilities with the Company.
14
<PAGE>
EXHIBIT 11.1
------------
STATEMENT RE: COMPUTATION OF NET INCOME PER ORDINARY SHARE
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Six Months
Ending June 30 Ending June 30
1997 1998 1997 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
BASIC
Total weighed average ordinary
and ordinary equivalent
Shares outstanding 39,923 43,283 39,690 42,939
====== ====== ====== ======
Net income 2,221 4,099 3,770 11,441
====== ====== ====== ======
Net income per Ordinary Share (1) $ 0.06 $ 0.09 $ 0.09 $ 0.27
====== ====== ====== ======
DILUTED
Computation of ordinary and
ordinary equivalent shares
outstanding:
Weighted average ordinary
shares outstanding 39,923 43,283 39,690 42,939
Dilutive equivalent ordinary
shares issuable upon
exercise of options 4,015 3,074 4,067 3,141
Total weighted average ordinary
and ordinary equivalent shares
outstanding 43,938 46,357 43,757 46,080
====== ====== ====== ======
Net income 2,221 4,099 3,770 11,441
====== ====== ====== ======
Net income per Ordinary Share (1) $ 0.05 $ 0.09 $ 0.09 $ 0.25
====== ====== ====== ======
</TABLE>
(1) On March 9, 1998, the Company effected a two-for-one split of its issued and
outstanding ADSs. Subsequent thereto, the Company's shareholders approved a
proposal at the Company's 1998 Annual General Meeting to subdivide each of
the Ordinary Shares of IR37.5p into four Ordinary Shares of IR9.375p (the
"Ordinary Share Split"). As a consequence of the Ordinary Share Split,
effective May 22, 1998, each ADS represents and is exchangeable for one
Ordinary Share. All share amounts in this exhibit give effect to the
Ordinary Share Split.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 45,577
<SECURITIES> 36,091
<RECEIVABLES> 45,409
<ALLOWANCES> (1,400)
<INVENTORY> 1,021
<CURRENT-ASSETS> 25,898
<PP&E> 23,895
<DEPRECIATION> (9,550)
<TOTAL-ASSETS> 166,941
<CURRENT-LIABILITIES> 29,756
<BONDS> 0
0
0
<COMMON> 122,316
<OTHER-SE> 14,869
<TOTAL-LIABILITY-AND-EQUITY> 166,941
<SALES> 84,781
<TOTAL-REVENUES> 84,781
<CGS> 12,641
<TOTAL-COSTS> 60,797
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,903)
<INCOME-PRETAX> 13,246
<INCOME-TAX> 1,805
<INCOME-CONTINUING> 11,441
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,441
<EPS-PRIMARY> $0.27
<EPS-DILUTED> $0.25
</TABLE>
