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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
June 18, 1999
Date of Report (date of earliest event reported)
CBT GROUP PUBLIC LIMITED COMPANY
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(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Republic of Ireland 0-25674 Not Applicable
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.)
incorporation or organization)
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900 Chesapeake Drive
Redwood City, California 94063
(Address of principal executive offices)
Registrant's telephone number, including area code: (650) 817-5900
N/A
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
------------------------------------
On June 18, 1999, CBT Group PLC, a public limited company organized
under the laws of the Republic of Ireland ("CBT"), closed its acquisition of
Knowledge Well Group Limited and Knowledge Well Limited, two private companies
formed under the laws of Ireland (collectively, "Knowledge Well"), pursuant to
the terms of a Share Purchase Agreement, dated as of November 30, 1998 as
amended and restated as of March 30, 1999 (the "Share Purchase Agreement"),
among CBT, Knowledge Well and the shareholders of Knowledge Well (the "Share
Exchange").
To effect the acquisition, CBT is issuing CBT Ordinary Shares to the
shareholders of Knowledge Well in exchange for their ordinary shares of
Knowledge Well. In addition, CBT has assumed the obligations of Knowledge Well
under all outstanding options to purchase ordinary shares of Knowledge Well such
that all such options are exercisable for CBT Ordinary Shares. As a result, CBT
is issuing to the shareholders of Knowledge Well an aggregate of 4,375,574 CBT
Ordinary Shares (each represented by one American Depositary Share). If all
assumed options vest and are exercised, CBT will issue to the option holders of
Knowledge Well an additional 461,635 CBT Ordinary Shares (each represented by
one American Depositary Share) in exchange for payment by the option holders of
the aggregate option exercise price. As a result, CBT could issue a total of as
many as 4,837,209 shares in connection with the Share Exchange. The number of
CBT Ordinary Shares issuable in exchange for each Knowledge Well ordinary share
(the "Exchange Ratio") was equal to the quotient obtained by dividing (x)
4,837,209 by (y) the sum of (1) the total number of Knowledge Well ordinary
shares in issue immediately prior to the closing of transaction plus (2) the
total number of shares of Knowledge Well of any class issuable upon exercise of
all options, warrants and similar rights outstanding immediately prior to the
closing of the Share Exchange.
In connection with the Share Exchange, CBT deposited 402,000 of the CBT
Ordinary Shares (the "Escrow Shares") into an escrow fund to secure the
obligations of Knowledge Well's shareholders to indemnify CBT for any damages,
including reasonable attorneys' fees and expenses, resulting from any breach of
their representations and warranties under the Share Purchase Agreement. Subject
to certain conditions, the liability of the shareholders of Knowledge Well under
this indemnity, other than for damages caused by any breach of or inaccuracy in
any representations or warranties relating to taxes, will end two years from the
closing date. The liability of the shareholders of Knowledge Well under this
indemnity for damages caused by any breach of or inaccuracy in any
representations or warranties relating to taxes will end six years from the
closing date. In no event will any shareholder be liable under this indemnity or
any other theory of liability for damages in connection with the Share Exchange
for an amount greater than the lesser of (1) such shareholder's pro rata share
of the acquisition price or (2) such shareholder's pro rata share of the damages
suffered by CBT.
CBT has agreed to use its reasonable best efforts to cause the CBT
Ordinary Shares to be registered under The Securities Act of 1933, as amended,
and has agreed to prepare and file with the Securities and Exchange Commission
(the "SEC") a registration statement covering all of such CBT Ordinary Shares
within 30 days after the closing to permit the resale of all of such CBT
Ordinary Shares. CBT has further agreed to maintain the effectiveness of the
registration statement for two years following the closing.
Certain shareholders of Knowledge Well have agreed from the closing
until October 1, 1999 not to dispose of any CBT Ordinary Shares without the
prior written consent of the members of CBT's board of directors who are not
former shareholders of Knowledge Well. Additionally, these individuals have
agreed from October 1, 1999 to October 1, 2000 not to dispose of more than 50%
of these CBT Ordinary Shares without the prior written consent of the members of
CBT's board of directors who are not former shareholders of Knowledge Well.
<PAGE>
William G. McCabe is a former Chief Executive Officer and the current
Chairman of CBT's board of directors and is also the founder and a former member
of the board of each of Knowledge Well Limited and Knowledge Well Group Limited.
Immediately prior to the closing of the Share Exchange, Mr. McCabe beneficially
owned approximately 69.0% (on a fully diluted basis) of Knowledge Well.
Gregory M. Priest is CBT's former Vice President, Finance and Chief
Financial Officer and its current President and Chief Executive Officer and a
member of its board of directors. At the time the Share Purchase Agreement was
originally executed, Mr. Priest was the President and Chief Executive Officer
and a member of the board of each of Knowledge Well Limited and Knowledge Well
Group Limited. Immediately prior to the closing of the Share Exchange, Mr.
Priest beneficially owned approximately 9.7% of Knowledge Well (on a fully
diluted basis).
John M. Grillos, CBT's current Chief Operating Officer and a member of
its board of directors, owned approximately 0.9% of Knowledge Well (on a fully
diluted basis). In addition, ITech Partners L.P., a venture capital limited
partnership of which Mr. Grillos serves as the sole general partner, owned
approximately 0.7% of Knowledge Well (on a fully diluted basis).
The foregoing individuals did not participate in CBT's decision making
process with respect to approval of the Share Exchange.
Item 7. Financial Statements and Exhibits
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(a) Financial Statements of the Business Acquired
The financial statements of the acquired business will be filed
by the Registrant as an amendment to this Form 8-K as soon as practicable, but,
in any event, not later than sixty days after the date hereof.
(b) Pro Forma Financial Information
The pro forma financial information relative to the acquired
business will be filed by the Registrant as amendment to this Form 8-K as soon
as practicable, but, in any event, not later than sixty days after the date
hereof.
(c) Exhibits
2.1 Amended and Restated Share Purchase Agreement, dated
March 30, 1999, by and among CBT Group PLC, Knowledge
Well Limited, Knowledge Well Group Limited
(collectively "Knowledge Well"), and the shareholders
of Knowledge Well (the "Shareholders").
2.2 Amended and Restated Declaration of Registration
Rights, dated March 30, 1999, by CBT Group PLC.
2.3 Amended and Restated Escrow Agreement, dated March 30,
1999, by and among CBT Group PLC, the Shareholders,
Jack Hayes, U.S. Bank Trust National Association, and
Gethin Taylor, as representative of the Shareholders.
<PAGE>
2.4 Restricted Deposit Agreement (B), dated as of June 8,
1999, among CBT Group PLC, The Bank of New York, and
the Owners and Beneficial Owners of Restricted American
Depositary Receipts.
99.1 Press Release of CBT Group PLC announcing the
completion of the Share Exchange, dated June 24, 1999.
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Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned hereunto duly authorized.
Dated: July 2, 1999 CBT GROUP PLC
/s/ Gregory M. Priest
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Gregory M. Priest
President and Chief Executive Officer
<PAGE>
CBT GROUP PLC
EXHIBIT INDEX TO FORM 8-K
Dated July 2, 1999
Exhibit
2.1 Amended and Restated Share Purchase Agreement, dated March 30, 1999,
by and among CBT Group PLC, Knowledge Well Limited, Knowledge Well
Group Limited (collectively "Knowledge Well"), and the shareholders of
Knowledge Well (the "Shareholders").
2.2 Amended and Restated Declaration of Registration Rights, dated March
30, 1999, by CBT Group PLC.
2.3 Amended and Restated Escrow Agreement, dated March 30, 1999, by and
among CBT Group PLC, the Shareholders, Jack Hayes, U.S. Bank Trust
National Association, and Gethin Taylor, as representative of the
Shareholders.
2.4 Restricted Deposit Agreement (B), dated as of June 8, 1999, among CBT
Group PLC, The Bank of New York, and the Owners and Beneficial Owners
of Restricted American Depositary Receipts.
99.1 Press Release of CBT Group PLC announcing the completion of the Share
Exchange, dated June 24, 1999.
<PAGE>
EXHIBIT 2.1
AMENDED AND RESTATED SHARE PURCHASE AGREEMENT
This AMENDED AND RESTATED SHARE PURCHASE AGREEMENT (this "Agreement") is
made and entered into as of March 30, 1999 by and among CBT Group PLC, a public
limited company formed under the laws of Ireland ("CBT"), Knowledge Well
Limited, a private limited company formed under the laws of Ireland ("KW
Limited"), Knowledge Well Group Limited, a private limited company formed under
the laws of Ireland ("KW Group" and, collectively with KW Limited,
"KnowledgeWell"), and the shareholders of KW Limited and KW Group listed on
Exhibit A hereto (collectively, "Shareholders," and individually, a
"Shareholder").
RECITALS
WHEREAS, the Shareholders will at Closing (as hereinafter defined) own all
of the issued shares in the capital of each of KW Limited and KW Group.
WHEREAS, CBT desires to acquire from the Shareholders, and the Shareholders
desire to sell to CBT, the KnowledgeWell Shares (as hereinafter defined) owned
by the Shareholders (the "Share Exchange"), in exchange for the consideration
specified herein and subject to the terms and conditions hereof.
WHEREAS, the parties hereto desire to amend and restate that certain Share
Purchase Agreement (the "Prior Share Purchase Agreement") entered into as of
November 30, 1998 by and among CBT, KnowledgeWell and the Shareholders.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable
consideration, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF KNOWLEDGEWELL SHARES
1.1 Purchase and Sale. Subject to the terms and conditions set forth in this
Agreement, at the Share Exchange, CBT shall purchase from the Shareholders, and
the Shareholders, as beneficial owners, shall sell, assign, transfer and
deliver to CBT, the KnowledgeWell Shares free and clear of any pledge, lien,
charge, security interest, encumbrance, claim or other equitable or third-party
interest ("Liens").
1.2 Acquisition Price.
(a) In reliance on the representations, warranties and covenants of the
Shareholders contained herein, and in consideration of the aforesaid sale,
assignment, transfer and delivery of the KnowledgeWell Shares, CBT shall pay to
each Shareholder, in full payment for each KnowledgeWell Share so sold,
assigned, transferred and delivered by such Shareholder and the agreements of
such Shareholder made in connection with the transactions contemplated hereby,
the following: such number of CBT American Depositary Shares ("ADSs") (or, in
the event that a Restricted ADR Facility is not arranged prior to the Closing
Date as contemplated in Section 6.16 of this Agreement, such number of Ordinary
Shares of IR9.375p in the capital of CBT ("CBT Ordinary Shares")) as is equal
to the Exchange Ratio. For purposes of this Agreement, the "Exchange Ratio"
shall mean the quotient (rounded to the nearest 1/10,000th) obtained by
dividing (x) 4,837,209 by (y) the sum of (i) the total number of KnowledgeWell
Shares in issue immediately prior to the Closing plus (ii) the total number of
shares in KnowledgeWell of any class issuable upon exercise of all options,
warrants and similar rights outstanding immediately prior to the Closing. For
purposes of this Agreement, "Acquisition Price" shall mean the 4,837,209
Ordinary Shares or ADSs, as the case may be, issuable pursuant to this
Agreement.
(b) For purposes of this Agreement, "KnowledgeWell Shares" shall mean (i)
all of the issued "A" Ordinary Shares of US$0.25 each and "C" Ordinary Shares
of IR25p each in the capital of KW Limited and (ii) all of the issued Ordinary
Shares of US$0.01 each and the convertible preference shares of US$0.01 each in
the capital of KW Group.
<PAGE>
(c) The Exchange Ratio shall be appropriately adjusted to reflect fully the
effect of any stock split, reverse split, stock dividend (including any
dividend or distribution of securities convertible into CBT Ordinary Shares or
ADSs), reorganization, recapitalization or other like change with respect to
CBT Ordinary Shares or ADSs occurring after the date hereof and prior to the
Closing Date (as hereinafter defined).
(d) No fraction of an Ordinary Share or ADS will be issued, but in lieu
thereof, each Shareholder who would otherwise be entitled to a fraction of an
Ordinary Share or ADS (after aggregating all fractional Ordinary Shares or ADSs
to be received by such Shareholder) shall be entitled to receive from CBT an
amount of cash (rounded to the nearest whole cent) equal to the product of (i)
such fraction, multiplied by (ii) the closing price of an ADS on November 27,
1998, as reported on the Nasdaq National Market.
1.3 Share Exchange. Unless this Agreement is earlier terminated pursuant to
Section 9.1, the closing of the Share Exchange (the "Closing") will take place
as promptly as practicable, but no later than five (5) business days, following
satisfaction or waiver of the conditions set forth in Article VII, at the
offices of Binchys' Solicitors, 43 Fitzwilliam Place, Dublin 2, Ireland, unless
another place or time is agreed to by CBT and the Shareholders. The date upon
which the Closing occurs is herein referred to as the "Closing Date". The
signing of this Agreement by a Shareholder shall constitute a waiver of all
pre-emption rights in relation to his, her or its KnowledgeWell Shares being
transferred pursuant to this Agreement.
1.4 Closing Mechanics. At Closing the following business shall be transacted
and the following documents shall be signed and delivered.
(a) The Shareholders shall deliver or procure to be delivered to CBT or
its legal counsel:
(i) duly executed and completed transfers in favor of CBT (or as it
shall direct) in respect of the KnowledgeWell Shares together with the
relative certificates therefor (the "KnowledgeWell Certificates");
(ii) duly executed and completed transfers into the names of such
persons as CBT may direct in respect of any shares in KnowledgeWell
Inc. (the "Subsidiary") not registered in the name of KW Group together
with the share certificates for the whole of the issued share capital
of the "Subsidiary";
(iii) any other documents which may be required to give good title
to the KnowledgeWell Shares (including any power of attorney under
which any document required to be delivered under this Section has been
executed or signed) or which may be necessary to enable CBT to procure
the registration of the same in the name of CBT or its nominee;
(iv) all the title deeds and documents relating to the properties at
Block 1, Blackrock Business Park, Blackrock, County Dublin, Ireland and
1701 Directors Boulevard, Suite 920, Austin, Texas 78764, USA occupied
by KnowledgeWell and the Subsidiary (together the "Properties");
(v) the Certificate of Incorporation, statutory books and Common
Seals of each of KW Limited and KW Group and the Subsidiary and all
prints of the Memorandum and Articles of Association or Bylaws thereof
in the possession or under the control of the Shareholders;
(vi) at the offices of KnowledgeWell and the Subsidiary all the
records of KnowledgeWell and the Subsidiary together with all
securities, deeds, documents of title, insurance policies, check books
and other books, papers and documents relating to KnowledgeWell and the
Subsidiary which are in the Shareholders possession or under their
control;
(vii) a letter of resignation in such form as CBT may require of Jim
Middleton and Martin Scully resigning as directors and of Molyneux
Secretarial Services Limited resigning as the Secretary of KW Limited
and KW Group and from any other office or employment that said persons
may hold with either of those companies and acknowledging that he or it
has no outstanding claims against either of those companies whether for
compensation for loss of office or otherwise whatsoever;
<PAGE>
(viii) a letter of resignation in such form as CBT may require of
Caplin Meehan of 3 College Green, Dublin 2, Ireland resigning as
Accountants for and Auditors of KW Limited and KW Group and
acknowledging that they have no outstanding claims against either of
those companies whether for compensation for loss of office or
otherwise whatsoever, with the exception of fees outstanding at the
date of resignation (whether billed or not) and containing the
statement referred to in sub-section 185(2)(a) of the Companies Act,
1990 of Ireland;
(ix) a letter of resignation in such form as CBT may require of Hays
& Co. resigning as Accountants for and Auditors of the Subsidiary and
acknowledging that they have no outstanding claims against the
Subsidiary whether for compensation for loss of office or otherwise
whatsoever;
(x) instruments in such form as CBT may require duly executed by all
of the members of KW Limited and KW Group and all the members (other
than KW Group) of the Subsidiary waiving any pre-emption or other
similar rights which they may have either under the Articles of
Association of KW Limited or KW Group or Bylaws of the Subsidiary or
otherwise in relation to the KnowledgeWell Shares or any of them or in
relation to any shares in the Subsidiary.
(b) The Shareholders shall procure a meeting of the Board of Directors
of each of KW Limited and KW Group to be held at which the following
business shall be transacted:
(i) the appointment of Bill Beamish as an additional director of
each of those companies;
(ii) the acceptance of the resignations of the directors, secretary
and auditors of each of these companies as referred to in sub-clauses
1.4 (vii) and (viii) above and the appointment as secretary and
auditors of each of those companies of such persons or firms as CBT may
nominate;
(iii) the situation of the registered office of each of those
companies shall be changed to Belfield Office Park, Clonskeagh, Dublin
4, Ireland;
(iv) the registration of CBT or its nominees as holder of the
KnowledgeWell Shares subject to the submission of duly stamped and
completed transfers of the KnowledgeWell Shares;
(v) the adoption of Bank Mandates in forms satisfactory to CBT in
substitution for and to the exclusion of the existing mandates; and
(vi) the accounting reference date of each of KW Group and KW
Limited shall be changed to December 31.
(c) The Shareholders shall procure a meeting of the Board of Directors
of the Subsidiary to be held at which the following business shall be
transacted:
(i) the appointment of Eric Murphy as an additional director of the
Subsidiary;
(ii) the acceptance of the resignation of the auditors of the
Subsidiary referred to in sub-clauses 1.4 (ix) above and the
appointment as auditors of the Subsidiary of such persons or firms as
CBT may nominate;
(iii) the registration of CBT or its nominees as the holder of those
shares in the Subsidiary not registered in the name of KW Group; and
(iv) the adoption of Bank Mandates in a form satisfactory to CBT in
substitution for and to the exclusion of the existing mandates.
(d) Each of the Shareholders shall repay and procure the repayment of
all sums owed to KnowledgeWell or the Subsidiary by him, her or it or any
connected person of his, hers or its or any company controlled by him, her
or it. For the purposes of the foregoing, each Shareholder (with the
intention of binding not only himself, herself or itself, but also his, her
or its successors and assigns and (in the case of an individual) his or her
estate after his or her death) hereby severally and not jointly represents
and warrants to CBT that no monies are owed to KnowledgeWell or the
Subsidiary by such Shareholder or any connected person of his, her or it or
any company controlled by him, her or it as at
<PAGE>
November 30, 1998. For purposes of this Section 1.4(d), the term "connected
person" and "control" shall have the meanings ascribed to those terms by
Sections 16(3) and 16(1), respectively, of the Finance (Miscellaneous
Provisions) Act 1968 of Ireland.
1.5 Payment of Acquisition Price.
(a) Upon Closing, CBT shall make available to each Shareholder as payment of
such Shareholder's part of the Acquisition Price in accordance with this
Article I Ordinary Shares of CBT in the name of such Shareholder; provided,
however, that CBT shall cause 402,000 Ordinary Shares to be issued pursuant to
Section 1.2(a) (the "Escrow Amount") to be deposited into an escrow account
pursuant to Section 8.3 below.
(b) Notwithstanding Section 1.5(a), in the event that a Restricted ADR
Facility (the "Restricted ADR Facility") has been arranged with The Bank of New
York prior to Closing as contemplated by Section 6.16, then upon Closing, CBT
shall make available to each Shareholder as payment of such Shareholder's part
of the Acquisition Price in accordance with this Article I Restricted American
Depositary Receipts ("ADRs") of CBT in the name of such Shareholder issued in
accordance with a Restricted Deposit Agreement among CBT, The Bank of New York,
as depository (the "Depository"), and all owners and beneficial owners of such
ADRs (the "Deposit Agreement"), which ADRs shall represent that number of ADSs
to be issued to that Shareholder as payment of such Shareholder's part of the
Acquisition Price in accordance with Section 1.2(a). Prior to or concurrent
with the Share Exchange, CBT shall deliver or cause to be delivered to the
Custodian (as defined in the Deposit Agreement), in accordance with the Deposit
Agreement, the Ordinary Shares represented by the ADSs to be issued in
connection with the Share Exchange, with instructions to the Depository to
create and deliver the ADRs representing the ADSs to each Shareholder as
provided above; provided, however, that CBT shall cause the ADRs representing
402,000 ADSs to be issued pursuant to Section 1.2(a) (the "Escrow Amount") to
be deposited into an escrow account pursuant to Section 8.3 below.
(c) If any ADR or Ordinary Share, as the case may be, is to be issued in a
name other than that of the Shareholder entitled thereto pursuant to the Share
Exchange, it will be a condition of the issuance thereof that the person
requesting such exchange will have paid to CBT or any agent designated by it
any transfer or other taxes required by reason of the issuance of an ADR or
Ordinary Share in any name other than that of the registered holder of the
KnowledgeWell Certificate surrendered, or established to the satisfaction of
CBT or any agent designated by it that such tax has been paid or is not
payable.
1.6 No Further Ownership Rights in KnowledgeWell Shares. All ADSs or
Ordinary Shares, as the case may be, issued in exchange for KnowledgeWell
Shares in accordance with the terms of this Agreement (including any cash paid
in respect of fractional shares) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such KnowledgeWell Shares.
1.7 Lost, Stolen or Destroyed KnowledgeWell Certificates. In the event any
KnowledgeWell Certificates evidencing KnowledgeWell Shares shall have been
lost, stolen or destroyed, then upon Closing, the holder thereof shall be
required to deliver an indemnity in such form as CBT may require in respect of
such lost, stolen or destroyed certificate and CBT may in its sole discretion
require the owner of any such lost, stolen or destroyed KnowledgeWell
Certificates to deliver a bond in such sum as CBT may reasonably direct as part
of any such indemnity against any claim that may be made against CBT with
respect to the KnowledgeWell Certificates alleged to have been lost, stolen or
destroyed.
1.8 Stock Options. At the Closing, all options to purchase shares in
KnowledgeWell then outstanding and unexercised under the KnowledgeWell Limited
1998 Share Option Plan or the KnowledgeWell Group Limited 1998 Share Option
Plan (collectively, the "KnowledgeWell Option Plans") shall be assumed by CBT
in accordance with provisions described below.
(a) At the Closing, each outstanding unexercised option to purchase "A"
Ordinary Shares of US$0.25 each in the capital of KW Limited ("KW Limited
Options") or Ordinary Shares of US$0.01 each
<PAGE>
in the capital of KW Group ("KW Group Options" and, collectively with KW
Limited Options, "KnowledgeWell Options")) under the KnowledgeWell Option
Plans, whether vested or unvested, shall be, in connection with the Share
Exchange, assumed by CBT. Each KnowledgeWell Option so assumed by CBT under
this Agreement shall continue to have, and be subject to, the same terms
and conditions set forth in the KnowledgeWell Option Plans and/or as
provided in the respective option agreements governing such KnowledgeWell
Option immediately prior to the Closing, except that (A) such KnowledgeWell
Option shall be exercisable for that number of whole CBT Ordinary Shares
equal to the product of the number of shares of KnowledgeWell that were
issuable upon exercise of such KnowledgeWell Option immediately prior to
the Closing multiplied by the Exchange Ratio rounded down to the nearest
whole number of CBT Ordinary Shares and (B) the per share exercise price
for the CBT Ordinary Shares issuable upon exercise of such assumed
KnowledgeWell Option shall be equal to the quotient determined by dividing
the exercise price per share at which such KnowledgeWell Option was
exercisable immediately prior to the Closing by the Exchange Ratio, rounded
up to the nearest whole cent.
(b) It is the intention of the parties that KnowledgeWell Options
assumed by CBT qualify following the Closing as incentive stock options as
defined in Section 422 of the Code to the extent KnowledgeWell Options
qualified as incentive stock options immediately prior to the Closing.
(c) Promptly following the Closing, CBT will issue to each holder of an
outstanding KnowledgeWell Option a document evidencing the foregoing
assumption of such KnowledgeWell Option by CBT.
1.9 Taking of Necessary Action; Further Action. If, at any time after the
Share Exchange, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest CBT with full right, title and
possession to the KnowledgeWell Shares, the Shareholders will take all such
lawful and necessary action.
1.10 Tax-Free Reorganization. The parties hereto intend that the Share
Exchange shall constitute a reorganization within the meaning of Section 368 of
the United States Internal Revenue Code of 1986 (the "Code"). The parties
hereto adopt this Agreement as a "plan of reorganization" within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
1.11 Termination of the Prior Share Purchase Agreement. The parties hereto
agree that all rights and obligations under the Prior Share Purchase Agreement
shall be terminated in their entirety and shall be superseded and governed by
this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders, jointly and severally, represent and warrant to CBT as of
November 30, 1998, subject to matters fairly and accurately disclosed in the
disclosure letter supplied by KnowledgeWell to CBT (the "KnowledgeWell
Disclosure Letter") and dated as of November 30, 1998, as follows (for the
purposes of the following warranties and representations (i) unless otherwise
indicated, the term "KnowledgeWell" shall be deemed to include where relevant
having regard to the context each of KW Limited, KW Group and the Subsidiary,
and (ii) subject to matters fairly and accurately disclosed in the
KnowledgeWell Disclosure Letter, no other information relating to KnowledgeWell
of which CBT has knowledge (actual or constructive) shall prejudice any claim
made by CBT under such warranties or representations or operate to reduce any
amount recoverable):
2.1 Organization of KnowledgeWell.
(a) Each of KW Limited and KW Group is a corporation duly incorporated under
the laws of Ireland and has complied in all respects with the filing
requirements of the Companies Acts, 1963 to 1990 of Ireland. Each of KW Limited
and KW Group has the corporate power to own its properties and to carry on its
business as
<PAGE>
now being conducted. Each of KW Limited and KW Group is duly qualified to do
business and in good standing as a foreign corporation in each jurisdiction in
which the failure to be so qualified would have a material adverse effect on
the business, assets (including intangible assets), financial condition or
results of operations of KnowledgeWell (hereinafter referred to as a "Material
Adverse Effect").
2.2 KnowledgeWell Capital Structure.
(a) The authorized share capital of KW Limited consists of US$5,000,000
divided into 19,872,000 "A" Ordinary Shares of US$0.25 each, of which 9,658,813
are issued and outstanding, 1,289,000 "B" Ordinary Shares of US$0.025 each,
none of which are issued or outstanding, and IR,1,000,000 divided into
4,000,000 "C" Ordinary Shares of IR25p each, of which 2,428,376 are issued and
outstanding. The authorized share capital of KW Group consists of US$250,000
divided into 23,000,000 Ordinary Shares of US$0.01 each, of which 8,023,320 are
issued and outstanding, and 2,000,000 Convertible Preference Shares of US$0.01
each ("KW Preferred"), of which 1,635,493 are issued and outstanding. The
issued shares of KW Limited and KW Group (collectively, "KnowledgeWell Share
Capital") are held by the persons, with the domicile addresses and in the
amounts set forth in Schedule 2.2(a) of the KnowledgeWell Disclosure Letter.
All of the issued shares of KnowledgeWell Share Capital are duly authorized,
validly issued, fully paid and non-assessable and not subject to preemptive
rights created by statute, the Articles of Association or Bylaws of
KnowledgeWell or any agreement to which KnowledgeWell is a party or by which it
is bound. Subject to the stock transfer forms being represented duly stamped
and the register of members being completed, as a result of the Share Exchange,
CBT will be the record and sole beneficial owner of all KnowledgeWell Share
Capital and rights to acquire or receive KnowledgeWell Share Capital. The
copies of the Memorandum and Articles of Association of each of KW Limited and
KW Group delivered by KnowledgeWell to CBT are true, complete and accurate and
have embodied therein or annexed thereto a copy of every such resolution or
agreement as is referred to in section 143(2) of the Companies Act, 1963 of
Ireland. The copy of the Bylaws of the Subsidiary delivered by KnowledgeWell to
CBT are true, complete and accurate;
(b) KW Limited has reserved 3,000,000 "A" Ordinary Shares of US$0.25 each
for issuance to employees and consultants pursuant to the KnowledgeWell Limited
1998 Share Option Plan, of which 2,706,566 shares are subject to outstanding,
unexercised options. KW Group has reserved 3,000,000 Ordinary Shares of US$0.01
each for issuance to employees and consultants pursuant to the KnowledgeWell
Group Limited 1998 Share Option Plan, of which 2,706,566 shares are subject to
outstanding, unexercised options. Schedule 2.2(b) of the KnowledgeWell
Disclosure Letter sets forth for each outstanding KnowledgeWell Option: the
name of the company which has granted the option, the name of the holder of
such option, the domicile address of such holder, the number of ordinary shares
of the relevant company subject to such option, the exercise price of such
option and the vesting schedule for such option, including the extent vested to
date and whether the exercisability of such option will be accelerated and
become exercisable by the transactions contemplated by this Agreement. Except
for KnowledgeWell Options described in Schedule 2.2(b) of the KnowledgeWell
Disclosure Letter, there are no options, warrants, calls, rights, commitments
or agreements of any character, written or oral, to which KnowledgeWell is a
party or by which it is bound obligating KnowledgeWell to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares in the capital of KnowledgeWell. Except for KnowledgeWell
Options described in Schedule 2.2(b) of the KnowledgeWell Disclosure Letter,
there are no options, warrants, calls, rights, commitments or agreements of any
character, written or oral, to which KnowledgeWell is a party or by which it is
bound obligating KnowledgeWell to grant, extend, accelerate the vesting of,
change the price of, otherwise amend or enter into any such option, warrant,
call, right, commitment or agreement.
2.3 Subsidiaries. KW Limited does not have and has never had any
subsidiaries and does not otherwise own and has never otherwise owned any
shares of capital stock or any interest in, or control, directly or indirectly,
any other corporation, partnership, association, joint venture or other
business entity. Except for the Subsidiary, KW Group does not have and has
never had any subsidiaries and does not otherwise own and has never otherwise
owned any shares of capital stock or any interest in, or control, directly or
indirectly, any other corporation, partnership, association, joint venture or
other business entity.
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2.4 Authority. KnowledgeWell has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of KnowledgeWell. KW Limited's and KW Group's
Boards of Directors have unanimously approved the Share Exchange and this
Agreement. This Agreement has been duly executed and delivered by KnowledgeWell
and constitutes the valid and binding obligation of KnowledgeWell, enforceable
in accordance with its terms. Except as set forth in Schedule 2.4 of the
KnowledgeWell Disclosure Letter, the execution and delivery of this Agreement
by KnowledgeWell does not, and the consummation of the transactions
contemplated hereby will not, conflict with, or result in any violation of, or
default under (with or without notice or lapse of time, or both), or give rise
to a right of termination, cancellation or acceleration of any obligation or
loss of any benefit under (any such event, a "Conflict") (i) any provision of
the Memorandum and Articles of Association of KW Limited or KW Group or (ii)
any mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to KnowledgeWell or its properties or
assets. No consent, waiver, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other federal, state, county, local or foreign governmental
authority, instrumentality, agency or commission ("Governmental Entity") or any
third party (so as not to trigger any Conflict), is required by or with respect
to KnowledgeWell in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, except
for (i) such consents, waivers, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal and state securities laws, (ii) such other consents, waivers,
authorizations, filings, approvals and registrations which are set forth in
Schedule 2.4 of the KnowledgeWell Disclosure Letter and (iii) such consents,
waivers, authorizations, filings, approvals and registrations which would not
individually or in the aggregate, have a material adverse effect on the ability
of KnowledgeWell to consummate the transactions contemplated hereby.
2.5 KnowledgeWell Financial Statements.
(a) Schedule 2.5 of the KnowledgeWell Disclosure Letter sets forth (i) KW
Limited's audited balance sheet as of October 31, 1997 and the related audited
statements of operations and cash flows for the period then ended, (ii) KW
Limited's unaudited balance sheet as of October 31, 1998 (the "KW Limited
Balance Sheet") and the related unaudited statements of operations and cash
flows for the twelve-month period then ended, (iii) KW Group's unaudited
consolidated balance sheet as of October 31, 1998 (the "KW Group Balance Sheet"
and, collectively with the KW Limited Balance Sheet, the "Balance Sheets") and
the related unaudited consolidated statements of operations and cash flows for
the period from incorporation (collectively, the "KnowledgeWell Financial
Statements"). The accounting reference date of each of KW Limited, KW Group and
the Subsidiary is 31 October.
(b) The audited KnowledgeWell Financial Statements:
(i) give a true and fair view of KnowledgeWell in all respects as at
October 31, 1998 (the "Accounts Date");
(ii) comply with the requirements of the Companies Acts, 1963 to 1990 of
Ireland and all regulations to be construed as one with those Acts;
(iii) have been prepared in accordance with the best generally accepted
and adopted accounting principles in Ireland and all applicable Statements
of Standard Accounting Practice ("SSAP");
(c) The audited and unaudited KnowledgeWell Financial Statements:
(i) have been prepared on a basis consistent with that adopted for
preceding accounting periods;
(ii) are not affected by any unusual, extraordinary, exceptional or non-
recurring items or by any other factor rendering the results thereof (or
any of them) unusually better or worse than they (or any of them) might
otherwise be or have been;
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(iii) are true, complete and accurate and properly reflect the financial
position of KnowledgeWell as at the Accounts Date and of its results for
the accounting period ending on that date;
(iv) correctly and accurately disclose all the assets and liabilities
(whether ascertained, contingent, deferred or otherwise and whether or not
quantified or disputed) of KnowledgeWell as at the Accounts Date and make
full provision and/or reserve for all such liabilities and for all capital
commitments of KnowledgeWell up to the Accounts Date;
(v) make full provision for any foreseeable losses which may arise on
Closing and/or on realization of stock and work-in-progress and/or on
completion of any existing or proposed contract;
(vi) make adequate provision for all bad and doubtful debts of
KnowledgeWell and for depreciation of the fixed assets of KnowledgeWell
having regard to their original cost and estimated useful life;
(vii) correctly and accurately disclose all financial commitments in
existence as at the Accounts Date; and
(viii) include all such reserves and provisions for Tax as are necessary
to cover all liabilities for Tax (whether or not assessed) of KnowledgeWell
up to the Accounts Date and, in particular, but without prejudice to the
generality of the foregoing attributable to profits, gains, income,
receipts, and loans and distributions made to participators and associates
and payments from which Tax is deductible.
(d) The KnowledgeWell Financial Statements do not include any intangible
assets and the value attributed to each fixed asset of KnowledgeWell does not
exceed the current market value thereof as at the Accounts Date. The basis of
valuing such fixed assets has not been changed during the period since
incorporation and nor has there been any revaluation of fixed assets during
such period.
(e) The rate of depreciation applied in respect of each fixed asset has been
consistently applied over the period since incorporation and is adequate to
write down the value of such fixed assets to its net realizable value as at the
end of its useful working life and the fixed assets have been depreciated in
accordance with the relevant SSAP for the relevant financial year.
(f) All the accounts, books, ledgers and financial and other records of
whatsoever kind of KnowledgeWell have at November 30, 1998 been fully, properly
and accurately maintained and contain true and accurate records of all matters
required to be entered therein under the Companies Acts, 1963 to 1990 and any
other relevant statutes or regulations and will, pending Closing, continue to
be so maintained and there are at November 30, 1998 and will pending Closing be
no material inaccuracies or discrepancies of any kind contained or reflected
therein or in any of them. At November 30, 1998 they give and reflect and at
Closing will give and reflect a true and fair view of the financial,
contractual and trading position of KnowledgeWell and of its plant and
machinery, fixed and current assets and liabilities (actual and contingent),
debtors and creditors and stock-in-trade and work-in-progress.
2.6 No Undisclosed Liabilities. Except as set forth in Schedule 2.6 of the
KnowledgeWell Disclosure Letter, KnowledgeWell does not have any material
liability, indebtedness, obligation, expense, claim, deficiency, guaranty or
endorsement of any type, whether accrued, absolute, contingent, matured,
unmatured or other (whether or not required to be reflected in financial
statements in accordance with generally accepted accounting principles), which
individually or in the aggregate, (i) has not been reflected in the Balance
Sheets, or (ii) has not arisen in the ordinary course of KnowledgeWell's
business since October 31, 1998, consistent with past practices.
2.7 No Changes. Except as set forth in Schedule 2.7 of the KnowledgeWell
Disclosure Letter, since October 31, 1998, there has not been, occurred or
arisen any:
(a) transaction by KnowledgeWell except in the ordinary course of
business as conducted on that date and consistent with past practices;
<PAGE>
(b) amendments or changes to the Memorandum and Articles of Association
of KW Limited or KW Group;
(c) capital expenditure or commitment by KnowledgeWell of US$25,000 in
any individual case or US$100,000 in the aggregate.
(d) destruction of, damage to or loss of any material assets, business
or customer of KnowledgeWell (whether or not covered by insurance);
(e) labor trouble or claim of wrongful discharge or other unlawful labor
practice or action;
(f) change in accounting methods or practices (including any change in
depreciation or amortization policies or rates) by KnowledgeWell;
(g) revaluation by KnowledgeWell of any of its assets;
(h) declaration, setting aside or payment of a dividend or other
distribution with respect to the share capital of KnowledgeWell, or any
direct or indirect redemption, purchase or other acquisition by
KnowledgeWell of any of its share capital;
(i) increase in the salary or other compensation payable or to become
payable by KnowledgeWell to any of its officers, directors, employees or
advisors, or the declaration, payment or commitment or obligation of any
kind for the payment, by KnowledgeWell, of a bonus or other additional
salary or compensation to any such person except as otherwise contemplated
by this Agreement;
(j) sale, lease, license or other disposition of any of the assets or
properties of KnowledgeWell, except in the ordinary course of business as
conducted on that date and consistent with past practices;
(k) amendment or termination of any material contract, agreement or
license to which KnowledgeWell is a party or by which it is bound;
(l) loan by KnowledgeWell to any person or entity, incurring by
KnowledgeWell of any material indebtedness, guaranteeing by KnowledgeWell
of any material indebtedness, issuance or sale of any debt securities of
KnowledgeWell or guaranteeing of any debt securities of others except for
advances to employees for travel and business expenses in the ordinary
course of business, consistent with past practices;
(m) waiver or release of any material right or material claim of
KnowledgeWell, including any material write-off or other material
compromise of any account receivable of KnowledgeWell;
(n) to KnowledgeWell's knowledge, commencement or notice or threat of
commencement of any lawsuit or proceeding against or investigation of
KnowledgeWell or its affairs;
(o) notice of any claim of ownership by a third party of the
Intellectual Property of KnowledgeWell (as defined in Section 2.11 below)
or of infringement by KnowledgeWell of any third party's Intellectual
Property rights;
(p) issuance or sale by KnowledgeWell of any of its share capital, or
securities exchangeable, convertible or exercisable therefor, or of any
other of its securities;
(q) change in pricing or royalties set or charged by KnowledgeWell to
its customers or licensees except in the ordinary course of business, or in
pricing or royalties set or charged by persons who have licensed
Intellectual Property to KnowledgeWell except in the ordinary course of
business;
(r) event or condition of any character that has or could be reasonably
expected to have a Material Adverse Effect on KnowledgeWell; or
(s) negotiation or agreement by KnowledgeWell or any officer or
employees thereof to do any of the things described in the preceding
clauses (a) through (r) (other than negotiations with CBT and its
representatives regarding the transactions contemplated by this Agreement).
<PAGE>
2.8 Tax and Other Returns and Reports.
(a) Definition of Taxes. For the purposes of this Agreement, "Tax" or,
collectively, "Taxes", means any and all national, federal, state, local and
foreign taxes, assessments and other governmental charges, duties, impositions,
levies and liabilities, whenever imposed, including without limitation taxes
based upon or measured by gross receipts, income, profits, sales, capital gain,
use and occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property taxes,
together with all interest, penalties and additions imposed with respect to
such amounts and any obligations under any agreements or arrangements with any
other person with respect to such amounts and including any liability for taxes
of a predecessor entity.
(b) Tax Returns and Audits. Except as set forth in Schedule 2.8 of the
KnowledgeWell Disclosure Letter:
(i) KnowledgeWell as of the Closing Date will have prepared and filed
all required national, U.S. federal, U.S. state, U.S. local and non-U.S.
returns, estimates, information statements and reports ("Returns") relating
to any and all Taxes concerning or attributable to KnowledgeWell or its
operations and such Returns are true and correct in all material respects
and have been completed in accordance with applicable law.
(ii) KnowledgeWell as of the Closing Date: (A) will have paid or accrued
all Taxes it is required to pay or accrue and (B) will have withheld with
respect to its employees all U.S. federal and U.S. state income taxes,
FICA, FUTA and other Taxes required to be withheld.
(iii) KnowledgeWell has not been delinquent in the payment of any Tax
nor is there any Tax deficiency outstanding, proposed or assessed against
KnowledgeWell, nor has KnowledgeWell executed any waiver of any statute of
limitations on or extending the period for the assessment or collection of
any Tax.
(iv) No audit or other examination of any Return of KnowledgeWell is
presently in progress, nor has KnowledgeWell been notified of any request
for such an audit or other examination.
(v) KnowledgeWell does not have any liabilities for unpaid U.S. federal,
state, U.S. local or non-U.S. Taxes which have not been accrued or reserved
against in accordance with GAAP on the Balance Sheets, whether asserted or
unasserted, contingent or otherwise, and KnowledgeWell has no knowledge of
any basis for the assertion of any such liability attributable to
KnowledgeWell, its assets or operations.
(vi) KnowledgeWell has provided to CBT copies of all U.S. federal and
U.S. state income and all U.S. state sales and use Tax Returns for all
periods since the date of KnowledgeWell's incorporation.
(vii) There are (and as of immediately following the Closing there will
be) no Liens on the assets of KnowledgeWell relating to or attributable to
Taxes.
(viii) KnowledgeWell has no knowledge of any basis for the assertion of
any claim relating or attributable to Taxes which, if adversely determined,
would result in any Lien on the assets of KnowledgeWell.
(ix) None of KnowledgeWell's assets are treated as "tax-exempt use
property" within the meaning of Section 168(h) of the Code.
(x) As of the Closing Date, there will not be any contract, agreement,
plan or arrangement, including but not limited to the provisions of this
Agreement, covering any employee or former employee of KnowledgeWell that,
individually or collectively, will, or would reasonably be expected to,
give rise to the payment of any amount that would not be deductible
pursuant to Section 280G or 162 of the Code.
(xi) KnowledgeWell is not a party to a tax sharing or allocation
agreement nor does KnowledgeWell owe any amount under any such agreement.
<PAGE>
(c) General
(i) All returns, computations, notices and items of information which are,
or have been, required to be made or given by KnowledgeWell for any Tax purpose
have been made or given within the requisite periods and on a proper basis and
are up-to-date and correct, and none of them is, or is likely to be, the
subject of any dispute with the Irish Revenue Commissioners (the "Revenue
Commissioners") or other Tax authorities.
(ii) All Tax, including amounts required by statute to be deducted by
KnowledgeWell in respect of payments made by it, which KnowledgeWell is liable
to pay prior to Closing has been or will be so paid prior to Closing.
(iii) KnowledgeWell has not paid, or become liable to pay, any fine, penalty
or interest charged by virtue of the Taxes Consolidation Act, 1997 ("TCA"), the
Value Added Tax Act, 1972, of Ireland or any other statutory provision relating
to Tax, and it has not committed any act or made any omission which might
constitute an offense under section 1078 of the TCA.
(iv) Schedule 2.8(c)(iv) of the KnowledgeWell Disclosure Letter sets out
full particulars of any agreement or arrangement between KnowledgeWell and the
Revenue Commissioners or other Tax authorities pursuant to which KnowledgeWell
is authorized not to comply with a requirement which, but for such agreement or
arrangement, would be its statutory obligation, and KnowledgeWell has not taken
any action which has had, or will have, the result of altering, prejudicing or
in any way disturbing any arrangement or agreement which it has previously had
with the Revenue Commissioners or other Tax authorities.
(v) The KnowledgeWell Disclosure Letter contains full and accurate
particulars of all transactions effected otherwise than in the ordinary course
of business since the Accounts Date in respect of which KnowledgeWell is
required to make a specific return to the relevant Tax authorities and in
respect of which the time for making such return will expire on or after
Closing.
(vi) No transaction has been effected by KnowledgeWell in respect of which
any consent or clearance from the Revenue Commissioners or other Tax
authorities was required:
(1) without such consent or clearance having been validly obtained
before the transaction was effected;
(2) otherwise than in accordance with the terms of, and so as to satisfy
any conditions attached to, such consent or clearance; or
(3) otherwise than at a time when, and in circumstances in which, such
consent or clearance was valid and effective,
and, in any case where such consent or clearance was required, no circumstances
have arisen which might reasonably be expected to cause such consent or
clearance to be or become invalid or to be withdrawn by the Tax authority
concerned.
(vii) All particulars furnished to the Revenue Commissioners or other Tax
authorities in connection with the application for any consent or clearance by
KnowledgeWell made since the Accounts Date fully and accurately disclosed all
facts and circumstances material to the decision of the Revenue Commissioners
or such other authorities.
(viii) KnowledgeWell is not and will not become liable to pay, or make
reimbursement or indemnity in respect of, any Tax (or amounts corresponding
thereto) in consequence of the failure by any other person to discharge that
Tax within any specified period or otherwise, where such Tax relates to a
profit, income or gain, transaction, event, omission or circumstance arising,
occurring or deemed to arise or occur whether wholly or partly prior to
Closing.
<PAGE>
(ix) The KnowledgeWell Disclosure Letter includes a correct and complete
list and full particulars with express reference to this clause (c)(ix) of all
matters relating to Tax in respect of which KnowledgeWell (either alone or
jointly with any other person) has, or at Closing will have, an outstanding
entitlement:
(1) to make any claim for relief under the TCA or any other statutory
provision relating to Tax;
(2) to make any election for one type of relief, or one basis, system or
method of Tax, as opposed to another;
(3) to make any appeal (including a further appeal) against an
assessment to Tax;
(4) to make any application for the postponement, or payment by
instalment of, Tax; or
(5) to disclaim any allowance or relief
such particulars being reasonably sufficient to enable CBT to procure that any
time limit to such entitlement expiring within six months after Closing can be
met.
(x) No notice of attachment has been served on KnowledgeWell under section
1002 of the TCA.
(xi) KnowledgeWell has not received, nor will it prior to Closing earn,
deposit interest subject to retention of Tax under section 257 of the TCA.
(xii) KnowledgeWell has not since its incorporation taken a fixed charge on
the book debts of any company, nor will it take any such fixed charge prior to
Closing.
(xiii) KnowledgeWell has never been, nor is it now, assessable to tax under
section 1034 or 1035 of the TCA.
(xiv) KnowledgeWell has not received any notice under section 811(6) of the
TCA or engaged in, or been a party to, a tax avoidance transaction within the
meaning of section 811(2) of the TCA or any other transaction or series of
transactions or scheme or arrangement of which the main purpose, or one of the
main purposes, was or could be said to be the avoidance or deferral of, or a
reduction in the liability to, Tax.
(xv) KnowledgeWell has properly operated the pay as you earn and social
welfare contribution systems (including levies), deducting and accounting for
Tax and maintaining records as required by law, and it has not suffered any
PAYE audit by the Revenue Commissioners since the Accounts Date nor has it been
notified that any such audit will or is expected to be made.
(d) Corporation Tax
(i) Neither KW Limited nor KW Group is, or has at any stage since its
incorporation been resident for Tax purposes in a country other than Ireland.
(ii) Schedule 2.8(d)(ii) of the KnowledgeWell Disclosure Letter includes a
correct and complete list and full particulars of any liability to Tax in a
country other than Ireland.
(iii)(1) Schedule 2.8(d)(iii) of the KnowledgeWell Disclosure Letter
includes a statement of all distributable reserves of KnowledgeWell which carry
a reduced tax credit.
(2) Where relief under chapter 1 of part 14 of the TCA has been claimed by
either KW Limited or KW Group, such relief was claimed, and is being claimed,
on a correct and proper basis.
(iv) No relief (whether by way of deduction, reduction, set-off, exemption,
repayment, allowance or otherwise) from, against or in respect of any tax has
been claimed or given to KnowledgeWell which could or might be effectively
withdrawn, postponed, restricted or otherwise lost as a result of any act,
omission, event or circumstance arising or occurring at or at any time before,
Closing, and KnowledgeWell has not at any time claimed any relief from Tax
under part 10 of the TCA.
<PAGE>
(v) Nothing has been done and no event or series of events has occurred or
will as a result of any contract, agreement or arrangement entered into before
Closing occur, which might when taken together with the entry into or Closing
of this Agreement cause or contribute to the disallowance to either KW Limited
or KW Group of the carry forward of any losses or excess charges on income or
surplus advance corporation tax.
(vi) The use of losses incurred by, or charges paid by, either of KW Limited
or KW Group is not restricted by section 454, 455 or 456 of the TCA.
(vii)(1) Neither KW Limited, KW Group nor the Subsidiary incurred a loss on
the disposal or deemed disposal of an asset (other than trading stock) in
relation to which their ability to set the whole of that loss against any
chargeable gain arising in the same or later accounting period is or may be
restricted or excluded.
(2) Neither KW Limited nor KW Group has made, nor are they entitled to make,
a claim under section 538 of the TCA.
(viii) None of KW Limited, KW Group or the Subsidiary has made a claim for
capital allowances in respect of any asset which is leased to or from, or hired
to or from, any of the other of them, and since the Accounts Date,
KnowledgeWell has not done, or omitted to do, or agreed to do or permitted to
be done, any act, or suffered any occurrence, as a result of which any
balancing charge has arisen or may arise under sections 274 or 288 of the TCA,
nor has there been or might there be any disallowance of excess relief by
virtue of section 403 of the TCA.
(ix)(1) If each of the assets (other than trading stock) of KnowledgeWell
was disposed of for a consideration equal to the book value of that asset shown
in or adopted for the purpose of the KnowledgeWell Financial Statements, no
liability to corporation tax on chargeable gains or balancing charges under
section 274 or 288 of the TCA not fully provided for in the KnowledgeWell
Financial Statements would arise.
(2) For the purpose of determining the liability to corporation tax on
chargeable gains, there shall be disregarded any reliefs and allowances
available to KnowledgeWell other than amounts falling to be deducted under
chapter 2 of part 19 of the TCA.
(3) KnowledgeWell has not since the Accounts Date acquired any asset (other
than trading stock) in circumstances such that sections 584, 585, 586 or 587 of
the TCA applied to its acquisition.
(x) The KnowledgeWell Disclosure Letter includes a correct and complete list
and full particulars of all dividends paid since the date of incorporation of
KnowledgeWell out of patent income disregarded for the purposes of corporation
tax by virtue of section 234 of the TCA.
(xi) Each of KW Limited and KW Group are regarded as close companies for
Irish tax purposes. Except as disclosed in the Schedule 2.8(d)(xi) of the
KnowledgeWell Disclosure Letter none of the said companies has any liability to
Tax pursuant to part 13 of the TCA or will incur any such liability in respect
of any accounting period prior to Closing.
(xii) Each of KW Limited, KW Group and the Subsidiary at November 30, 1998,
carried on an activity which is a trade for the purposes of Tax and has not
ceased, and will not as a result of any contract, agreement or arrangement
entered into before Closing cease, to carry on such activity.
(xiii) KnowledgeWell has never received nor become entitled to any income
which is particular income within the meaning of section 1004 of the TCA nor
any particular gains to which section 1005 of the TCA could apply.
(xiv) KnowledgeWell:
(1) does not own nor has it agreed to acquire any asset, nor has it
received or agreed to receive any services or facilities (including without
limitation the benefit of any licences or agreements), the
<PAGE>
consideration for the acquisition or provision of which was or will be in
excess of its market value, or otherwise than on an arm's length basis;
(2) does not own nor has it agreed to dispose of any asset, nor has it
provided or agreed to provide any services or facilities (including without
limitation the benefit of any licences or agreements), the consideration
for the disposal or provision of which was or will be less than its market
value, or otherwise than on an arm's length basis;
(3) has not disposed of or acquired any asset in such circumstances that
the provisions of section 547 of the TCA applied or could apply thereto;
and
(4) has not since the Accounts Date appropriated any asset owned by it
to or from trading stock.
(xv) None of KW Limited, KW Group or the Subsidiary has since the
respective date of its incorporation:
(1) repaid or agreed to repay, or redeemed or agreed to redeem, or
purchased or agreed to purchase, any of its share capital; or
(2) capitalized or agreed to capitalize in the form of debentures or
redeemable shares any profits or reserves of any class or description.
(xvi) No rents, interest, annual payments, emoluments or other sums of an
income nature paid or payable by KnowledgeWell or which KnowledgeWell is under
an obligation to pay in the future are, or (under the law as presently in
force) may be, wholly or partially disallowable as deductions or charges in
computing profits for the purpose of corporation tax by reason of any
statutory provision relating to Tax.
(xvii) No securities, within the meaning of section 135(8) of the TCA
issued by KnowledgeWell and remaining in issue at November 30, 1998 were
issued in such circumstances that any interest or other distribution out of
assets in respect thereof falls to be treated as a distribution under section
130(2)(d) of the TCA, nor has KnowledgeWell agreed to issue securities (within
that meaning) in such circumstances.
(xviii) Section 138 of the TCA does not apply to dividends paid or received
by any of KW Limited, KW Group or the Subsidiary.
(xix) No asset owned by KnowledgeWell has at any time since its acquisition
by KnowledgeWell been subjected to a reduction in value such that any
allowable loss arising on its disposal is likely to be reduced or eliminated
or any chargeable gain arising on its disposal is likely to be increased.
(xx) KnowledgeWell has not entered into any transaction to which the
provisions of section 98, 99 or 199 of the TCA have been or could be applied.
(xxi) KnowledgeWell has not since the Accounts Date received any payment to
which section 782 of the TCA is applicable.
(xxii)(1) There is set out in Schedule 2.8(d)(xxii) of the KnowledgeWell
Disclosure Letter details of all share schemes established by KnowledgeWell
and approved pursuant to Part 17 of the TCA.
(2) None of KW Limited, KW Group or the Subsidiary has been a qualifying
research and development company or a qualifying sponsoring company within the
meaning of Chapter III of Part I of the Finance Act, 1986, of Ireland.
(xxiii)(1) Schedule 2.8(d)(xxiii)(1) of the KnowledgeWell Disclosure Letter
includes a correct and complete list and full particulars of all arrangements
and agreements relating to group relief (as described in Chapter 5 of Part 2
of the TCA) to which any of KW Limited, KW Group or the Subsidiary are or have
been a party since the respective date of its incorporation.
(2) All claims made by KW Limited, KW Group or the Subsidiary for group
relief were, when made, valid and have been or will be allowed by way of
relief from corporation tax.
<PAGE>
(3) Except as disclosed in Schedule 2.8(d)(xxiii)(3) of the KnowledgeWell
Financial Statements, none of KW Limited, KW Group or the Subsidiary has since
the Accounts Date made, nor are they liable to make, any payment under any such
arrangement or agreement.
(4) Each of KW Limited, KW Group and the Subsidiary has received any
payments due to it under any such arrangements or agreement for surrender of
group relief made by it.
(xxiv)(1) Schedule 2.8(d)(xxiv)(1) of the KnowledgeWell Disclosure Letter
includes a correct and complete list and full particulars of all arrangements
and agreements relating to the surrender of advance corporation tax (as
described in section 166 of the TCA) to which any of KW Limited, KW Group or
the Subsidiary are or have been a party in the period since their respective
incorporation.
(2) All claims made by any of KW Limited, KW Group or the Subsidiary for the
surrender of advance corporation tax were, when made, valid and have been or
will be allowed by way of relief from corporation tax payable by the particular
company to whom the advance corporation tax was surrendered.
(3) Except as disclosed in Schedule 2.8(d)(xxiv)(3) of the KnowledgeWell
Disclosure Letter none of KW Limited, KW Group or the Subsidiary has since the
Accounts Date paid, or is liable to pay, any advance corporation tax which is
or may become incapable of set-off against its liability to corporation tax.
(4) Each of KW Limited, KW Group or the Subsidiary has received all payments
due to it under any such arrangements or agreements for the surrender of
advance corporation tax.
(xxv) Schedule 2.8(d)(xxv) of the KnowledgeWell Disclosure Letter includes a
correct and complete list and full particulars of all elections made by any of
KW Limited, KW Group or the Subsidiary under section 165 of the TCA.
(xxvi) The entry into or Closing of this Agreement will not result in any
profit or gain being deemed to accrue to any of KW Limited, KW Group or the
Subsidiary for Tax purposes, whether pursuant to section 623 of the TCA or
otherwise.
(xxvii) KnowledgeWell has not purchased an asset subject to a claim made
under section 620 of the TCA, nor has it made any other claim which would
affect the amount of the chargeable gain or allowable loss which would, but for
such claim, have arisen on a disposal of any of its assets.
(xxviii) KnowledgeWell has not entered into any transaction as a result of
which it could be assessed to Tax under Chapter 1 Part 22 of the TCA.
(e) Capital Acquisitions Tax.
(i) There is no outstanding charge for unpaid capital acquisitions tax over
any asset of KnowledgeWell or in relation to any shares in the capital of any
of KW Limited, KW Group or the Subsidiary.
(ii) There are not in existence any circumstances whereby any such power as
is mentioned in section 35(8) of the Capital Acquisitions Tax Act, 1976, of
Ireland could be exercised in relation to any shares, securities or other
assets of or owned by KnowledgeWell.
(iii) Since the Accounts Date, no taxable gift (as defined by section 6 of
the Capital Acquisitions Tax Act, 1976, of Ireland) or taxable inheritance (as
defined by section 12 of the same Act) has been received by any of KW Limited,
KW Group or the Subsidiary, nor have any of KW Limited, KW Group or the
Subsidiary been disponers (as defined by section 2 of the same Act) for the
purposes of capital acquisitions tax.
2.9 Restrictions on Business Activities. There is no agreement (noncompete
or otherwise), commitment, judgment, injunction, order or decree to which
KnowledgeWell is a party or otherwise binding upon KnowledgeWell which has or
reasonably could be expected to have the effect of prohibiting or impairing any
<PAGE>
business practice of KnowledgeWell, any acquisition of property (tangible or
intangible) by KnowledgeWell or the conduct of business by KnowledgeWell.
Without limiting the foregoing, KnowledgeWell has not entered into any
agreement under which KnowledgeWell is restricted from selling, licensing or
otherwise distributing any of its products to any class of customers, in any
geographic area, during any period of time or in any segment of the market.
2.10 Title to Properties; Absence of Liens and Encumbrances.
(a) KnowledgeWell owns no real property, nor has it ever owned any real
property. Schedule 2.10(a) of the KnowledgeWell Disclosure Letter sets forth a
list of all real property currently, or at any time in the past, leased by
KnowledgeWell, the name of the lessor and the date of the lease and each
amendment thereto and, with respect to any current lease, the aggregate annual
rental and/or other fees payable under any such lease. All such current leases
are in full force and effect, are valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
material default or event of material default (or event which with notice or
lapse of time, or both, would constitute a material default).
(b) KnowledgeWell has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any Liens, except as reflected in the KnowledgeWell
Financial Statements or in Schedule 2.10(b) of the KnowledgeWell Disclosure
Letter and except for liens for taxes not yet due and payable and such
imperfections of title and encumbrances, if any, which are not material in
character, amount or extent, and which do not materially detract from the
value, or materially interfere with the present use, of the property subject
thereto or affected thereby. The buildings on the Properties have been properly
and soundly constructed and are in a good and substantial state of repair and
condition and no high alumina cement, woodwool, calcium chloride, sea dredged
aggregates or asbestos material was used in the construction thereof and
KnowledgeWell has no outstanding claims or liabilities in respect of the
construction of the buildings of the Properties.
(c) Notwithstanding the foregoing paragraphs (a) and (b), no representation
or warranty made in such paragraphs relate to the property at Block 1,
Blackrock Industrial Estate, Blackrock, County Dublin as such property is dealt
with by way of a certificate of title furnished to CBT by Binchys Solicitors at
November 30, 1998.
2.11 Intellectual Property.
(a) For the purposes of this Agreement, the following terms have the
following definitions:
"Intellectual Property" shall mean any or all of the following and all
rights in, arising out of, or associated therewith: (i) all Irish, United
States and foreign patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (ii) all inventions (whether patentable or
not), invention disclosures, improvements, trade secrets, proprietary
information, know how, technology, technical data and customer lists, and
all documentation relating to any of the foregoing; (iii) all copyrights,
copyrights registrations and applications therefor, and all other rights
corresponding thereto throughout the world; (iv) all mask works, mask work
registrations and applications therefor, and all other rights corresponding
thereto throughout the world; (v) all industrial designs and any
registrations and applications therefor throughout the world; (vi) all
trade names, logos, common law trademarks and service marks; trademark and
service mark registrations and applications therefor throughout the world;
(vii) all databases and data collections and all rights therein throughout
the world; and (vii) all computer software including all source code,
object code, firmware, development tools, files, records and data, all
media on which any of the foregoing is recorded, and all documentation
related to any of the foregoing throughout the world.
"Intellectual Property of KnowledgeWell" shall mean any Intellectual
Property that is owned by or exclusively licensed to KnowledgeWell.
"currently" means, as used in this section, the period beginning six
years prior to the Closing Date and ending on such date.
<PAGE>
(b) Schedule 2.11(b) of the KnowledgeWell Disclosure Letter lists all of
KnowledgeWell's Irish and United States and foreign: (i) patents, patent
applications (including provisional applications); (ii) registered trademarks,
applications to register trademarks, intent-to-use applications, or other
registrations related to trademarks; (iii) registered copyrights and
applications for copyright registration; (iv) mask work registrations and
applications to register mask works; and (v) any other Intellectual Property of
KnowledgeWell that is the subject of an application, certificate or
registration issued by or recorded by any state, government or other public
legal authority, all of the foregoing, the "Registered Intellectual Property".
(c) 2.11(c) of the KnowledgeWell Disclosure Letter lists any proceedings or
actions before any court, tribunal (including the Irish Patents Office ("IPO")
and the United States Patent Office ("PTO") or equivalent authority anywhere
else in the world) related to any of the Registered Intellectual Property.
(d) KnowledgeWell has complied with all applicable disclosure requirements
and has not committed any fraudulent act in the application for and maintenance
of any patent, trademark or copyright of KnowledgeWell.
(e) each item of Registered Intellectual Property is valid and subsisting,
all necessary registration, maintenance and renewal fees in connection with
such Registered Intellectual Property have been made or paid and all necessary
documents and certificates in connection with such Registered Intellectual
Property have been filed with the relevant patent, copyright, trademark or
other authorities in Ireland, the United States or foreign jurisdictions, as
the case may be, for the purposes of maintaining such Registered Intellectual
Property. Schedule 2.11(e) of the KnowledgeWell Disclosure Letter lists all
actions and payments that must be made in the six month period following the
Closing Date in connection with the preservation or maintenance of the
Registered Intellectual Property.
(f) KnowledgeWell is not barred from seeking patents on material potentially
patentable inventions of KnowledgeWell by "on-sale" or similar bars to
patentability or by failure to apply for a patent on such inventions within the
time required.
(g) The contracts, licenses and agreements listed in Schedule 2.11(g) of the
KnowledgeWell Disclosure Letter include all contracts, licenses and agreements,
to which KnowledgeWell is a party with respect to any Intellectual Property
with a potential value or cost in excess of US$20,000.
(h) The contracts, licenses and agreements listed in Schedule 2.11(g) of the
KnowledgeWell Disclosure Letter are in full force and effect. The consummation
of the transactions contemplated by this Agreement will neither violate nor
result in the breach, modification, cancellation, termination, or suspension of
the contracts, licenses and agreements listed in Schedule 2.11(g) of the
KnowledgeWell Disclosure Letter. KnowledgeWell is in compliance with, and has
not breached any term of, the contracts, licenses and agreements listed in
Schedule 2.11(g) of the KnowledgeWell Disclosure Letter, and, to the knowledge
of KnowledgeWell, all other parties to the contracts, licenses and agreements
listed in Schedule 2.11(g) of the KnowledgeWell Disclosure Letter are, in
compliance with, and have not breached any term of, such contracts, licenses
and agreements.
(i) except as set forth in Schedule 2.11(i) of the KnowledgeWell Disclosure
Letter: (i) no person has any rights to use any of the Intellectual Property of
KnowledgeWell; and (ii) KnowledgeWell has not granted to any Person, nor
authorized any Person to retain, any rights in the Intellectual Property of
KnowledgeWell.
(j) Except as set forth in Schedule 2.11(j) of the KnowledgeWell Disclosure
Letter: (i) KnowledgeWell owns and has good and exclusive title to each item of
Intellectual Property of KnowledgeWell, including all Registered Intellectual
Property listed in Schedule 2.11(b) of the KnowledgeWell Disclosure Letter,
free and clear of any lien or encumbrance; (ii) KnowledgeWell owns, or has the
right, pursuant to a valid Contract to use or operate under, all other
Intellectual Property of KnowledgeWell; and (iii) KnowledgeWell is the
exclusive owner of all trademarks and trade names used in connection with the
operation or conduct of the business of KnowledgeWell, including the sale of
any products or the provision of any services by KnowledgeWell.
<PAGE>
(k) The operation of the business of KnowledgeWell as such business
currently is conducted, or is reasonably is contemplated to be conducted,
including KnowledgeWell's design, development, manufacture, marketing and sale
of the products or services of KnowledgeWell (including with respect to
products currently under development) has not, does not and will not infringe
or misappropriate the Intellectual Property of any other Person or constitute
unfair competition or trade practices under the laws of any jurisdiction.
(l) KnowledgeWell has not received notice from any person that the operation
of the business of KnowledgeWell, including its design, development,
manufacture and sale of its products (including with respect to products
currently under development) and provision of its services, infringes or
misappropriates the Intellectual Property of any Person or constitutes unfair
competition or trade practices under the laws of any jurisdiction.
(m) KnowledgeWell owns or has the right to all Intellectual Property
necessary to the conduct of its business as it currently is conducted or is
reasonably contemplated to be conducted, including, without limitation, the
design, development, manufacture and sale of all products currently
manufactured or sold by KnowledgeWell or under development by KnowledgeWell and
the performance of all services provided or contemplated to be provided by
KnowledgeWell.
(n) Schedule 2.11(n) of the KnowledgeWell Disclosure Letter lists all
contracts, licenses and agreements between KnowledgeWell and any other Person
wherein or whereby KnowledgeWell has agreed to, or assumed, any obligation or
duty to warrant, indemnify, hold harmless or otherwise assume or incur any
obligation or liability with respect to the infringement or misappropriation by
KnowledgeWell or such other Person of the Intellectual Property of any other
Person.
(o) Except as listed in Schedule 2.11(o) of the KnowledgeWell Disclosure
Letter, there are no contracts, licenses and agreements between KnowledgeWell
and any other person with respect to the Intellectual Property of KnowledgeWell
under which there is any dispute known to KnowledgeWell regarding the scope of
such agreement, or performance under such agreement including with respect to
any payments to be made or received by KnowledgeWell thereunder.
(p) Except as listed in Schedule 2.11(p) of the KnowledgeWell Disclosure
Letter, to the knowledge of KnowledgeWell, no person has or is infringing or
misappropriating any of the Intellectual Property of KnowledgeWell.
(q) Except as listed in Schedule 2.11(q) of the KnowledgeWell Disclosure
Letter, there have been, and are, no claims asserted against KnowledgeWell or
against any customer of KnowledgeWell, related to any product or service of
KnowledgeWell.
(r) No Intellectual Property of KnowledgeWell, or product or service of
KnowledgeWell is subject to any proceeding or outstanding decree, order,
judgment, or stipulation restricting in any manner the use or licensing thereof
by KnowledgeWell, or which may affect the validity, use or enforceability of
such Intellectual Property of KnowledgeWell.
(s) KnowledgeWell has taken all steps that are reasonably required to
protect KnowledgeWell's rights in KnowledgeWell's confidential information and
trade secrets or any trade secrets or confidential information of third parties
provided to KnowledgeWell, and, without limiting the foregoing, KnowledgeWell
has and enforces a policy requiring each employee and contractor to execute
proprietary information and confidentiality agreements substantially in
KnowledgeWell's standard forms and all current and former employees and
contractors of KnowledgeWell have executed such an agreement.
(t) KnowledgeWell owns exclusively and has good title to all copyrighted
works that are KnowledgeWell products or which KnowledgeWell otherwise purports
to own, except for those copyrighted works licensed to KnowledgeWell listed in
Schedule 2.11(t) of the KnowledgeWell Disclosure Letter.
<PAGE>
(u) To the extent that any work, invention, or material has been developed
or created by a third party for KnowledgeWell, KnowledgeWell has a written
agreement with such third party with respect thereto and KnowledgeWell thereby
has obtained ownership of, and is the exclusive owner of, all Intellectual
Property in such work, material or invention by operation of law or by valid
assignment.
(v) Notwithstanding any other provision of this Agreement, it is understood
and agreed that KnowledgeWell will not be deemed to be in violation of any
representation, warranty, covenant or agreement under this Agreement,
including without limitation any representation, warranty, covenant or
agreement relating to Intellectual Property, due to any matter that relates to
the Intellectual Property licensed from CBT pursuant to the Software License
Agreement dated October 22, 1997 between KW Limited and CBT, as amended.
2.12 (a) Agreements, Contracts and Commitments. Except as set forth in
Schedule 2.12(a) of the KnowledgeWell Disclosure Letter, KnowledgeWell does
not have, is not a party to nor is it bound by:
(i) any collective bargaining agreements,
(ii) any agreements or arrangements that contain any severance pay or
post-employment liabilities or obligations,
(iii) any bonus, deferred compensation, pension, profit sharing or
retirement plans, or any other employee benefit plans or arrangements,
(iv) any employment or consulting agreement with an employee or
individual consultant or salesperson or consulting or sales agreement with
a firm or other organization,
(v) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation rights plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement,
(vi) any fidelity or surety bond or completion bond,
(vii) any lease of personal property having a value individually in
excess of US$5,000,
(viii) any agreement of indemnification or guaranty,
(ix) any agreement containing any covenant limiting the freedom of
KnowledgeWell or its present and future affiliated entities to engage in
any line of business or to compete with any person,
(x) any agreement relating to capital expenditures and involving future
payments in excess of US$20,000,
(xi) any agreement relating to the disposition or acquisition of assets
or any interest in any business enterprise outside the ordinary course of
KnowledgeWell's business,
(xii) any mortgages, indentures, loans or credit agreements, security
agreements or other agreements or instruments relating to the borrowing of
money or extension of credit, including guaranties referred to in clause
(viii) hereof,
(xiii) any purchase order or contract for the purchase of raw materials
involving US$20,000 or more,
(xiv) any construction contracts,
(xv) any distribution, joint marketing or development agreement,
(xvi) any agreement pursuant to which KnowledgeWell has granted or may
grant in the future, to any party a source-code license or option or other
right to use or acquire source-code, or
(xvii) any other agreement that involves US$20,000 or more or is not
cancelable without penalty within thirty (30) days.
<PAGE>
(b) Except for such alleged breaches, violations and defaults, and events
that would constitute a breach, violation or default with the lapse of time,
giving of notice, or both, as are all noted in Schedule 2.12(b) of the
KnowledgeWell Disclosure Letter, KnowledgeWell has not materially breached,
violated or defaulted under, or received notice that it has breached, violated
or defaulted under, and there are no circumstances reasonably likely to give
rise to any material breach, violation or default under any of the terms or
conditions of any agreement, contract or commitment required to be set forth in
Schedule 2.12(a) or 2.11(b) of the KnowledgeWell Disclosure Letter (any such
agreement, contract or commitment, a "Contract"). Each Contract is in full
force and effect and, except as otherwise disclosed in Schedule 2.12(b) of the
KnowledgeWell Disclosure Letter, is not subject to any material default
thereunder of which KnowledgeWell has knowledge by any party obligated to
KnowledgeWell pursuant thereto.
2.13 Interested Party Transactions. Except as set forth in Schedule 2.13 of
the KnowledgeWell Disclosure Letter, to KnowledgeWell's knowledge, no officer,
director or shareholder of KnowledgeWell (nor any ancestor, sibling, descendant
or spouse of any of such persons, or any trust, partnership or corporation in
which any of such persons has or has had a material economic interest), has or
has had, directly or indirectly, (i) an economic interest in any entity which
furnished or sold, or furnishes or sells, services or products that
KnowledgeWell furnishes or sells, or proposes to furnish or sell, (ii) an
economic interest in any entity that purchases from, or sells or furnishes to,
KnowledgeWell, any goods or services or (iii) a beneficial interest in any
contract or agreement set forth in Schedule 2.12(a) or 2.12(b) of the
KnowledgeWell Disclosure Letter; provided, that (x) ownership of no more than
one percent (1%) of the outstanding voting stock of a publicly traded
corporation and no more than ten percent (10%) of the outstanding equity of any
other entity shall not be deemed an "economic interest in any entity" for
purposes of this Section 2.13 and (y) this provision shall only apply if the
terms and conditions applicable to the subject relationship are materially less
favorable to KnowledgeWell than the terms and conditions that could be obtained
in an arms-length relationship.
2.14 Compliance with Laws. To KnowledgeWell's knowledge, KnowledgeWell and
its officers and employees have complied in all material respects with, are not
in material violation of, and have not received any notices of violation with
respect to, any foreign, federal, state or local statute, law or regulation.
2.15 Litigation. Except as set forth in Schedule 2.15 of the KnowledgeWell
Disclosure Letter, KnowledgeWell is not engaged in nor is there any action,
suit or proceeding of any nature pending or, to KnowledgeWell's knowledge
threatened, against KnowledgeWell, its properties or any of its officers or
directors, in their respective capacities as such or any person for whose acts
or defaults KnowledgeWell is or may be vicariously liable. Except as set forth
in Schedule 2.15 of the KnowledgeWell Disclosure Letter, to KnowledgeWell's
knowledge, there is no investigation pending or threatened against
KnowledgeWell, its properties or any of its officers or directors by or before
any governmental entity. Schedule 2.15 of the KnowledgeWell Disclosure Letter
sets forth, with respect to any pending or threatened action, suit, proceeding
or investigation, the forum, the parties thereto, the subject matter thereof
and the amount of damages claimed or other remedy requested. No governmental
entity has at any time challenged or questioned the legal right of
KnowledgeWell to manufacture, offer or sell any of its products in the present
manner or style thereof.
2.16 Insurance.
(a) All material assets of KnowledgeWell of an insurable nature have at all
material times been and are at November 30, 1998 insured in amounts
representing their full replacement or reinstatement value against fire and
other risks (including without limiting the generality of the foregoing loss of
profit) normally insured against by persons carrying on the same classes of
business as those carried on by KnowledgeWell and KnowledgeWell has at all
material times been and is at November 30, 1998 adequately covered against
accident, damage, injury, third party public liability (including products
liability and defamation liability) loss of profits and other risks normally
insured against by persons carrying on the same classes of business as those
carried on by KnowledgeWell. All such policies are and will at Closing be in
full force and effect and nothing has been done or omitted to be done which
would make any policy of insurance void or voidable or which is likely to
result in an increase in premium. All of such insurance policies have been
disclosed to CBT and are listed in Schedule 2.16(a) of the KnowledgeWell
Disclosure Letter.
<PAGE>
(b) With respect to the insurance policies and fidelity bonds covering the
assets, business, equipment, properties, operations, employees, officers and
directors of KnowledgeWell, there is no claim by KnowledgeWell pending under
any of such policies or bonds as to which coverage has been questioned, denied
or disputed by the underwriters of such policies or bonds. All premiums due and
payable under all such policies and bonds have been paid and KnowledgeWell is
otherwise in material compliance with the terms of such policies and bonds (or
other policies and bonds providing substantially similar insurance coverage).
To KnowledgeWell's knowledge, there is no threatened termination of, or
material premium increase with respect to, any of such policies.
2.17 Minute Books. The minute books of KnowledgeWell provided to counsel for
CBT are the only minute books of KnowledgeWell and contain a reasonably
accurate summary of all meetings of directors (or committees thereof) and
shareholders or actions by written consent since the time of incorporation of
KnowledgeWell.
2.18 Environmental Matters.
(a) Hazardous Material. KnowledgeWell has not: (i) operated any underground
storage tanks at any property that KnowledgeWell has at any time owned,
operated, occupied or leased; or (ii) illegally released any material amount of
any substance that has been designated by any Governmental Entity or by
applicable federal, state or local law to be radioactive, toxic, hazardous or
otherwise a danger to health or the environment, including, without limitation,
PCBs, asbestos, petroleum, urea-formaldehyde and all substances listed as
hazardous substances pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, or defined as a hazardous
waste pursuant to the United States Resource Conservation and Recovery Act of
1976, as amended, and the regulations promulgated pursuant to said laws,
(a "Hazardous Material"), but excluding office and janitorial supplies properly
and safely maintained. No Hazardous Materials are present, as a result of the
deliberate actions of KnowledgeWell, or, to KnowledgeWell's knowledge, as a
result of any actions of any third party or otherwise, in, on or under any
property, including the land and the improvements, ground water and surface
water thereof, that KnowledgeWell has at any time owned, operated, occupied or
leased.
(b) Hazardous Materials Activities. KnowledgeWell has not transported,
stored, used, manufactured, disposed of, released or exposed its employees or
others to Hazardous Materials in violation of any law in effect on or before
the Closing Date, nor has KnowledgeWell disposed of, transported, sold, or
manufactured any product containing a Hazardous Material (any or all of the
foregoing being collectively referred to as "Hazardous Materials Activities")
in violation of any rule, regulation, treaty or statute promulgated by any
Governmental Entity in effect prior to or as of November 30, 1998 to prohibit,
regulate or control Hazardous Materials or any Hazardous Material Activity.
(c) Permits. KnowledgeWell currently holds all environmental approvals,
permits, licenses, clearances and consents (the "Environmental Permits")
necessary for the conduct of KnowledgeWell's Hazardous Material Activities and
other businesses of KnowledgeWell as such activities and businesses are
currently being conducted.
(d) Environmental Liabilities. No action, proceeding, revocation proceeding,
amendment procedure, writ, injunction or claim is pending, or to
KnowledgeWell's knowledge, threatened concerning any Environmental Permit,
Hazardous Material or any Hazardous Materials Activities of KnowledgeWell.
KnowledgeWell is not aware of any fact or circumstance which could involve
KnowledgeWell in any environmental litigation or impose upon KnowledgeWell any
environmental liability.
2.19 Brokers' and Finders' Fees; Third Party Expenses. KnowledgeWell has not
incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
<PAGE>
2.20 United States Employee Matters and Benefit Plans.
(a) Definitions. With the exception of the definition of "Affiliate" set
forth in Section 2.20(a)(i) below (such definition shall only apply to this
Section 2.20), for purposes of this Agreement, the following terms shall have
the meanings set forth below:
(i) "Affiliate" shall mean any other person or entity under common
control with KnowledgeWell within the meaning of Section 414(b), (c), (m)
or (o) of the Code and the regulations thereunder;
(ii) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended;
(iii) "KnowledgeWell Employee Plan" shall refer to any plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or
remuneration of any kind, whether formal or informal, funded or unfunded,
including without limitation, each "employee benefit plan", within the
meaning of Section 3(3) of ERISA which is or has been maintained,
contributed to, or required to be contributed to, by KnowledgeWell or any
Affiliate for the benefit of any "Employee" (as defined below), and
pursuant to which KnowledgeWell or any Affiliate has or may have any
material liability contingent or otherwise;
(iv) "Employee" shall mean any current, former, or retired employee,
officer, or director of KnowledgeWell or any Affiliate;
(v) "Employee Agreement" shall refer to each management, employment,
severance, consulting, relocation, repatriation, expatriation, visa, work
permit or similar agreement or contract between KnowledgeWell or any
Affiliate and any Employee or consultant;
(vi) "IRS" shall mean the Internal Revenue Service;
(vii) "Multiemployer Plan" shall mean any "Pension Plan" (as defined
below) which is a "multiemployer plan", as defined in Section 3(37) of
ERISA; and
(viii) "Pension Plan" shall refer to each KnowledgeWell Employee Plan
which is an "employee pension benefit plan", within the meaning of Section
3(2) of ERISA.
(b) Schedule. Schedule 2.20(b) of the KnowledgeWell Disclosure Letter
contains an accurate and complete list of each KnowledgeWell Employee Plan and
each Employee Agreement, together with a schedule of all liabilities, whether
or not accrued, under each such KnowledgeWell Employee Plan or Employee
Agreement. KnowledgeWell does not have any plan or commitment to establish any
new KnowledgeWell Employee Plan or Employee Agreement, to modify any
KnowledgeWell Employee Plan or Employee Agreement (except to the extent
required by law or to conform any such KnowledgeWell Employee Plan or Employee
Agreement to the requirements of any applicable law, or as required by this
Agreement), or to enter into any KnowledgeWell Employee Plan or Employee
Agreement, nor does it have any intention or commitment to do any of the
foregoing.
(c) Documents. KnowledgeWell has provided to CBT (i) correct and complete
copies of all documents embodying or relating to each KnowledgeWell Employee
Plan and each Employee Agreement including all amendments thereto and written
interpretations thereof; (ii) the most recent annual actuarial valuations, if
any, prepared for each KnowledgeWell Employee Plan; (iii) the three most recent
annual reports (Series 5500 and all schedules thereto), if any, required under
ERISA or the Code in connection with each KnowledgeWell Employee Plan or
related trust; (iv) if a KnowledgeWell Employee Plan is funded, the most recent
annual and periodic accounting of that KnowledgeWell Employee Plan's assets;
(v) the most recent summary plan description together with the most recent
summary of material modifications, if any, required under ERISA with respect to
each KnowledgeWell Employee Plan; (vi) all IRS determination letters and
rulings relating to KnowledgeWell Employee Plans and copies of all applications
and correspondence to or from the IRS or the Department of Labor ("DOL") with
respect to any KnowledgeWell Employee Plan; (vii) all communications material
to any Employee or Employees relating to any KnowledgeWell Employee Plan and
any proposed
<PAGE>
KnowledgeWell Employee Plans, in each case, relating to any amendments,
terminations, establishments, increases or decreases in benefits, acceleration
of payments or vesting schedules or other events which would result in any
material liability to KnowledgeWell; and (viii) all registration statements and
prospectuses prepared in connection with each KnowledgeWell Employee Plan.
(d) Employee Plan Compliance. Except as set forth in Schedule 2.20(d) of the
KnowledgeWell Disclosure Letter, (i) KnowledgeWell has performed in all
material respects all obligations required to be performed by it under each
KnowledgeWell Employee Plan and each KnowledgeWell Employee Plan has been
established and maintained in all material respects in accordance with its
terms and in compliance with all applicable laws, statutes, orders, rules and
regulations, including but not limited to ERISA or the Code; (ii) no
"prohibited transaction", within the meaning of Section 4975 of the Code or
Section 406 of ERISA, has occurred with respect to any KnowledgeWell Employee
Plan; (iii) there are no actions, suits or claims pending, or, to the knowledge
of KnowledgeWell, threatened or anticipated (other than routine claims for
benefits) against any KnowledgeWell Employee Plan or against the assets of any
KnowledgeWell Employee Plan; and (iv) each KnowledgeWell Employee Plan can be
amended, terminated or otherwise discontinued after the Closing Date in
accordance with its terms, without liability to KnowledgeWell, CBT or any of
its Affiliates (other than ordinary administration expenses typically incurred
in a termination event); (v) there are no inquiries or proceedings pending or,
to the knowledge of KnowledgeWell or any affiliates, threatened by the IRS or
DOL with respect to any KnowledgeWell Employee Plan; and (vi) neither
KnowledgeWell nor any Affiliate is subject to any penalty or tax with respect
to any KnowledgeWell Employee Plan under Section 402(i) of ERISA or Section
4975 through 4980 of the Code.
(e) Pension Plans. KnowledgeWell does not now, nor has it ever, maintained,
established, sponsored, participated in, or contributed to, any Pension Plan
which is subject to Part 3 of Subtitle B of Title I of ERISA, Title IV of ERISA
or Section 412 of the Code.
(f) Multiemployer Plans. At no time has KnowledgeWell contributed to or been
requested to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. Except as set forth in Schedule 2.20(g)
of the KnowledgeWell Disclosure Letter, no KnowledgeWell Employee Plan
provides, or has any liability to provide, life insurance, medical or other
employee benefits to any Employee upon his or her retirement or termination of
employment for any reason, except as may be required by statute, and
KnowledgeWell has never represented, promised or contracted (whether in oral or
written form) to any Employee (either individually or to Employees as a group)
that such Employee(s) would be provided with life insurance, medical or other
employee welfare benefits upon their retirement or termination of employment,
except to the extent required by statute.
(h) Effect of Transaction.
(i) Except as provided in Section 1.8 of this Agreement or as set forth
in Schedule 2.20(h)(i) of the KnowledgeWell Disclosure Letter, the
execution of this Agreement and the consummation of the transactions
contemplated hereby will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event under any
KnowledgeWell Employee Plan, Employee Agreement, trust or loan that will or
may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase
in benefits or obligation to fund benefits with respect to any Employee.
(ii) Except as set forth in Schedule 2.20(h)(ii) of the KnowledgeWell
Disclosure Letter, no payment or benefit which will or may be made by
KnowledgeWell or CBT or any of their respective Affiliates with respect to
any Employee will be characterized as an "excess parachute payment", within
the meaning of Section 280G(b)(1) of the Code.
(i) Employment Matters. KnowledgeWell (i) is in compliance in all material
respects with all applicable foreign, federal, state and local laws, rules and
regulations respecting employment, employment practices, terms
<PAGE>
and conditions of employment and wages and hours, in each case, with respect to
Employees; (ii) has withheld all amounts required by law or by agreement to be
withheld from the wages, salaries and other payments to Employees; (iii) is not
liable for any arrears of wages or any taxes or any penalty for failure to
comply with any of the foregoing; and (iv) is not liable for any payment to any
trust or other fund or to any governmental or administrative authority, with
respect to unemployment compensation benefits, social security or other
benefits or obligations for Employees (other than routine payments to be made
in the normal course of business and consistent with past practice).
(j) Labor. No work stoppage or labor strike against KnowledgeWell is pending
or, to the knowledge of KnowledgeWell, threatened. Except as set forth in
Schedule 2.20(j) of the KnowledgeWell Disclosure Letter, KnowledgeWell is not
involved in or, to the knowledge of KnowledgeWell, threatened with, any labor
dispute, grievance, or litigation relating to labor, safety or discrimination
matters involving any Employee, including, without limitation, charges of
unfair labor practices or discrimination complaints, which, if adversely
determined, would, individually or in the aggregate have a Material Adverse
Effect on KnowledgeWell. Neither KnowledgeWell nor any of its subsidiaries has
engaged in any unfair labor practices within the meaning of the National Labor
Relations Act which would, individually or in the aggregate, directly or
indirectly result in a liability to KnowledgeWell. Except as set forth in
Schedule 2.20(j) of the KnowledgeWell Disclosure Letter, KnowledgeWell is not
presently, nor has it been in the past, a party to, or bound by, any collective
bargaining agreement or union contract with respect to Employees and no
collective bargaining agreement is being negotiated by KnowledgeWell.
2.21 Ireland Employee Matters and Benefits Plans.
(a) There are not in existence any service agreements with directors or
employees of Knowledge Well which cannot be terminated by three months notice
or less or (whether or not reduced to writing) by reasonable notice without
giving rise to any claim for damages or compensation (other than the statutory
redundancy payment or statutory compensation for unfair dismissals).
(b) The information set out in the KnowledgeWell Disclosure Letter,
comprises accurate disclosure of all retirement, death, superannuation and
pension benefits and schemes actually or contingently agreed, or due, or
accrued, or proposed in respect of all of the present and former employees of
KnowledgeWell (all such schemes and benefits being hereinafter called the
"Pension Schemes").
(c) There are no gratuitous payments, pensions, or benefits payable,
promised, undertaken or being paid by KnowledgeWell to any directors,
consultants, employees or former directors consultants or employees of
KnowledgeWell.
(d) KnowledgeWell:
(i) has not given any undertaking or assurance (whether legally
enforceable or not) to any Relevant Employee or to any widow, child or
dependant of any Relevant Employee as to the continuance, introduction,
improvement or increase of any benefit of a kind described in paragraph (b)
above; or
(ii) is not paying or has not in the period since incorporation paid any
benefit of the kind described in paragraph (c) above to any Relevant
Employee or the widow, child or dependant of any Relevant Employee.
(e) The Pension Schemes have been registered pursuant to the provisions of
the Pensions Act, 1990, of Ireland.
(f) The Pension Schemes are exempt approved schemes within the meaning of
Sections 15 and 16 of the Finance Act, 1972, of Ireland and comply with and
have at all times been administered in accordance with all applicable laws,
regulations and requirements (including those of the Revenue Commissioners and
of trust law) and KnowledgeWell is not aware of any reason why such exempt
status should or could be withdrawn.
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(g) True copies of all of the Definitive and interim Trust Deeds, Rules,
Explanatory Booklets and Announcements relating to the Pension Schemes have
been delivered to CBT and copies thereof are contained in the KnowledgeWell
Disclosure Letter, and KnowledgeWell has no obligation to any employee or
former employee in relation to death in service, pension, superannuation or
analogous benefits except as provided in the said Deeds, Rules, Booklets and
Announcements.
(h) All of the Pension Schemes are fully, properly and adequately funded
with respect to existing and prospective liabilities having regard to current
funding rates, assets and investment and liability assumptions of the Pension
Schemes and no increase in funding rates is proposed or has been recommended in
relation to any of the Pension Schemes. Schedule 2.21(h) of the KnowledgeWell
Disclosure Letter contains a true copy of the latest reports and valuations of
all of the Pension Schemes by the actuary or actuaries advising thereon and
since the dates of such reports all recommendations contained therein have been
fully implemented and no material change has occurred in the assets,
valuations, liabilities or funding rates of any of the Pension Schemes or as to
the assumptions according to which the same are calculated.
(i) All benefits (other than any refund of members' contributions with
interest where appropriate) payable under the Pensions Schemes on the death of
any person while in employment to which the Pension Schemes relate are insured
fully under a policy with an insurance company of good repute and there are no
grounds on which that company might avoid liability thereunder.
(j) Contributions to the Pension Schemes are not paid in arrears and all
contributions and other amounts which have fallen due for payment have been
paid and no fees, charges or expenses referable to the Pension Schemes for
which KnowledgeWell is or may become liable (whether wholly or in part) have
been incurred but not paid and KnowledgeWell has reimbursed any person who has
paid any such fees, costs or expenses if and to the extent that KnowledgeWell
is or may become liable so to do.
(k) KnowledgeWell:
(i) has been admitted to participation in the Pension Schemes on the
same terms as apply to all other employers participating in the Schemes;
(ii) has observed and performed those provisions of the Pension Schemes
which apply to it;
(iii) may terminate its liability to contribute to the Pension Schemes
without notice, without the consent of any person and without further
payment;
(iv) has at all material times held or been named in a contracting-out
certificate referable to the Pensions Scheme.
(l) The trustees of the Pension Scheme are not engaged in any litigation or
arbitration proceedings and so far as KnowledgeWell is aware no litigation or
arbitration proceedings are pending or threatened by or against the trustees of
the Pension Scheme and there are no facts likely to give rise to any litigation
or arbitration.
(m) Except as set forth in the KnowledgeWell Financial Statements there are
no amounts owing to any present or former directors of KnowledgeWell other than
remuneration agreed due or for reimbursement of business expenses properly
incurred.
(n) Except to the extent (if any) to which provision or allowance has been
made in the KnowledgeWell Financial Statements, KnowledgeWell has not made or
agreed to make any payment to or provided or agreed to provide any benefit for
any present or former officer or employee which is not allowable as a deduction
for the purposes of Tax.
(o) No liability has been incurred by KnowledgeWell for breach of any
contract of service for redundancy payment or for compensation for wrongful or
unfair dismissal or for failure to comply with any order for the reinstatement
or re-engagement of any employee and no gratuitous payment has been made or
promised by
<PAGE>
KnowledgeWell in connection with the termination or proposed termination of the
employment of any present or former director or employee.
(p) KnowledgeWell is not involved in any industrial or trade dispute or any
dispute or negotiation regarding a claim of material importance with any trade
union or organization or body of employees or any dispute arising out of or
affected by or otherwise relating to the provisions of the Employment Statutes
as defined in 2.21(r)(iii) below and there are no agreements or other
arrangements (whether or not legally binding) between KnowledgeWell and any
trade union or other body representing employees.
(q) Except for the KnowledgeWell Option Plans, KnowledgeWell has not in
existence nor is it proposing to introduce any share incentive scheme, share
option scheme or profit sharing scheme for all or any part of its directors or
employees.
(r) KnowledgeWell has in relation to each of its employees (and so far as is
relevant to each of its former employees);
(i) complied in all material respects with all obligations imposed on it
by any statutory provision or regulation and codes of conduct relevant to
the relations between it and its employees or any recognized trade union
and has maintained adequate and suitable records regarding the service of
each of its employees; and
(ii) complied in all material respects with all collective agreements
for the time being having effect as regards such relations or the
conditions of service of its employees;
(iii) complied in all material respects with the following regulations
of Ireland: the Redundancy Payments Acts, 1967-1991, the Minimum Notice and
Terms of Employment Act, 1973 to 1991, the Organization of Working Time
Act, 1997, the Anti-Discrimination (Pay) Act, 1974, the Protection of Young
Persons (Employment) Act, 1976, the Unfair Dismissals Acts, 1977 to 1993,
the Protection of Employment Act, 1977 to 1993, the Employment Equality
Act, 1977, the European Communities (Safeguarding of Rights of Employees on
Transfer of Undertakings) Regulations, 1980, the Maternity Protection of
Employees Act, 1981, the Pensions Act, 1990, the Payment of Wages Act, 1991
and the Worker Protection (Regular Part Time Employees) Act, 1991 (the
"Employment Statutes").
(s) No KnowledgeWell employee in receipt of a salary at a basic rate in
excess of IR(Pounds)40,000 per annum has advised KnowledgeWell formally or
informally that he or she is terminating or considering terminating his or her
employment with the company and to KnowledgeWell's knowledge, there are no
circumstances likely to give rise to such termination. KnowledgeWell has no
existing dispute with any of its employees of a material nature and to
KnowledgeWell's knowledge, there are no circumstances reasonably likely to give
rise to a dispute with any of its employees of a material nature.
(t) To KnowledgeWell's knowledge, all persons in receipt of income at a
basic rate in excess of IR(Pounds)40,000 per annum who have during the period
since the Relevant Accounting Date habitually or normally carried out duties of
a full time nature on behalf of KnowledgeWell in connection with its business
and affairs are not planning to terminate employment with KnowledgeWell at or
after Closing.
(u) No change has been made since the Accounts Date by KnowledgeWell in the
rate or basis of the emoluments or other terms of any contract of service,
contract for services or otherwise of any directors or employees of
KnowledgeWell who at any time since the said date were in receipt of emoluments
at the rate of IR(Pounds)40,000 per annum or more.
(v) True and complete particulars of the total numbers of KnowledgeWell's
full time and part time employees as at the Accounts Date, their dates of
commencement of employment or appointment to office, and terms and conditions
of their employment including their remuneration and other benefits have been
disclosed to CBT and are referred to or contained in Schedule 2.21(v) of the
KnowledgeWell Disclosure Letter and there has been no material change in such
numbers since the Accounts Date.
<PAGE>
(w) KnowledgeWell is not under any contractual or other obligation to
increase the rates of remuneration of or make any bonus or incentive or other
similar payment to any of its officers or employees at any future date.
(x) KnowledgeWell has not given to any person any power or attorney or other
authority (express, implied or ostensible) which is still outstanding.
(y) KnowledgeWell has not entered into any recognition agreement with a
trade union nor has it done any act which might be construed as recognition.
2.22 Borrowed Moneys. KnowledgeWell has not received notice (whether formal
or informal) from any lenders of money to it in respect of or as a preliminary
to the demand by such persons for payment of any money owing by KnowledgeWell
to such persons and KnowledgeWell is not aware of any circumstances likely to
give rise to such notice being given to it.
2.23 Grants, etc. Not Repayable. Except for disposals in the ordinary course
of business KnowledgeWell has not done or failed to do any act or thing which
could result in all or any part of a government grant or other similar payment
or allowance made or due to be made by it becoming repayable or being forfeited
by it.
2.24 Oral Contracts. No tender, quotation or offer issued or made at any
time by KnowledgeWell is or will become capable of giving rise to a contract by
an order or acceptance by another party or parties, except in the ordinary
course of business and on terms calculated to yield a gross profit margin
consistent with the prudent carrying on of the business of KnowledgeWell.
2.25 Returns Up-to-Date.
(a) All returns, particulars, resolutions and other documents required to be
filed or to be delivered on behalf of KnowledgeWell to the Registrar of
Companies of Ireland or any other applicable jurisdiction have been correctly
and properly made up and so filed or delivered within the period prescribed.
(b) All charges in favor of KnowledgeWell have (if appropriate) been
registered in accordance with the provisions of the Companies Acts, 1963 to
1990 of Ireland.
2.26 Insolvency.
(a) No order has been made or petition presented or resolution passed for
the winding up of KnowledgeWell to the Shareholders, there are no grounds on
which any such order or petition could be made or presented to the Shareholders
and no such resolution is contemplated by the members or any of them.
(b) No distress, execution or other process has been levied on any of the
assets of KnowledgeWell, nor has any of KW Limited, KW Group or the Subsidiary
stopped payment or become insolvent or unable to pay its debts for the purposes
of Section 214 of the Companies Act, 1963 of Ireland.
(c) No power to appoint a receiver or administrative receiver has been
exercised or has arisen in respect of the business or any of the assets of
KnowledgeWell and there is no unfulfilled or unsatisfied judgment or Court
order outstanding against any of KW Limited, KW Group or the Subsidiary.
2.27 Stamp Duty and Capital Duty.
(a) KnowledgeWell has duly complied with and has no liability under Section
1 of the Stamp Act, 1891, of Ireland as substituted by the provisions of
Section 94 of the Finance Act, 1991, of Ireland.
(b) All documents in existence and any others which may be existing at
Closing in the enforcement of which KnowledgeWell is, was or may be or become
interested have been duly stamped or adequate provision has been made therefor
in the KnowledgeWell Financial Statements.
<PAGE>
(c) No relief or exemption has been obtained from companies capital duty or
stamp duty and, without prejudice to the generality of the foregoing, no
relief, exemption or reduction has been obtained from companies capital duty or
stamp duty under Section 72 of the Finance Act, 1973, of Ireland or from stamp
duty under Section 19 of the Finance Act, 1952, of Ireland or Statutory
Instrument No. 244 of 1979, of Ireland or Statutory Instrument No. 272 of 1981,
of Ireland or Section 31 of the Finance Act, 1965, of Ireland which has (a)
become liable to forfeiture or (b) been obtained in respect of a transaction
carried out within the period within which it may become liable to forfeiture
and pending Closing no relief or exemption under any of the said enactments
will be claimed and all stamp duty or capital duty which has become or pending
Closing will become payable by KnowledgeWell has been or will be duly paid.
(d) All capital duty and/or stamp duty payable by KnowledgeWell in respect
of any of the transactions referred to in the following Sections of the Finance
Act, 1973, of Ireland has been duly and promptly paid by KnowledgeWell so that
there is no liability in respect thereof or any interest thereon:
(i) Section 63;
(ii) Section 64;
(iii) Section 68; and
(iv) Section 69 and 70.
(e) All other capital and/or stamp duty howsoever arising or payable has
been paid by KnowledgeWell and there is no outstanding liability therefor or
interest thereon.
(f) KnowledgeWell has not executed an instrument in respect of which fines
could be imposed pursuant to Section 5 of the Stamp Act, 1891, of Ireland as
substituted by Section 97 of the Finance Act, 1991, of Ireland.
(g) KnowledgeWell is not liable for any penalty imposed by Section 103 of
the Finance Act, 1991, of Ireland.
(h) KnowledgeWell and its employees have not done or omitted to do anything
which could give rise to a liability on KnowledgeWell for a fine, penalty,
interest, charge or additional duty under the Stamp Act, 1891, of Ireland as
amended.
2.28 VAT.
(a) Each of KW Limited and KW Group is a registered and taxable person for
the purposes of the VAT legislation (as hereinafter defined) and:
(i) Neither of them has at any time been treated as a member of a group
(other than that comprising KW Group and the Subsidiary alone) for such
purposes and no application for either of them to be so treated has at any
time been or pending Closing will be made and no act or transaction has
been or pending Closing will be effected in consequence whereof either KW
Limited or KW Group is or may be held liable for any Value Added Tax
chargeable against some other company except, in the case of KW Group, the
Subsidiary;
(ii) Each of them has complied and pending Closing will comply in all
respects with the VAT legislation;
(iii) Each of them has given, obtained, made and maintained and pending
Closing will give, obtain, make and maintain full, complete, correct and up
to date invoices, records and other documents appropriate or requisite for
the purposes of the VAT legislation;
(iv) Neither of them is and will not pending Closing be in arrears with
any payment or returns or notifications thereunder or liable to any
abnormal or non-routine payment or any forfeiture or penalty or to the
operation of any penal provision and where payment is not yet due or
receivable has provided for such payment;
<PAGE>
(v) neither of them has been and pending Closing neither of them will be
required by the appropriate fiscal authorities to give security; and
(vi) all supplies made and to be made pending Closing by either of them
are taxable supplies and neither of them is or will pending Closing be
denied credit for any input tax;
(b) For the purposes of this clause the "VAT legislation" means the Value
Added Tax Act, 1972, of Ireland and all orders, rules, regulations, notices,
provisions, directions or conditions made, laid down, given or imposed
thereunder.
2.29 Shelf Registration Statement Information. The information supplied by
KnowledgeWell for inclusion in the registration statement contemplated by the
Declaration of Registration Rights attached hereto as Exhibit B (the "Rights
Declaration") does not contain, and will not contain at the effective date of
such registration statement, any untrue statement of a material fact or omit,
and will not omit at the effective date of such registration statement, to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading.
2.30 Representations Complete. None of the representations or warranties
made by the Shareholders (as modified by the KnowledgeWell Disclosure Letter),
nor any statement made in the KnowledgeWell Disclosure Letter or certificate
furnished by KnowledgeWell pursuant to this Agreement, contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements contained herein, in the light of the
circumstances under which they were made, not misleading.
2.31 Proxy Statements Complete. None of the statements made or furnished by
KnowledgeWell in or in connection with documents mailed or delivered to the
shareholders of CBT in connection with soliciting their approval of this
Agreement (it being acknowledged that KnowledgeWell shall have the opportunity
to review and comment on such documents prior to any such mailing or
delivering), contains or will contain at the date of such mailing or delivery
or the date of the CBT shareholder vote, any untrue statement of a material
fact, or omits or will omit at the date of such mailing or delivery or the date
of the CBT shareholder vote to state any material fact necessary in order to
make the statements contained therein, in the light of the circumstances under
which they were made, not misleading.
ARTICLE III
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each Shareholder, severally and not jointly, represents and warrants to CBT
as of November 30, 1998 as follows:
3.1 Authority. This Agreement and each agreement attached as an exhibit
hereto (collectively, the "Related Agreements") to which such Shareholder is a
party have been duly and validly executed and delivered by, or on behalf of,
Shareholder and, assuming due authorization, execution and delivery by the
other parties hereto and thereto, constitute valid and binding obligations of
Shareholder, enforceable against Shareholder in accordance with their
respective terms, subject to the laws of general application relating to
bankruptcy, insolvency and the relief of debtors and to rules of law governing
specific performance, injunctive relief or other equitable remedies.
3.2 Conflicts. Neither the execution and delivery of each of this Agreement
and the Related Agreements to which such Shareholder is a party nor the
performance by Shareholder of his, her or its respective obligations hereunder
or thereunder, violate, conflict with, or constitute a default under any
agreement or commitment to which Shareholder is a party, or violate any statute
or law or any judgment, decree, order, regulation or rule of any court or other
Governmental Entity applicable to Shareholder that would preclude Shareholder
from entering into this Agreement or the Related Agreements to which such
Shareholder is a party or consummating the transactions contemplated hereby or
thereby.
<PAGE>
3.3 Consents. No consent, waiver, approval, order or authorization of, or
declaration, filing or registration with, any Governmental Entity or any third
party is required to be made or obtained by Shareholder in connection with the
execution and delivery by Shareholder of each of this Agreement and the Related
Agreements to which such Shareholder is a party or the performance by
Shareholder of his, her or its obligations hereunder or thereunder or the
consummation by Shareholder of the transactions contemplated herein or therein.
3.4 Title. Shareholder has the sole right to transfer the KnowledgeWell
Shares registered in his, her or its name to CBT. Upon delivery of
KnowledgeWell Certificates representing such KnowledgeWell Shares to CBT,
together with a duly executed transfer instrument, CBT will receive good title
to such KnowledgeWell Shares, free and clear of all Liens.
3.5 Taxes. Shareholder has had an opportunity to review with his, her or its
respective tax advisors the tax consequences to Shareholder of the Share
Exchange and the transactions contemplated by this Agreement. Shareholder
understands that he, she or it must rely solely on his, her or its advisors and
not on any statements or representations by CBT, KnowledgeWell or any of their
respective agents. Shareholder understands that he, she or it (and not CBT or
KnowledgeWell) shall be responsible for his, her or its own tax liability that
may arise as a result of the Share Exchange or any other transactions
contemplated by this Agreement or the Related Agreements.
3.6 Sufficient Assets. Shareholder will have sufficient assets, after sale
of the KnowledgeWell Shares owned by Shareholder as contemplated hereby, to
satisfy all of Shareholder's obligations to his, her or its creditors, as the
same become due and payable.
3.7 Release of Liabilities. Shareholder has procured the release of
KnowledgeWell and the Subsidiary unconditionally from all liability whatsoever
(actual or contingent) to the Shareholder and/or to third parties in respect of
the liabilities and obligations of Shareholder, including, without prejudice to
the generality of the foregoing, all guarantees given by KnowledgeWell and/or
the Subsidiary to the bankers of the Shareholder.
3.8 Investment Experience. Shareholder has substantial experience in
evaluating and investing in private placement transactions so that Shareholder
is capable of evaluating the merits and risks of receiving CBT's securities in
the Share Exchange. Shareholder, by reason of his, her or its business or
financial experience or the business or financial experience of its
professional advisors who are unaffiliated with and who are not compensated by
CBT or any affiliate of CBT, directly or indirectly, has the capacity to
protect its own interests in connection with the Share Exchange.
3.9 Investment. Shareholder is acquiring CBT's shares for investment for
Shareholders' own account, not as a nominee or agent, and not with the view to,
or for resale in connection with, any distribution thereof. Shareholder
understands that the CBT shares to be received in the Share Exchange have not
been, and will not be, registered under the United States Securities Act of
1933, as amended (the "Securities Act") by reason of a specific exemption from
the registration provisions of the Securities Act which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of
Shareholder's representations as expressed herein. If Shareholder is not an
individual, Shareholder has not been formed for the specific purpose of
acquiring CBT's shares in the Share Exchange.
3.10 Rule 144. Shareholder acknowledges that the CBT shares to be received
are characterized as "Restricted Securities" and must be held indefinitely
unless subsequently registered under the Securities Act or an exemption from
such registration is available. Shareholder is aware of the provisions of Rule
144 promulgated under the Securities Act, which permit limited resale of
securities purchased in a private placement subject to the satisfaction of
certain conditions, including (except as limited by Rule 144(k)), among other
things, the existence of a public market for the shares, the availability of
certain current public information about CBT, the resale occurring at least one
year after a party has purchased and paid for the security to be sold, the sale
being effected through a "broker's transaction" or in transactions directly
with a "market maker" (as provided by Rule 144(f)) and the number of shares
being sold during any three-month period not exceeding specified limitations.
<PAGE>
3.11 Nature of Solicitation; Access to Data. Shareholder has had the
opportunity to ask questions of and receive answers from CBT or a person acting
on its behalf concerning the terms and conditions of this transaction as well
as to obtain any information requested by Shareholder. Shareholder has asked
such questions and received such answers as were necessary to enable him or it
to make an informed decision as to whether to participate in the Share
Exchange. Shareholders' decision to so participate is based in part on the
answers to such questions as Shareholder and its representatives have raised
concerning the transaction and on his or its own evaluation of the risks and
merits of CBT's business activities. Shareholder confirms that at no time was
Shareholder presented with or solicited by or through any leaflet, public
promotional meeting, television advertisement or any other form of general
advertising in connection and concurrently with such communicated offer.
3.12 Accredited Shareholder. Shareholder is an "Accredited Investor" as that
term is defined in Rule 501 of Regulation D, promulgated by the United States
Securities and Exchange Commission under the Securities Act.
3.13 Shelf Registration Statement Information. The information supplied by
Shareholder for inclusion in the registration statement contemplated by the
Rights Declaration does not contain, and will not contain at the effective date
of such registration statement, any untrue statement of a material fact or
omit, and will not omit at the effective date of such registration statement,
to state any material fact required to be stated therein or necessary in order
to make the statements therein not misleading.
3.14 Representations Complete. None of the statements furnished by
Shareholder in or in connection with documents mailed or delivered to the
shareholders of CBT in connection with soliciting their approval of this
Agreement, contains or will contain at the Closing Date, the date of such
mailing or delivery or the date of the CBT vote, any untrue statement of a
material fact, or omits or will omit at the Closing Date, the date of such
mailing or delivery or the date of the CBT vote to state any material fact
necessary in order to make the statements contained herein or therein, in the
light of the circumstances under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CBT
CBT represents and warrants to each Shareholder as of November 30, 1998 as
follows:
4.1 Organization, Standing and Power. CBT is a corporation duly organized,
validly existing and in good standing under the laws of Ireland. CBT has the
corporate power to own its properties and to carry on its business as now being
conducted and is duly qualified to do business and is in good standing in each
jurisdiction in which the failure to be so qualified would have a material
adverse effect on the business, assets, financial condition, or results of
operations of CBT or the ability of CBT to consummate the transactions
contemplated hereby.
4.2 Authority. CBT has all requisite corporate power and authority to enter
into this Agreement and the Related Agreements to which CBT is a party and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Related Agreements to which CBT is a party
and the consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of CBT and
no further action is required on the part of CBT to authorize the Share
Exchange, this Agreement, the Related Agreements to which CBT is a party and
the transactions contemplated hereby or thereby, except for approval by the
shareholders of CBT and as expressly set forth elsewhere herein. This Agreement
and each Related Agreement to which CBT is a party has been duly executed and
delivered by CBT and, assuming due authorization, execution and delivery by
other parties hereto, constitute the valid and binding obligations of CBT,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by principles of public policy and subject to the
laws of general application relating to bankruptcy, insolvency and the relief
of debtors and rules of law governing specific performance, injunctive relief
or other equitable remedies.
<PAGE>
4.3 No Conflict. The execution and delivery of this Agreement and the
Related Agreements to which CBT is a party do not, and the consummation of the
transactions contemplated hereby and thereby will not, conflict with, or result
in any violation of, or default under (with or without notice or lapse of time,
or both), or give rise to a right of termination, cancellation or acceleration
of any obligation or to loss of a material benefit under (i) any provision of
the Memorandum and the Articles of Association of CBT or (ii) any mortgage,
indenture, lease, contract or other agreement or instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to CBT or its properties or assets,
other than any such conflicts, violations, defaults, terminations,
cancellations or accelerations which would not have a material adverse effect
on the ability of CBT to consummate the transactions contemplated hereby and
thereby.
4.4 Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity, or any third
party is required by or with respect to CBT in connection with the execution
and delivery of this Agreement and the Related Agreements to which CBT is a
party by CBT or the consummation by CBT of the transactions contemplated hereby
and thereby, except for (i) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
state and federal securities laws and the laws of any foreign country, and (ii)
such other consents, authorizations, filings, approvals and registrations which
if not obtained or made would not have a material adverse effect on the ability
of CBT to consummate the transactions contemplated hereby and thereby.
4.5 Capital Structure.
(a) The authorized share capital of CBT is IR(Pounds)11,250,000 divided into
120,000,000 Ordinary Shares, par value IR(Pounds)9.375 pence per share, of
which 44,355,890 shares were issued and outstanding as of October 31, 1998. No
shares of preferred stock are issued or outstanding. All such shares of CBT
have been duly authorized and validly issued, and all such issued and
outstanding shares are fully paid and nonassessable. An aggregate of 4,049,007
Ordinary Shares are subject to outstanding, unexercised options issued to
employees, directors and consultants pursuant to CBT employee benefit plans,
and 3,640,537 shares remain available for future grant. There are no other
options, warrants, calls, rights, commitments or agreements of any character to
which CBT is a party or by which it is bound obligating CBT to issue, deliver,
sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased
or redeemed, any shares of the capital stock of CBT or obligating CBT to grant,
extend or enter into any such option, warrant, call, right, commitment or
agreement.
(b) The CBT Ordinary Shares to be issued pursuant to the Share Exchange will
be, at the Share Exchange, duly authorized, validly issued, fully paid, not
subject to any call, preemptive or similar rights and nonassessable. Upon
issuance of the Ordinary Shares issued pursuant to Article I, the right, title
and interest to such Ordinary Shares will be transferred to the Shareholders,
free and clear of all liens, charges, encumbrances, security interests and
claims.
(c) CBT meets all requirements for the qualification of the inclusion and
quotation of ADSs on the Nasdaq National Market System ("NMS"). ADSs to be
issued pursuant to the Share Exchange or in connection with the resale of
Ordinary Shares issued in the Share Exchange, as the case may be, will be
included and quoted in the NMS.
4.6 SEC Documents; CBT Financial Statements. CBT has made available to each
Shareholder true and complete copies of CBT's annual report on Form 10-K for
the fiscal year ended December 31, 1997 and quarterly reports on Form 10-Q for
each of the three fiscal quarters in the period ended September 30, 1998, which
CBT filed under the United States Securities Exchange Act of 1934, as amended
(the "Exchange Act"), with the Securities and Exchange Commission (the "SEC")
and of its registration statement on Form S-4 (Registration Statement No. 333-
51159), which CBT filed under the Securities Act with the SEC (collectively,
the "SEC Documents"). As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Exchange Act and the
Securities Act, as applicable, and the SEC Documents did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of
the circumstances in which they were made, not
<PAGE>
misleading. The financial statements of CBT, including the notes thereto,
included in the SEC Documents (the "CBT Financial Statements") comply as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles in the
United States consistently applied and fairly present in all material respects
the consolidated financial position of CBT at the dates thereof and of its
operations and cash flows for the periods then ended. Except as set forth in
Schedule 4.6, since September 30, 1998, there have not been any changes in the
assets, liabilities, financial condition, business or operations of CBT from
that reflected in the SEC Documents except changes which have not been, either
individually or in the aggregate, materially adverse to CBT. Except as set
forth in Schedule 4.6, since September 30, 1998, there has not been, occurred
or arisen any event or condition which has had a material adverse effect on the
business, assets (including intangible assets), financial conditions or results
of operations of CBT and subsidiaries, taken as a whole. Since September 30,
1998, CBT has filed all forms, reports and documents with the SEC required to
be filed by it pursuant to the U.S. federal securities laws and the rules and
regulations of the SEC (collectively, "Securities Laws"), each of which
complied as to form, at the time such form, document or report was filed, in
all material respects with the applicable requirements of all Securities Laws,
except for such failures to file or to comply with Securities Laws as are not,
individually or in the aggregate, materially adverse to CBT and its
subsidiaries, taken as a whole. None of the statements made by CBT in or in
connection with documents mailed or delivered to the shareholders of CBT in
connection with soliciting their approval of this Agreement contains or will
contain at the Closing Date or the date of the CBT shareholder vote, any untrue
statement of a material fact, or omits or will omit at the Closing Date or the
date of the CBT shareholder vote to state any material fact necessary in order
to make the statements contained herein or therein, in the light of the
circumstances under which they were made, not misleading.
4.7 Broker's and Finder's Fees. Except for Lehman Brothers Inc., no broker,
finder or investment banker is entitled to any brokers', finders' or other fee
or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of CBT.
ARTICLE V
CONDUCT PRIOR TO THE CLOSING DATE
5.1 Conduct of Business of KnowledgeWell. During the period from November
30, 1998 and continuing until the earlier of (i) the termination of this
Agreement and (ii) the Closing Date, the Shareholders, as shareholders, and
Martin Scully, as a director, shall procure that KnowledgeWell shall (except to
the extent that CBT shall otherwise consent in writing) carry on its business
in the usual, regular and ordinary course in substantially the same manner as
heretofore conducted, pay its debts and Taxes when due, pay or perform other
obligations when due, and, to the extent consistent with such business, use all
reasonable efforts consistent with past practice and policies to preserve
intact its present business organization, keep available the services of its
present officers and key employees and preserve their relationships with
customers, suppliers, distributors, licensors, licensees, and others having
business dealings with it, all with the goal of preserving unimpaired its
goodwill and ongoing business at the Closing Date. KnowledgeWell shall promptly
notify CBT of any event or occurrence or emergency not in the ordinary course
of its business, and any material event involving KnowledgeWell or its
business. Such representatives and advisors as CBT requests may be designated
to work with KnowledgeWell with regard to the management and operations of
KnowledgeWell. Subject to such representatives and advisors being reasonably
available, KnowledgeWell will consult with such representatives and advisors
with respect to any action that may materially affect the business of
KnowledgeWell. KnowledgeWell will furnish to such representatives and advisors
such information as they may reasonably request for this purpose. Except as
expressly contemplated by this Agreement or disclosed in Schedule 5.1, the
Shareholders, as shareholders, and Mr. Scully, as a director, shall procure
that KnowledgeWell shall not (and KW Group shall cause the Subsidiary to not),
without the prior written consent of CBT (which consent shall not be
unreasonably withheld):
(a) Enter into any commitment or transaction not in the ordinary course
of business.
<PAGE>
(b) Transfer to any person or entity any rights to KnowledgeWell
Intellectual Property Rights (other than pursuant to end-user licenses in
the ordinary course of business);
(c) Enter into or amend any material agreements pursuant to which any
other party is granted marketing, distribution or similar rights of any
type or scope with respect to any products of KnowledgeWell;
(d) Amend or otherwise modify (or agree to do so), except in the
ordinary course of business, or violate the terms of, any of the agreements
set forth or described in the KnowledgeWell Disclosure Letter;
(e) Commence any litigation;
(f) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any of its
share capital, or split, combine or reclassify any of its share capital or
issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of share capital of KnowledgeWell, or
repurchase, redeem or otherwise acquire, directly or indirectly, any shares
of its share capital (or options, warrants or other rights exercisable
therefor);
(g) Except for the issuance of shares upon exercise or conversion of
presently outstanding KnowledgeWell Options or KW Preferred, create, issue,
grant, deliver or sell or authorize or propose the creation, issuance,
grant, delivery or sale of, or purchase or propose the purchase of, any of
its share capital or securities convertible into, or subscriptions, rights,
warrants or options to acquire, or other agreements or commitments of any
character obligating it to issue any such shares or other convertible
securities;
(h) Cause or permit any amendments to its Memorandum or Articles of
Association or Bylaws (as the case may be) or pass any resolution by its
members;
(i) Acquire or agree to acquire by merging or consolidating with, or by
purchasing any assets or equity securities of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire
any material assets;
(j) Sell, lease, license or otherwise dispose of any of its properties
or assets, other than in the ordinary course of business;
(k) Incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities of KnowledgeWell or
guarantee any debt securities of others, or create, extend, grant or issue
any loan, mortgage, charge, debenture, guarantee, warranty or other form of
security or agree to do so;
(l) Grant any severance or termination pay (i) to any director or
officer or (ii) to any other employee, except payments made pursuant to
standard written agreements outstanding on November 30, 1998;
(m) Adopt or amend any employee benefit plan, or enter into any
employment contract, extend employment offers, pay or agree to pay any
bonus or special remuneration to any director or employee, or increase the
salaries or wage rates of its employees;
(n) Revalue any of its assets, including without limitation writing down
the value of inventory or writing off notes or accounts receivable other
than in the ordinary course of business;
(o) Pay, discharge or satisfy, in an amount in excess of US$10,000 (in
any one case) or US$50,000 (in the aggregate), any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business of liabilities reflected or reserved against in
the KnowledgeWell Financial Statements (or the notes thereto) or
liabilities, claims or obligations arising in the ordinary course of
business after October 31, 1998 or expenses consistent with the provisions
of this Agreement incurred in connection with any transaction contemplated
and permitted hereby;
<PAGE>
(p) Make or change any material election in respect of Taxes, adopt or
change any accounting method in respect of Taxes, enter into any closing
agreement, settle any claim or assessment in respect of Taxes, or consent
to any extension or waiver of the limitation period applicable to any claim
or assessment in respect of Taxes;
(q) Incur any capital commitment in excess of US$25,000, or acquire any
assets on lease, purchase, credit sale or deferred terms;
(r) Co-opt any person to its board of directors;
(s) Enter into any strategic alliance, development or joint marketing
agreement except in the ordinary course of business; or
(t) Take, or agree in writing or otherwise to take, any of the actions
described in Sections 5.1(a) through (s) above, or any other action that
would prevent KnowledgeWell from performing or cause KnowledgeWell not to
perform its covenants hereunder.
5.2 No Solicitation. Until the earlier of (i) the Closing Date and (ii) the
date of termination of this Agreement pursuant to the provisions of Section 9.1
hereof, KnowledgeWell will not (nor will KnowledgeWell permit any of
KnowledgeWell's officers, directors, agents, representatives or affiliates to)
directly or indirectly, take any of the following actions with any party other
than CBT and its designees: (a) solicit, conduct discussions with or engage in
negotiations with any person, relating to the possible acquisition of
KnowledgeWell or any of its subsidiaries (whether by way of share exchange,
purchase of share capital, purchase of assets or otherwise) or any material
portion of its or their share capital or assets, (b) provide information with
respect to it or any of its subsidiaries to any person, other than CBT,
relating to the possible acquisition of KnowledgeWell (whether by way of share
exchange, purchase of share capital, purchase of assets or otherwise) or any
material portion of its or their share capital or assets, (c) enter into an
agreement with any person, other than CBT, providing for the acquisition of
KnowledgeWell (whether by way of share exchange, purchase of share capital,
purchase of assets or otherwise) or any material portion of its share capital
or assets or (d) make or authorize any statement, recommendation or
solicitation in support of any possible acquisition of KnowledgeWell or any of
its subsidiaries (whether by way of share exchange, purchase of share capital,
purchase of assets or otherwise) or any material portion of its or their share
capital or assets by any person, other than by CBT. In addition to the
foregoing, if KnowledgeWell receives prior to the Closing Date or the
termination of this Agreement any offer or proposal relating to any of the
above, KnowledgeWell shall promptly notify CBT thereof, including information
as to the identity of the offeror or the party making any such offer or
proposal and the specific terms of such offer or proposal, as the case may be,
and such other information related thereto as CBT may reasonably request.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Proxy Statement; Shareholder Meetings. As promptly as practicable after
the execution of this Agreement, CBT shall prepare, and KnowledgeWell shall
assist in preparing, a Proxy Statement (the "Proxy Statement") relating to the
solicitation of the approval of the shareholders of CBT of this Agreement. CBT
shall file with the SEC the Proxy Statement as soon as is reasonably
practicable following preparation thereof. KnowledgeWell shall provide to CBT
and its counsel for inclusion in the Proxy Statement, in form and substance
reasonably satisfactory to CBT and its counsel, such information concerning
KnowledgeWell, its operations, capitalization, technology, share ownership and
other material as CBT or its counsel may reasonably request. Each of CBT and
KnowledgeWell shall use its reasonable efforts to respond to any comments of
the SEC, to have the Proxy Statement approved by the SEC as promptly as
practicable after such filing and to cause the Proxy Statement to be mailed to
CBT's shareholders at the earliest practicable time. Each party will notify the
other parties hereto promptly of the receipt of any comments from the SEC or
its staff and of any request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for
<PAGE>
additional information and will supply the other party with copies of all
correspondence between such party or any of its representatives, on the one
hand, and the SEC, or its staff, on the other hand, with respect to the Proxy
Statement. Whenever any event occurs which should be set forth in an amendment
or supplement to the Proxy Statement, CBT or KnowledgeWell, as the case may be,
shall promptly inform the other company of such occurrence and cooperate in
filing with the SEC or its staff.
6.2 Access to Information. Subject to any applicable contractual
confidentiality obligations (which each party shall use its reasonable best
efforts to cause to be waived) each party shall afford the others and its
accountants, counsel and other representatives, reasonable access during normal
business hours during the period prior to the Closing Date to (a) all of its
properties, books, contracts, agreements and records, and (b) all other
information concerning the business, properties and personnel (subject to
restrictions imposed by applicable law) of it as the others may reasonably
request, including without limitation all information required by CBT's
accountants to perform an audit in accordance with United States Generally
Accepted Accounting Principles ("GAAP") of the financial statements of
KnowledgeWell for the year ended October 31, 1997. No information or knowledge
obtained in any investigation pursuant to this Section 6.2 shall affect or be
deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the parties to consummate the Share Exchange.
6.3 Expenses. Whether or not the Share Exchange is consummated, all fees and
expenses incurred in connection with the Share Exchange including, without
limitation, all legal, accounting, financial advisory, consulting and all other
fees and expenses of third parties ("Third Party Expenses") incurred in
connection with the negotiation and effectuation of the terms and conditions of
this Agreement and the transactions contemplated hereby (i) by CBT and the
Independent Committee of the Board of Directors of CBT shall be the obligation
of CBT and (ii) by KnowledgeWell and the Shareholders shall be the joint and
several obligation of the Shareholders, provided that if the necessary
approvals under Section 60 of the Ireland Companies Act 1963 have been
obtained, such Third Party Expenses shall be the obligation of Knowledge Well.
6.4 Public Disclosure. Upon execution and delivery of this Agreement by the
parties hereto, CBT and KnowledgeWell shall release a jointly prepared
announcement describing the Share Exchange.
6.5 Consents. KnowledgeWell shall use its reasonable efforts to obtain the
consents, waivers and approvals under any of the Contracts as may be required
in connection with the Share Exchange (all of such consents, waivers and
approvals are set forth in KnowledgeWell Disclosure Letter) so as to preserve
all rights of, and benefits to KnowledgeWell thereunder.
6.6 FIRPTA Compliance. On the Closing Date, KnowledgeWell shall deliver to
CBT a properly executed statement in a form reasonably acceptable to CBT for
purposes of satisfying CBT's obligations under Treasury Regulation Section
1.1445-2(c)(3).
6.7 Reasonable Efforts. Subject to the terms and conditions provided in this
Agreement, each of the parties hereto shall use its reasonable efforts to take
promptly, or cause to be taken, all actions, and to do promptly, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated
hereby to obtain all necessary waivers, consents and approvals and to effect
all necessary registrations and filings and to remove any injunctions or other
impediments or delays, legal or otherwise, in order to consummate and make
effective the transactions contemplated by this Agreement for the purpose of
securing to the parties hereto the benefits contemplated by this Agreement;
provided that CBT shall not be required to agree to any divestiture by CBT or
KnowledgeWell or any of CBT's subsidiaries or affiliates of share capital or of
any business, assets or property of CBT or its subsidiaries or affiliates or
KnowledgeWell or its affiliates, or the imposition of any material limitation
on the ability of any of them to conduct their businesses or to own or exercise
control of such assets, properties and share capital.
6.8 Notification of Certain Matters. The Shareholders shall give prompt
notice to CBT, and CBT shall give prompt notice to the Shareholders, of (i) the
occurrence or non-occurrence of any event, the occurrence or
<PAGE>
non-occurrence of which is likely to cause any representation or warranty of
the Shareholder and CBT, respectively, contained in this Agreement to be untrue
or inaccurate at or prior to the Closing Date except as contemplated by this
Agreement (including KnowledgeWell Disclosure Letter) and (ii) any failure of
the Shareholders, KnowledgeWell or CBT, as the case may be, to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 6.8 shall not limit or
otherwise affect any remedies available to the party receiving such notice.
6.9 Affiliate Agreements.
(a) Prior to the Exchange Date, each Shareholder shall cause to be delivered
to CBT a certificate of an officer of KnowledgeWell on behalf of KnowledgeWell
identifying all persons who are "affiliates" (as that term is used in
paragraphs (c) and (d) of Rule 145 under the Securities Act) of KnowledgeWell
(collectively, the "KnowledgeWell Affiliates").
(b) Prior to the Exchange Date, KnowledgeWell shall cause each KnowledgeWell
Affiliate to execute and deliver a written agreement in the form attached as
Exhibit C (the "Affiliate Agreement"), that he will not sell, offer to sell, or
otherwise dispose of any of the Ordinary Shares or ADSs, as the case may be,
issued to him pursuant to the Share Exchange, except in compliance with Rule
145 or another exemption for the registration requirements of the Securities
Act. CBT shall be entitled to place appropriate legends on the certificates
evidencing any Ordinary Shares or ADSs, as the case may be, or other CBT
securities to be received by KnowledgeWell Affiliates, and to issue appropriate
stop transfer instructions to the transfer agent for CBT Ordinary Shares and,
if applicable, the Depositary consistent with the terms of such Affiliate
Agreement.
6.10 Additional Documents and Further Assurances. Each party hereto, at the
request of the other party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be reasonably
necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby.
6.11 NMS Listing. CBT shall authorize for listing on the NMS the ADRs with
respect to the securities issued in connection with the Share Exchange, upon
official notice of issuance.
6.12 Form S-8. CBT shall file a registration statement on Form S-8 for the
CBT Ordinary Shares issuable with respect to assumed KnowledgeWell Options no
later than fifteen business days after the Closing Date.
6.13 Repurchase of "C" Ordinary Shares. William G. McCabe hereby covenants
and agrees that on or prior to the Closing Date he will acquire all of the "C"
Ordinary Shares of IR25p each in the capital of KW Limited in issue from the
holder thereof. Mr. McCabe hereby further covenants and agrees that following
such acquisition, and in any event not later than the Closing Date, he will
exercise the options held by him pursuant to the Option Agreements dated August
31, 1998 in respect of shares in each of KW Limited and KW Group and that in
the event of his failing to exercise such options as aforesaid, such options
shall forthwith lapse and shall be of no further force and effect. Any shares
issued to Mr. McCabe pursuant to the exercise of the foregoing options shall be
deemed to be "KnowledgeWell Shares" for purposes of this Agreement.
6.14 Tax-Free Reorganization. The parties hereto shall not take any action
either prior to or after the Closing that could reasonably be expected to cause
the Share Exchange to fail to qualify as a "reorganization" under Section
368(a) of the Code.
6.15 Resale Registration Statement. CBT shall file, within thirty (30) days
following the Closing Date, a registration statement on Form S-3 with the SEC
covering the resale of the Ordinary Shares and the ADSs representing such
Ordinary Shares received by the Shareholders hereunder. CBT shall use its
reasonable best efforts to cause such registration statement to be declared
effective under the Securities Act as promptly as
<PAGE>
reasonably practicable. Any such registration shall be subject to the terms and
conditions set forth in the Rights Declaration. CBT covenants that with respect
to information contained in the registration statement and supplied by CBT in
connection therewith, such information will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading, or
omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Each
Shareholder covenants that with respect to information contained in the
registration statement and supplied in writing by such Shareholder in
connection therewith, such information will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading, or
omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
6.16 Restricted ADR Facility. CBT shall use its reasonable best efforts to
arrange a Restricted ADR Facility at the Bank of New York with respect to the
Ordinary Shares to be issued to the Shareholders hereunder, such that at the
Closing the Shareholders will receive Restricted ADSs (each representing one
restricted Ordinary Share) in lieu of restricted Ordinary Shares.
ARTICLE VII
CONDITIONS TO THE SHARE EXCHANGE
7.1 Conditions to Obligations of Each Party to Effect the Share
Exchange. The respective obligations of each party to this Agreement to effect
the Share Exchange shall be subject to the satisfaction at or prior to the
Closing of the following conditions:
(a) Shareholder Approval. The Share Purchase Agreement, the Share Exchange
and the issuance of CBT Ordinary Shares (or ADSs representing such Ordinary
Shares) pursuant to the Share Exchange shall have been approved by the
shareholders of CBT (who are not also Shareholders) by the requisite vote under
applicable law and CBT's Articles of Association.
(b) No Injunctions or Restraints; Illegality; HSR Act. (i) No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the Share Exchange shall be in
effect; (ii) all waiting periods under the HSR Act shall have expired or
terminated early; and (iii) either (A) the Irish Minister for Enterprise and
Employment (the "Minister") shall have informed CBT in writing that he has
decided not to make an order under Section 9 of the Mergers, Take-Overs and
Monopolies (Control) Act, 1978, as amended (the "Mergers Act"), in relation to
the sale and purchase of the Knowledge Well Shares hereunder, (B) the Minister
shall have made a conditional order in relation to such sale and purchase on
terms acceptable to CBT and the Shareholders, (C) the relevant period under
Section 6 of the Mergers Act shall have expired without the Minister having so
informed CBT or having made any order, or (D) the Minister shall have confirmed
that the Mergers Act does not apply.
7.2 Additional Conditions to Obligations of Shareholders. The obligations of
Shareholders to consummate the Share Exchange and the transactions contemplated
by this Agreement shall be subject to the satisfaction at or prior to the
Closing of each of the following conditions, any of which may be waived, in
writing, exclusively by William G. McCabe and/or Gregory M. Priest, as the
representatives on behalf of the Shareholders:
(a) Representations and Warranties. The representations and warranties of
CBT contained in this Agreement shall have been true and correct in all
material respects as of November 30, 1998. In addition, the representations and
warranties of CBT contained in Section 4.5(a) of this Agreement shall be true
and correct in all material respects on and as of the Closing Date, and the
Shareholders shall have received a certificate to such effect signed by a vice
president of CBT.
<PAGE>
(b) Agreements and Covenants. CBT shall have performed or complied (which
performance or compliance shall be subject to CBT's ability to cure as provided
in Section 9.1(e) below) in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it on
or prior to the Closing Date, and the Shareholders shall have received a
certificate to such effect signed by a vice president of CBT.
(c) Nasdaq Listing. The CBT ADSs issuable to the Shareholders pursuant to
this Agreement or upon resale of Ordinary Shares issuable to the Shareholders
shall have been authorized for listing on the NMS upon official notice of
issuance.
(d) Restricted ADR Facility. The Restricted ADR Facility shall have been
arranged such that the Shareholders are able to receive Restricted ADRs in lieu
of restricted Ordinary Shares.
7.3 Additional Conditions to the Obligations of CBT. The obligations of CBT
to consummate the Share Exchange and the transactions contemplated by this
Agreement shall be subject to the satisfaction at or prior to the Closing of
each of the following conditions, any of which may be waived, in writing,
exclusively by CBT:
(a) Representations and Warranties. The representations and warranties of
the Shareholders contained in this Agreement shall have been true and correct
in all material respects as of November 30, 1998. In addition, the
representations and warranties of the Shareholders contained in Sections 2.2
and 3.4 of this Agreement shall be true and correct in all material respects on
and as of the Closing Date. CBT shall have received a certificate with respect
to the foregoing signed by William G. McCabe and/or Gregory M. Priest, as the
representatives on behalf of the Shareholders.
(b) Agreements and Covenants. KnowledgeWell and the Shareholders shall have
performed or complied (which performance or compliance shall be subject to
KnowledgeWell's or the Shareholders' ability to cure as provided in Section
9.1(d) below) in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it or them, as
the case may be, on or prior to the Closing Date, and CBT shall have received a
certificate to such effect signed by the Chief Executive Officer of
KnowledgeWell (to the extent applicable to KnowledgeWell) and by William G.
McCabe and/or Gregory M. Priest, as the representatives on behalf of the
Shareholders (to the extent applicable to the Shareholders).
(c) Legal Opinion. CBT shall have received a legal opinion on Irish law
matters from Mason, Hayes & Curran, Irish legal counsel to KnowledgeWell, in
form and substance reasonably satisfactory to CBT.
(d) Affiliate Agreements. Each of the KnowledgeWell Affiliates shall have
delivered an executed Affiliate Agreement which shall be in full force and
effect.
(e) Employment and Noncompetition Agreements. Each of William G. McCabe,
Gregory M. Priest, Jeffrey Newton, William Beamish, William Lewis and John M.
Grillos shall have executed and delivered to CBT an Employment and
Noncompetition Agreement in form and substance reasonably satisfactory to CBT
and consistent with all applicable laws, and all such Employment and
Noncompetition Agreements shall be in full force and effect.
(f) Audited Financial Statements. If requested by CBT, CBT's independent
accountants shall have completed an audit of the financial statements of
KnowledgeWell. Such audited financial statements shall have been prepared in
accordance with GAAP and shall confirm that the KnowledgeWell Financial
Statements present fairly, in all material respects, the financial position of
KnowledgeWell as of the dates and during the periods indicated therein. Such
audited financial statements shall, in the view of CBT's independent
accountants, satisfy the requirements of Regulation S-X and shall be sufficient
for the requirements of the SEC with respect to CBT's reporting obligations
under the U.S. federal securities laws.
(g) Preference Shares; "C" Ordinary Shares. Immediately prior to the
Closing, each Shareholder shall have voluntarily converted all of his, her or
its shares of KW Preferred into Ordinary Shares of US$0.01 each
<PAGE>
of KW Group on a one-for-one basis, no KW Preferred shall be in issue or
outstanding, and no "C" Ordinary Shares of KW Limited shall be in issue or
outstanding. Any Ordinary Shares issued pursuant to the conversion of the KW
Preferred shall be deemed to be "KnowledgeWell Shares" for purposes of this
Agreement.
(h) William G. McCabe, Gregory M. Priest, Peregrine Company Managers
Limited, William Beamish, John Grillos and Patricia Grillos, ITech Partners
L.P., Finite Properties Limited and Molyneux Secretarial Services Limited shall
have executed a Lock-Up Agreement in the form attached hereto as Exhibit D.
7.4 No Additional Conditions. Except for the conditions set forth in
Sections 7.1, 7.2 and 7.3 of this Agreement, no other statement, term or
provision of this Agreement shall constitute a condition to the obligations of
the parties to consummate the Share Exchange.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW; INDEMNITY
8.1 Survival of Representations, Warranties and Covenants. All
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement and all covenants to be performed prior to the
Closing Date shall not in any respect be extinguished or affected by the
Closing shall survive the Share Exchange for a period ending at 5:00 p.m.,
California time, on the date two (2) years from the Closing Date, provided that
representations and warranties related to Tax shall survive the Share Exchange
for a period ending at 5:00 p.m., California time, on the date six (6) years
from the Closing Date.
8.2 Agreement to Indemnify.
(a) Each Shareholder agrees, jointly and severally, to indemnify and hold
CBT and its affiliates, officers, directors, employees and shareholders
(collectively, the "CBT Indemnitees") harmless against any losses, claims,
damages, costs, expenses or other liabilities (including reasonable attorneys'
fees and expenses) (collectively, "Damages") resulting from (i) any breach of
or inaccuracy in any representations and warranties of the Shareholders set
forth in Article II of this Agreement or in any certificate delivered by the
Shareholders or KnowledgeWell pursuant to this Agreement, or (ii) any breach or
default by KnowledgeWell or the Shareholders of any covenant, obligation or
other agreement of KnowledgeWell or the Shareholders set forth in this
Agreement (each, a "CBT Indemnifiable Claim," which term shall include a claim
made pursuant to the following sentence). In addition, each Shareholder agrees,
severally and not jointly, to indemnify and hold the CBT Indemnitees harmless
against any Damages resulting from any breach of or inaccuracy in any
representations and warranties of such Shareholder set forth in Article III of
this Agreement.
(b) Subject to Section 8.4, the liability of the Shareholders under this
indemnity (other than in respect of Damages resulting from any breach of or
inaccuracy in any representations or warranties of the Shareholders relating to
Tax) shall expire at 5:00 p.m., California time, on the second anniversary of
the Closing Date (the "Two-Year Indemnity Termination Date"), and the liability
of the Shareholders under this indemnity in respect of Damages resulting from
any breach of or inaccuracy in any representations or warranties of the
Shareholders relating to Tax shall expire at 5:00 p.m., California time, on the
sixth anniversary of the Closing Date (the "Six-Year Indemnity Termination
Date" and, collectively with the Two-Year Indemnity Termination Date, the
"Indemnity Termination Dates").
8.3 Escrow Arrangements; Limits of Liability.
(a) In no event shall (i) any Shareholder be liable to CBT, any other CBT
Indemnitees or anyone claiming through either of them under this Article VIII
or any other theory of liability for Damages or other amounts in connection
with the transactions contemplated by this Agreement or any of the Related
Agreements in excess of the lesser of (A) such Shareholder's pro rata share
(assuming exercise of all of such Shareholder's Knowledge Well Options assumed
by CBT regardless of whether such options are vested or unvested) of the
<PAGE>
Acquisition Price and (B) such Shareholder's pro rata share (assuming exercise
of all of such Shareholder's Knowledge Well Options assumed by CBT regardless
of whether such options are vested or unvested) of the aggregate amount of such
Damages or other amounts or (ii) any CBT Indemnitee be reimbursed for any
Damages under this Article VIII or any other theory of liability in connection
with the transactions contemplated by this Agreement or any of the Related
Agreements until the aggregate of all Damages exceeds US$500,000 (after which
the all Damages, including such US$500,000, shall become payable in accordance
with the provisions of this Article VIII). As partial security for the
obligations of each Shareholder pursuant to this Article VIII, the Escrow
Amount shall be deposited with an escrow agent and shall be controlled pursuant
to the terms of the escrow agreement (the "Escrow Agreement") in substantially
the form attached hereto as Exhibit E.
(b) For purposes of determining the amount of any Damages incurred by the
CBT Indemnitees, the amount of any Damages shall be reduced to the extent of
(i) any net tax benefit actually realized by the CBT Indemnitees arising from
the incurrence or payment by the CBT Indemnitees of the indemnifiable loss to
which such Damages relate and after giving full effect to the actual tax effect
of receipt of the indemnification payments to the CBT Indemnitees, if any, and
(ii) any amounts previously received by the CBT Indemnitees pursuant to this
Article VIII for losses resulting from the same facts or events.
(c) Nothing in this Agreement shall in any way diminish any obligation on
the part of CBT under applicable law to attempt to mitigate its loss. If the
amount of any Damages, at any time subsequent to the making of a payment
hereunder in respect thereof, is reduced (i) by recovery, settlement or
otherwise under or pursuant to any insurance coverage or (ii) pursuant to any
claim, recovery, settlement or otherwise against or with any person or entity
that is not an affiliate of a CBT Indemnitee, the amount of such reduction, in
each case less any costs or expenses of recovery (including attorney's fees and
expenses), will be repaid by the CBT Indemnitees to (A) the Escrow Agent to be
controlled pursuant to the terms of the Escrow Agreement if such repayment is
made prior to the Two-Year Indemnity Termination Date or (B) the Shareholders
if such repayment is made after the Two-Year Indemnity Termination Date.
(d) CBT confirms to the Shareholders that, as of November 30, 1998, it had
not formulated nor is it in the process of formulating any claim under this
Agreement. The information supplied by Knowledge Well or its professional
advisers to the Shareholders or their agents, representatives or advisors in
connection with the representations and warranties and indemnities in this
Agreement and the contents of the Knowledge Well Disclosure Letter or otherwise
in relation to the business or affairs of Knowledge Well shall not be deemed a
representation, warranty or guarantee of its accuracy by Knowledge Well to the
Shareholders, and the Shareholders hereby irrevocably waive any claim against
Knowledge Well (and its employees and agents) which any of them might otherwise
have in respect of it.
8.4 Survival of Indemnity; Indemnification Procedures; Time Limits.
(a) The indemnification obligations of each Shareholder pursuant to Section
8.2 for amounts up to the Escrow Amount shall apply only to those claims for
indemnification as to which CBT has given written notice thereof pursuant to
the terms of the Escrow Agreement on or prior to the relevant Indemnity
Termination Date; provided that the foregoing shall not limit the liability of
such Shareholder for Damages incurred by CBT Indemnitees after the relevant
Indemnity Termination Date that result from a CBT Indemnifiable Claim if CBT
Indemnitees have given written notice of such CBT Indemnifiable Claim prior to
the relevant Indemnity Termination Date. CBT and each Shareholder agree that
the indemnification procedures set forth in the Escrow Agreement shall apply to
all claims for Damages up to the Escrow Amount resulting from a CBT
Indemnifiable Claim. Notwithstanding the foregoing, any claim for Damages in
respect of any breach of or inaccuracy in any representation or warranties of
the Shareholders relating to Tax made after the Two-Year Indemnity Termination
Date shall be administered in accordance with paragraph (c) of this Section 8.4
regardless of whether the amount is less than or exceeds the Escrow Amount.
(b) The indemnification obligations of each Shareholder pursuant to Section
8.2 for amounts in excess of the Escrow Amount shall apply only to those claims
for indemnification as to which CBT has given written
<PAGE>
notice thereof pursuant to the terms of paragraph (c) of this Section 8.4 on or
prior to the relevant Indemnity Termination Date; provided that the foregoing
shall not limit the liability of such Shareholder for Damages incurred by CBT
Indemnitees after the relevant Indemnity Termination Date that result from a
CBT Indemnifiable Claim if CBT Indemnitees have given written notice of such
CBT Indemnifiable Claim prior to the relevant Indemnity Termination Date. CBT
and each Shareholder agree that the indemnification procedures set forth in
paragraph (c) of this Section 8.4 shall apply to all claims for Damages in
excess of the Escrow Amount resulting from a CBT Indemnifiable Claim.
(c) If any CBT Indemnitee shall incur Damages that exceed the Escrow Amount,
there shall be delivered to each Shareholder a certificate signed in good faith
on behalf of CBT by an officer of CBT or by a member of the Special Committee
(an "Officer's Certificate") stating that a CBT Indemnitee has paid, properly
accrued, or reasonably anticipates that it will have to pay or accrue Damages
in an amount specified in such Officer's Certificate, with the basis for such
claim set forth in reasonable detail. Each Officer's Certificate shall be
delivered to each Shareholder in the manner specified in Section 10.1 hereof.
In the event CBT becomes aware of a third-party claim which CBT believes may
result in a demand which exceeds the Escrow Amount, CBT shall, as soon as
reasonably practicable, notify each Shareholder of such claim, and each
Shareholder shall be entitled, at their individual expense, to participate in
any defense of such claim. Delay in providing such notice shall not eliminate
such claim except to the extent that the Shareholders are prejudiced thereby.
CBT shall have the right in its sole discretion to settle any such claim;
provided, however, that except with the consent of a given Shareholder, no
settlement of any such claim with third-party claimants shall be determinative
of the validity and quantum of any claim against such Shareholder. In the event
that a given Shareholder has consented to any such settlement, such Shareholder
shall have no power or authority to object to the amount of any claim by CBT
against such Shareholder with respect to such settlement.
8.5 Representative; Power of Attorney.
(a) Each Shareholder hereby appoints Gethin Taylor of Peregrine Company
Managers Limited as agent and attorney-in-fact (the "Representative") for such
Shareholder to give and receive notices and communications, to authorize
delivery to CBT of ADSs or Ordinary Shares, as the case may be, from the Escrow
Amount in satisfaction of claims by CBT, to object to such deliveries, to agree
to, negotiate, enter into settlements and compromises of, such claims, to
perform such other obligations and make such other decisions as are set forth
in the Escrow Agreement, and to take all actions necessary or appropriate in
the judgment of the Representative for the accomplishment of the foregoing.
Such agency may be changed by the Shareholders from time to time upon not less
than thirty (30) days prior written notice to CBT; provided that the
Representative may not be removed unless holders of a two-thirds interest of
the Escrow Amount agree to such removal and to the identity of the substituted
agent. The Representative may resign upon not less than thirty (30) days prior
written notice to CBT and to all holders of an interest in the Escrow Amount.
Any vacancy in the position of the Representative may be filled by approval of
the holders of a majority in interest of the Escrow Amount. No bond shall be
required of the Representative, and the Representative shall not receive
compensation for his or her services. Notices or communications to or from the
Representative shall constitute notice to or from each of the Shareholders.
(b) The Representative shall not be liable for any act done or omitted
hereunder as Representative while acting in good faith and without
recklessness. The Shareholders shall severally indemnify the Representative and
hold the Representative harmless against any loss, liability or expense
incurred without recklessness or bad faith on the part of the Representative
and arising out of or in connection with the acceptance or administration of
the Representative's duties hereunder, including the reasonable fees and
expenses of any legal counsel retained by the Representative.
(c) A decision, act, consent or instruction of the Representative shall be
final, binding and conclusive upon each of such Shareholders, and the Escrow
Agent and CBT may rely upon any such decision, act, consent or instruction of
the Representative as being the decision, act, consent or instruction of each
Shareholder. The Escrow Agent and CBT are hereby relieved from any liability to
any person for any acts done by them in accordance with such decision, act,
consent or instruction of the Representative.
<PAGE>
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. Except as provided in Section 9.2 below, this Agreement may
be terminated and the Share Exchange abandoned at any time prior to the Closing
Date:
(a) by mutual consent of the Shareholders or their attorneys and CBT;
(b) by CBT or by William G. McCabe and/or Gregory M. Priest, as the
representatives on behalf of the Shareholders, if: (i) the Closing Date has
not occurred by June 30, 1999 (provided that the right to terminate this
Agreement under this clause 9.1(b)(i) shall not be available to any party
whose willful failure to fulfill any obligation hereunder has been the
cause of, or resulted in, the failure of the Closing Date to occur on or
before such date); (ii) there shall be a final nonappealable order of a
federal or state court in the United States or a court in Ireland in effect
preventing consummation of the Share Exchange; or (iii) there shall be any
statute, rule, regulation or order enacted, promulgated or issued or deemed
applicable to the Share Exchange by any Governmental Entity that would make
consummation of the Share Exchange illegal;
(c) by CBT if there shall be any action taken, or any statute, rule,
regulation or order enacted, promulgated or issued or deemed applicable to
the Share Exchange, by any Governmental Entity, which would: (i) prohibit
CBT's or KnowledgeWell's ownership or operation of any material portion of
the business of KnowledgeWell or (ii) compel CBT or KnowledgeWell to
dispose of or hold separate, as a result of the Share Exchange, any
material portion of the business or assets of KnowledgeWell or CBT;
(d) by CBT if it is not in material breach of its obligations under this
Agreement and there has been a breach of any representation, warranty,
covenant or agreement contained in this Agreement on the part of
KnowledgeWell or any Shareholder and as a result of such breach the
conditions set forth in Section 7.3(a) or 7.3(b), as the case may be, would
not then be satisfied; provided, however, that if such breach is curable by
KnowledgeWell or such Shareholder within thirty (30) days through the
exercise of its reasonable best efforts, then for so long as KnowledgeWell
or such Shareholder continues to exercise such reasonable best efforts CBT
may not terminate this Agreement under this Section 9.1(d) unless such
breach is not cured within thirty (30) days (but no cure period shall be
required for a breach which by its nature cannot be cured);
(e) by William G. McCabe and/or Gregory M. Priest, as the
representatives on behalf of the Shareholders, if KnowledgeWell and the
Shareholders are not in material breach of their respective obligations
under this Agreement and there has been a breach of any representation,
warranty, covenant or agreement contained in this Agreement on the part of
CBT and as a result of such breach the conditions set forth in Section
7.2(a) or 7.2(b), as the case may be, would not then be satisfied;
provided, however, that if such breach is curable by CBT within thirty (30)
days through the exercise of its reasonable best efforts, then for so long
as CBT continues to exercise such reasonable best efforts Messrs. McCabe
and/or Priest, as the representatives on behalf of the Shareholders, may
not terminate this Agreement under this Section 9.1(e) unless such breach
is not cured within thirty (30) days (but no cure period shall be required
for a breach which by its nature cannot be cured).
Where action is taken to terminate this Agreement pursuant to this Section
9.1, it shall be sufficient for such action to be authorized by the Independent
Committee of the Board of Directors of CBT on behalf of CBT or by William G.
McCabe and/or Gregory M. Priest, as the representatives on behalf of the
Shareholders, as the case may be.
9.2 Effect of Termination. In the event of termination of this Agreement as
provided in Section 9.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of CBT, KnowledgeWell or the
Shareholders, or their respective officers, directors or shareholders, provided
that each party shall remain liable for any breaches of this Agreement prior to
its termination; and provided further that the provisions of Sections 6.3 and
Article X of this Agreement shall remain in full force and effect and survive
any termination of this Agreement.
<PAGE>
9.3 Amendment. Except as is otherwise required by applicable law after the
shareholders of CBT approve this Agreement, this Agreement may be amended by
the parties hereto at any time by execution of an instrument in writing signed
on behalf of each of the parties hereto.
9.4 Extension; Waiver. At any time prior to the Closing Date, CBT, on the
one hand, and KnowledgeWell and William G. McCabe and/or Gregory M. Priest, as
the representatives on behalf of the Shareholders, on the other, may, to the
extent legally allowed, (i) extend the time for the performance of any of the
obligations of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in an instrument in writing signed on behalf of CBT
by a member of the Independent Committee of the Board of Directors, on behalf
of KnowledgeWell by an officer or director of KW Limited or KW Group, and on
behalf of the Shareholders by William G. McCabe and/or Gregory M. Priest, as
the representatives on behalf of the Shareholders.
ARTICLE X
GENERAL PROVISIONS
10.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with acknowledgment of complete transmission)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to CBT, to:
CBT Group PLC
Belfield Office Park, Clonskeagh
Dublin 4
Ireland
Attention: Jack Hayes / Company Secretary
Telephone No.: 011-353-1-283-0077
Facsimile No.: 011-353-1-208-1296
with a copy to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304
Attention: Steven V. Bernard
Telephone No.: (650) 493-9300
Facsimile No.: (650) 493-6811
(b) if to KnowledgeWell, to:
KnowledgeWell, Inc.
1701 Directors Blvd., Suite 920
Austin, Texas 78735
Attention: Chief Executive Officer
Telephone No.: (512) 462-9223
Facsimile No.: (512) 373-7557
<PAGE>
(c) if to the Representative:
Peregrine Corporate Services Limited
Burleigh Manor
Peel Road
Douglas Isle of Man
Attention: Gethin Taylor
Telephone No.: (441-624) 626-586
Facsimile No.: (441-624) 673-827
(d) if to a Shareholder, at such Shareholder's address as is specified on
Exhibit A to this Agreement.
10.2 Interpretation. The words "include," "includes" and "including" when
used herein shall be deemed in each case to be followed by the words "without
limitation." The word "agreement" when used herein shall be deemed in each case
to mean any contract, commitment or other agreement, whether oral or written,
that is legally binding. As used in this Agreement, the phrase "to the best of
[a party's] knowledge," "to [a party's] knowledge," "[a party] is not aware,"
and similar phrases shall mean the actual knowledge of such party, or of the
officers and directors of such party, after careful consideration of the
matters set forth in the representation that is so qualified and after
performing or causing to be performed a reasonably diligent review of all
files, documents, agreements and other materials in such person's possession or
subject to his or her control. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
10.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
10.4 Entire Agreement; Successors; Assignment. This Agreement, the schedules
and Exhibits hereto, and the documents and instruments and other agreements
among the parties hereto referenced herein: (a) constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof; (b) are not intended to confer upon
any other person any rights or remedies hereunder; and (c) shall not be
assigned by operation of law or otherwise except as otherwise specifically
provided. Notwithstanding the foregoing, this Agreement shall be binding upon
and enforceable against administrators, executors, representatives, heirs,
legatees and devisees of the Shareholders.
10.5 Severability. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Agreement with a
valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
10.6 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity
upon such party, and the exercise by a party of any one remedy will not
preclude the exercise of any other remedy. Notwithstanding any provision of
this Agreement to the contrary, the parties expressly agree that reasonable
attorney's fees may be recoverable in connection with any action to enforce
contractual rights under Section 6.15 of this Agreement.
10.7 Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, regardless of
the laws that might otherwise govern under applicable
<PAGE>
principles of conflicts of laws thereof. Each of the parties hereto hereby
consents to the jurisdiction and venue of any state or U.S. federal court in
California with respect to matters arising out of or related to this Agreement,
agrees that process may be served upon them in any manner authorized by the
laws of the State of California for such persons and waives and covenants not
to assert or plead any objection which they might otherwise have to such
jurisdiction and such process.
10.8 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule
of construction providing that ambiguities in an agreement or other document
will be construed against the party drafting such agreement or document.
10.9 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
10.10 Share Legends. All certificates representing any of the CBT Ordinary
Shares or ADRs to be issued pursuant to this Agreement shall have endorsed
thereon a restrictive legend substantially as follows:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION
IS NOT REQUIRED."
(b) Any legend required to be placed thereon by applicable blue sky laws
of any state or under the laws of Ireland.
10.11 California Corporate Securities Law. THE SALE OF THE SECURITIES WHICH
ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER
OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES
OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO
SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED
UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
(Remainder of page intentionally left blank)
<PAGE>
IN WITNESS WHEREOF, CBT, KW Limited, KW Group, the Representative (as to
matters set forth in Section 8.5 only), the Shareholders, the Escrow Agent and
Martin Scully (as to matters set forth in Section 5.1 only) have caused this
Agreement to be signed by their duly authorized respective officers, all as of
the date first written above.
CBT GROUP PLC KNOWLEDGE WELL LIMITED
/s/ Jack Hayes /s/ Martin Scully
By __________________________________ By __________________________________
Name:Jack Hayes Name:Martin Scully
Title:Director Title:Director
KNOWLEDGE WELL GROUP LIMITED ESCROW AGENT
/s/ Martin Scully /s/ Carol Andreacchi
By __________________________________ By __________________________________
Name:Martin Scully Name:Carol Andreacchi
Title:Director Title:Trust Officer
SHAREHOLDER REPRESENTATIVE
/s/ Martin Scully /s/ Gethin Taylor
By __________________________________ By __________________________________
Name:Martin Scully Name:Gethin Taylor
Title:
MARTIN SCULLY
/s/ Martin Scully
_____________________________________
Martin Scully
***SHARE PURCHASE AGREEMENT***
<PAGE>
Exhibit 2.2
ANNEX B
AMENDED AND RESTATED DECLARATION OF REGISTRATION RIGHTS
<PAGE>
EXHIBIT B TO AMENDED AND RESTATED SHARE PURCHASE AGREEMENT
AMENDED AND RESTATED DECLARATION OF REGISTRATION RIGHTS
This Amended and Restated Declaration of Registration Rights ("Declaration")
is made as of March 30, 1999 by CBT Group PLC, a public limited company
organized under the laws of Ireland ("CBT" or the "Company") in connection with
an Amended and Restated Share Purchase Agreement (the "Share Purchase
Agreement") of even date herewith among the Company, Knowledge Well Group
Limited and Knowledge Well Limited, two private companies formed under the laws
of Ireland (collectively "KnowledgeWell"), and the shareholders of
KnowledgeWell ("Shareholders"). The Share Purchase Agreement provides for the
acquisition of all of the ordinary shares in the capital of KnowledgeWell by
the Company (the transaction hereinafter referred to as the "Share Exchange").
This Declaration amends and restates that certain declaration made as of
November 30, 1998 (the "Prior Declaration") by CBT. All rights and obligations
under the Prior Declaration are terminated in their entirety and superseded and
governed by this Declaration.
1. Definitions. As used in this Declaration:
(a) "CBT ADSs" means American Depositary Shares of CBT, each
representing one CBT Ordinary Share.
(b) "Exchange Act" means the United States Securities Exchange Act of
1934, as amended.
(c) "Form S-3" means such form under the Securities Act as in effect on
the date hereof or any registration form under the Securities Act
subsequently adopted by the SEC which similarly permits inclusion or
incorporation of substantial information by reference to other documents
filed by the Company with the SEC.
(d) "Registrable Securities" means the CBT Ordinary Shares (or
restricted CBT ADSs) issued to Shareholders pursuant to the Share Purchase
Agreement, including all CBT ADSs into which such CBT Ordinary Shares may
be converted, together with all other CBT Ordinary Shares issued in respect
thereof (by way of stock split, dividend or otherwise).
(e) "SEC" means the United States Securities and Exchange Commission.
(f) "Securities Act" means the United States Securities Act of 1933, as
amended.
Capitalized terms not otherwise defined herein have the meanings given to
them in the Share Purchase Agreement.
2. Registration. CBT shall use its reasonable best efforts to cause the
Registrable Securities issued pursuant to the transactions contemplated by the
Share Purchase Agreement to be registered under the Securities Act so as to
permit the resale thereof, and in connection therewith shall prepare and file
with the SEC within thirty (30) days following the closing of the Share
Exchange and shall use its reasonable best efforts to cause to become effective
a registration statement on Form S-3 or on such other form as is then available
under the Securities Act covering the Registrable Securities; provided,
however, that Shareholders shall provide CBT with all such information as may
be necessary under the Securities Act with respect to ownership of the
Registrable Securities for use in connection with any such registration
statement or prospectus. Such provision of information is a condition precedent
to the obligations of CBT pursuant to this Declaration. CBT shall not be
required to effect more than one (1) registration under this Declaration. The
offering made pursuant to such registration shall not be underwritten.
3. Postponement of Registration. Notwithstanding Section 2 above, CBT shall
be entitled to postpone filing the registration statement pursuant to Section 2
for a reasonable period of time, but not in excess of forty-five (45) calendar
days after the applicable deadline, if the board of directors of CBT, acting in
good faith, determines that there exists material nonpublic information about
CBT which the board of directors does not wish to disclose in a registration
statement but which information would otherwise be required by the Securities
Act to be disclosed in the registration statement.
<PAGE>
4. Obligations of CBT.
(a) Subject to the limitations of Sections 2 and 3 above and Section 10
below, CBT shall (i) prepare and file with the SEC the registration
statement in accordance with Section 2 hereof with respect to the
Registrable Securities and shall use its reasonable best efforts to cause
such registration statement to become effective as promptly as practicable
after filing and to keep such registration statement effective until the
second anniversary of the closing of the Share Exchange; (ii) prepare and
file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be
necessary, and to comply with the provisions of the Securities Act with
respect to the sale or other disposition of all securities proposed to be
registered in such registration statement until the second anniversary of
the closing of the Share Exchange; (iii) furnish to Shareholders such
number of copies of any prospectus (including any preliminary prospectus
and any amended or supplemented prospectus) in conformity with the
requirements of the Securities Act, and such other documents, as
Shareholders may reasonably request in order to effect the offering and
sale of the shares of the Registrable Securities to be offered and sold,
but only while CBT shall be required under the provisions hereof to cause
the registration statement to remain current; and (iv) use its reasonable
best efforts to register or qualify the shares of the Registrable
Securities covered by such registration statement under the securities or
blue sky laws of such jurisdictions as Shareholders shall reasonably
request (provided that CBT shall not be required in connection therewith or
as a condition thereto to qualify to do business or to file a general
consent to service of process in any such jurisdiction where it has not
been qualified).
(b) CBT shall notify Shareholders (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and, with
respect to the registration statement or any post-effective amendment, when
the same has become effective; (ii) of any request by the SEC or any other
federal or state governmental authority during the period of effectiveness
of the registration statement for amendments or supplements to the
registration statement or related prospectus or for additional information
relating to the registration statement; (iii) of the issuance by the SEC or
any other federal or state governmental authority of any stop order
suspending the effectiveness of the registration statement or the
initiation of any proceedings for that purpose; (iv) of the receipt by CBT
of any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for sale
in any jurisdiction or the initiation or threatening of any proceeding for
such purpose; or (v) of the happening of any event which makes any
statement made in the registration statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or which requires the making of any changes
in the registration statement or prospectus so that, in the case of the
registration statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and
that in the case of the prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading. CBT may, upon the happening of any
event (A) of the kind described in clauses (ii), (iii), (iv), or (v) hereof
or, (B) that, in the judgment of CBT's board of directors, renders it
advisable to suspend use of the prospectus for no more than ninety (90)
days in the aggregate in any twelve (12) month period of time due to
pending corporate developments, public filings with the SEC or similar
events, suspend use of the prospectus on written notice to Shareholders, in
which case Shareholders shall discontinue disposition of Registrable
Securities covered by the registration statement or prospectus until copies
of a supplemented or amended prospectus are distributed to Shareholders or
until Shareholders are advised in writing by CBT that the use of the
applicable prospectus may be resumed. CBT shall use its reasonable best
efforts to ensure that the use of the prospectus may be resumed as soon as
practicable. CBT shall use its reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of the registration
statement, or the lifting of any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale
in any jurisdiction, at the earliest practicable moment. CBT shall,
promptly following the occurrence of any event contemplated by clause (v),
prepare a supplement or post-effective amendment to the registration
statement or a supplement to the related prospectus or any document
incorporated therein by reference or
<PAGE>
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities being sold thereunder, such
prospectus will not contain an untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(c) In connection with any offering of Registrable Securities registered
pursuant to this Declaration, CBT shall (x) furnish Shareholders, at CBT's
expense, with un-legended certificates representing ownership of the
Registrable Securities being sold in such denominations as Shareholders
shall request and (y) instruct the transfer agent and registrar of the
Registrable Securities to release any stop transfer orders with respect to
the Registrable Securities being sold.
5. Availability of Form S-3. CBT represents that if Form S-3 (or a successor
form) is not available for use by CBT, CBT shall use its reasonable best
efforts to satisfy the requirements of Form S-3 at the earliest possible time.
CBT further represents that it believes it is currently eligible to utilize
Form S-3 and currently believes that there is no material nonpublic information
which would preclude it from filing a registration statement on Form S-3.
6. Expenses. CBT shall pay all of the out-of-pocket expenses incurred in
connection with any registration of Registrable Securities pursuant to this
Declaration, including all SEC, NASD and blue sky registration and filing fees,
printing expenses, transfer agents' and registrars' fees, and the reasonable
fees and disbursements of CBT's outside counsel and independent accountants.
Notwithstanding the foregoing, Shareholders shall pay any and all brokerage
fees, applicable transfer taxes, if any (including stamp transfer taxes imposed
by Irish law) and depositary fees, if any, in connection with the deposit of
the Registrable Securities, if applicable, and the subsequent sale by
Shareholders of the Registrable Securities.
7. Additional Obligations of CBT; Reports under the Exchange Act. CBT agrees
to:
(a) use its reasonable best efforts to file with the SEC in a timely
manner all reports and other documents required of CBT under the Securities
Act and the Exchange Act; and
(b) furnish to Shareholders forthwith upon request (i) a written
statement by CBT that it has complied with the reporting requirements of
the Securities Act and the Exchange Act, or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3 (at any time
after it so qualifies), (ii) a copy of the most recent annual or quarterly
report of CBT and (iii) such other information as may be reasonably
requested in availing Shareholders of any rule or regulation of the SEC
which permits the selling of any Registrable Securities pursuant to Form S-
3.
8. Assignment of Registration Rights. The rights, duties and obligations of
CBT pursuant to this Declaration may not be assigned. The rights, duties and
obligations of Shareholders pursuant to this Declaration may not be assigned or
transferred except (x) by will or the laws of descent and distribution, or (y)
to a family member of a Shareholder, or a trust of which a family member is the
beneficiary; provided however, in the event of an assignment or transfer
pursuant to clauses (i), or (ii), such assignee or transferee gives CBT notice
that he, she or it is an assignee or transferee of Registrable Securities under
this Section 8, provides CBT with his, her or its name and address and the
number of Registrable Securities acquired, and agrees to be bound as a
Shareholder by all of the terms of this Declaration. Nothing herein shall be
construed to modify Shareholders' obligations under the Affiliate's Agreement
signed by Shareholders pursuant to the Share Purchase Agreement.
9. Amendment of Registration Rights. The registration rights granted
hereunder may only be amended by a written amendment signed by Shareholders
holding a majority of the Registrable Securities and CBT.
10. Termination. The registration rights set forth in this Declaration shall
terminate with respect to Shareholders (and the shares held by Shareholders
shall cease to constitute Registrable Securities) upon the earlier of (i) such
time as all of the Registrable Securities then held by Shareholders can be sold
by Shareholders in a three (3) month period in accordance with Rule 144 under
the Securities Act and (ii) the second anniversary of the closing of the Share
Exchange.
<PAGE>
11. Obligations of Shareholders. By exercising any rights hereunder, a
Shareholder shall be deemed to assume all obligations hereunder as though such
Shareholder was a signatory hereto.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, CBT has executed this Declaration as of the date first
above written.
CBT GROUP PLC
By: _________________________________
Name: _______________________________
Title: ______________________________
<PAGE>
Exhibit 2.3
ANNEX C
AMENDED AND RESTATED ESCROW AGREEMENT
<PAGE>
EXHIBIT E TO AMENDED AND RESTATED SHARE PURCHASE AGREEMENT
AMENDED AND RESTATED ESCROW AGREEMENT
THIS AMENDED AND RESTATED ESCROW AGREEMENT (this "Escrow Agreement") is made
and entered into as of March 30, 1999 by and among CBT Group PLC, a public
limited company formed under the laws of Ireland ("CBT"), the shareholders of
Knowledge Well Limited, a private company formed under the laws of Ireland ("KW
Limited"), and the shareholders of Knowledge Well Group Limited, a private
company formed under the laws of Ireland ("KW Group" and, collectively with KW
Limited, "KnowledgeWell") (individually, a "Shareholder" and collectively, the
"Shareholders"), Jack Hayes, as trustee pursuant to the Trust Agreement as
defined herein (the "Trustee"), U.S. Bank Trust National Association (the
"Escrow Agent"), and Gethin Taylor, as representative of the Shareholders (the
"Representative"). This Escrow Agreement amends and restates that certain
escrow agreement made and entered into as of the 30th day of November, 1998
(the "Prior Escrow Agreement") by and among the parties hereto. All rights and
obligations under the Prior Escrow Agreement are terminated in their entirety
and superseded and governed by this Escrow Agreement.
RECITALS
WHEREAS, CBT, the Shareholders and KnowledgeWell have entered into a Share
Purchase Agreement dated as of November 30, 1998, as amended and restated as of
March 30, 1999 (the "Share Purchase Agreement").
WHEREAS, Article VIII of the Share Purchase Agreement provides that the
parties hereto shall enter into an Escrow Agreement with respect to a portion
of the total American Depository Shares ("ADSs") or Ordinary Shares of CBT
transferred to the Shareholders in connection with the transactions
contemplated by the Share Purchase Agreement.
NOW, THEREFORE, in consideration of the promises contained herein and in the
Share Purchase Agreement and other good and valuable consideration, the receipt
of which is hereby acknowledged, the parties hereto agree as follows:
1. Share Purchase Agreement. The Escrow Agent hereby acknowledges receipt of
a copy of the Share Purchase Agreement, but, except for reference thereto for
definitions of certain words or terms not defined herein, the Escrow Agent is
not charged with any duties or responsibilities with respect thereto.
Capitalized terms used and not defined herein shall have the meanings set forth
in the Share Purchase Agreement unless the context requires otherwise.
2. Purpose; Effectiveness. This Escrow Agreement has been executed and
delivered, and the deposit of the Escrow Amount hereunder will be made, for the
purpose of reimbursing and providing compensation for those Damages (as defined
in the Share Purchase Agreement) that CBT or any of its affiliates has incurred
or reasonably anticipates incurring by reason of any CBT Indemnifiable Claim
(as defined in the Share Purchase Agreement). Transfers of Escrow Shares (as
defined below) to Jack Hayes, as Trustee under the Trust Agreement attached
hereto as Exhibit A (the "Trust Agreement"), shall be the non-exclusive remedy
of CBT against each of the Shareholders for any such CBT Indemnifiable Claim.
This Escrow Agreement shall become effective at the Closing Date.
3. Escrow Fund.
(b) Upon effectiveness of this Escrow Agreement, CBT shall deliver or
cause to be delivered to the Escrow Agent such number of ADSs or Ordinary
Shares registered in the name of each of the Shareholders, as the case may be,
which ADSs or Ordinary Shares will be endorsed in blank for transfer to the
Trustee pursuant to the terms of this Escrow Agreement, representing the Escrow
Amount (collectively, the "Escrow Shares")
<PAGE>
required to be placed in escrow pursuant to Section 8.3 of the Share Purchase
Agreement. Each Shareholder shall also execute and deliver an Irrevocable
Assignment Separate from Certificate in the form attached hereto as Exhibit B
to the Escrow Agent. "Escrow Fund" shall mean the Escrow Shares which, as of
the date of determination, remain subject to this Escrow Agreement. The Escrow
Agent shall not be required to inquire as to or examine the number of Escrow
Shares it receives pursuant to the Share Purchase Agreement. The Escrow Fund
shall be held by the Escrow Agent subject to the terms and conditions
hereinafter set forth.
(b) Each Shareholder shall be responsible for any tax liability
attributable to the placement of the Escrow Shares in the escrow and the
payment of any dividends or other amounts payable to the Shareholders with
respect to the Escrow Shares. Each Shareholder, severally and not jointly,
agrees to assume any and all obligations relating to his, her or its Escrow
Shares imposed now or hereafter by any applicable tax law with respect to the
transfer of Escrow Shares under this Escrow Agreement, and to indemnify and
hold the Escrow Agent harmless from and against any liability relating to his,
her or its Escrow Shares on account of taxes, assessments, additions for late
payment, interest, penalties and other expenses, or other governmental charges
to which the Escrow Agent may be or become subject in connection with or which
arises out of this Escrow Agreement, including reasonable costs and expenses
(including reasonable legal fees and expenses), interest and penalties.
4. Escrow Stock. The number of ADSs or Ordinary Shares representing the
Escrow Amount is listed on Schedule A hereto.
5. Representative.
(a) The Representative shall have full power and authority to represent
the Shareholders and their successors with respect to all matters arising under
this Escrow Agreement, including, without limitation, the execution and
delivery of any forms or other documents to effect a transfer of all or part of
the Escrow Shares to the Trustee pursuant to Section 7 hereof, and all actions
taken by the Representative hereunder shall be binding upon the Shareholders
and their successors as if expressly done by, or confirmed and ratified in
writing by, each of them. Without limiting the generality of the foregoing, the
Representative shall have full power and authority to interpret all the terms
and provisions of this Escrow Agreement and to consent to any amendment hereof
on behalf of the Shareholders and such successors. All action to be taken by
the Representative hereunder shall be taken by or at his or her written
direction or pursuant to such other method as the Representative, by written
notice to CBT and the Escrow Agent, shall designate.
(b) The Representative may act upon any instrument or other writing
believed by such Representative in good faith to be genuine and to be signed or
presented by the proper person and shall not be liable in connection with the
performance by him or her of his or her duties pursuant to the provisions of
this Escrow Agreement, except for his or her own willful default or
recklessness. The Representative shall be, and hereby is, indemnified and saved
harmless, jointly and severally, by the Shareholders from all losses, costs and
expenses that may be incurred by the Representative as a result of such
Representative's involvement in any arbitration or litigation arising from
performance of his or her duties hereunder, provided that such arbitration or
litigation shall not result from any action taken or omitted by the
Representative as a result of his or her willful default or recklessness.
(c) The Representative shall not be entitled to compensation for his or
her services rendered hereunder. However, the Representative shall be
reimbursed by Shareholders for reasonable counsel fees and other reasonable
out-of-pocket expenses incurred in connection with the provisions of this
Escrow Agreement.
(d) The Representative, or any successor to him or her hereafter
appointed, may resign and shall be discharged of such Representative's duties
hereunder upon the appointment of a successor Representative as hereinafter
provided. In case of the Representative's resignation, death or inability to
act as Representative, upon receipt of notice thereof, a successor or
successors shall be named by the remaining Shareholders. Each successor
Representative shall have all the power, authority, rights and privileges
hereby conferred upon the original Representative, and the term
"Representative" as used herein shall be deemed to include each such successor
Representative.
<PAGE>
(e) The Representative shall take all actions, execute all documents and
otherwise cooperate fully with any request by CBT or the Trustee to transfer
Escrow Shares as required by this Agreement or to otherwise effect the purpose
of this Escrow Agreement.
6. Escrow Period; Distribution Upon Termination of Escrow Period. The Escrow
Fund shall remain in existence two (2) years after the Closing Date (the
"Escrow Period"). At the close of business on the date the Escrow Period
terminates (the "Termination Date"), the Escrow Period shall terminate with
respect to all of the Escrow Fund; provided, however, that the amount of the
Escrow Fund which in the reasonable judgment of the Special Committee of the
Board of Directors of CBT formed in connection with the Share Exchange (the
"Special Committee"), subject to objection of the Representative and the
subsequent arbitration of the matter in the manner provided in Section 7
hereof, is necessary to satisfy any unsatisfied CBT Indemnifiable Claim
specified in any Officer's Certificate (as hereafter defined) delivered to the
Escrow Agent prior to termination of the Escrow Period with respect to facts
and circumstances existing prior to the termination of such Escrow Period,
shall remain in the Escrow Fund (and the Escrow Fund shall remain in existence)
until such claims have been resolved. As soon as all such claims have been
resolved, the Escrow Agent shall deliver to the Shareholders all Escrow Shares
remaining in the Escrow Fund and not required to satisfy such claims. Any
delivery of Escrow Shares pursuant to this Section 6 shall be of full shares,
and the Escrow Agent shall sell the number of Escrow Shares that shall equal
the aggregate of all fractions to which the Shareholders would otherwise be
entitled. The Escrow Agent shall distribute the remaining Escrow Shares and the
proceeds of such sale to each Shareholders as is pro rata to his or her
proportional ownership in the KnowledgeWell Shares sold to CBT pursuant to the
Share Purchase Agreement; provided that, if a Shareholder shall have been
severally and not jointly liable for a CBT Indemnifiable Claim under the terms
of the Share Purchase Agreement, such Shareholder's pro rata distribution of
Escrow Shares shall be appropriately reduced.
7. Assertion of Claims.
(a) If any CBT Indemnitee shall incur Damages within the Escrow Period,
there shall be delivered to the Escrow Agent and the Representative a
certificate signed in good faith on behalf of CBT by an officer of CBT or by a
member of the Special Committee (an "Officer's Certificate") stating that a CBT
Indemnitee has paid, properly accrued, or reasonably anticipates that it will
have to pay or accrue Damages in an amount specified in such Officer's
Certificate, with the basis for such claim set forth in reasonable detail.
Subject to Sections 7(b), 7(c), 8 and 9 hereof, as soon as practicable (but not
earlier than fifteen (15) calendar days, nor later than thirty (30) calendar
days, after delivery to the Escrow Agent and the Representative of such
Officer's Certificate) the Escrow Agent shall transfer, deliver and assign to
Jack Hayes, as Trustee under the Trust Agreement, such number of the Escrow
Shares (rounded down to the nearest whole share) as is equal to the number
resulting from dividing the amount of such Damages by the closing price of an
ADS on the trading day immediately prior to the Closing Date, as reported on
the Nasdaq National Market. Each Officer's Certificate shall be delivered to
the Escrow Agent and the Representative in the manner specified in Section 11
hereof, and shall contain thereon a representation of the mailing of a copy
thereof to the Representative.
(b) Unless, within fifteen (15) calendar days after delivery to the
Escrow Agent and the Representative of any Officer's Certificate, the
Representative gives written notice to CBT and the Escrow Agent, and said
written notice is received by both CBT and the Escrow Agent within said fifteen
(15) calendar day period, that he or she disputes in good faith the claim set
forth in such Officer's Certificate, with the basis for such dispute set forth
in reasonable detail, such Officer's Certificate shall constitute full
authority to the Escrow Agent to take the action provided for by the preceding
paragraph and shall be conclusive on all parties hereto. If the Representative
gives such notice, the Escrow Agent shall not transfer, deliver or assign to
the Trustee any Escrow Shares pursuant to this Section 7 until either (i) it
receives the written consent of the Representative or (ii) there is a final
decision of an arbitration panel appointed in accordance with the provisions of
Section 9 and the Escrow Agent receives the written final decision in
accordance with Section 9 hereof.
(c) Nothing in this Escrow Agreement shall create or be deemed to create
any interest by way of charge or otherwise in favor of CBT in the Escrow Shares
or Escrow Fund.
<PAGE>
8. Third-Party Claims. In the event CBT becomes aware of a third-party claim
which CBT believes may result in a demand against the Escrow Fund, CBT shall
notify the Representative of such claim, and any of the Representative or each
Shareholder shall be entitled, at their individual expense, to participate in
any defense of such claim. Delay in providing such notice shall not eliminate
such claim except to extent that the Shareholders are prejudiced thereby. CBT
shall have the right in its sole discretion to settle any such claim; provided,
however, that except with the consent of the Representative, no settlement of
any such claim with third-party claimants shall be determinative of the
validity and quantum of any claim against the Escrow Fund. In the event that
the Representative has consented to any such settlement, the Representative
shall have no power or authority to object under any provision of this Escrow
Agreement to the amount of any claim by CBT against the Escrow Fund with
respect to such settlement.
9. Arbitration. If the Representative delivers to CBT and the Escrow Agent a
timely notice pursuant to Section 7(b) above disputing in good faith the amount
of any claim or that any claim is covered hereby or if any other dispute arises
with respect to this Escrow Agreement, then a CBT (in consultation with the
members of the Special Committee) and the Representative shall use their best
efforts to resolve such dispute. In the event of resolution of such dispute,
CBT and the Representative shall both execute a memorandum setting forth such
resolution and, if applicable, the amount of any damages payable to the Trustee
on behalf of CBT, and shall furnish such memorandum to the Escrow Agent. In the
event CBT and the Representative are unable to resolve such dispute within
twenty (20) calendar days from CBT's receipt of the Representative's written
notice disputing a claim or from the date of receipt of written notice with
respect to any other dispute arising with respect to this Escrow Agreement,
then either party may demand, by written notice to the other, that such issue
shall be settled by binding arbitration to be held in San Francisco, California
(an "Arbitration Demand"). All claims shall be settled by three arbitrators in
accordance with the Commercial Arbitration Rules then in effect of the American
Arbitration Association (the "Arbitration Rules"). The Representative and CBT
shall each designate one (1) arbitrator within fifteen (15) calendar days after
the delivery of the Arbitration Demand. Such designated arbitrators shall
mutually agree upon and shall designate a third arbitrator (the "third
arbitrator"). The final decision of a majority of the arbitrators shall be
furnished to the Representative, CBT and the Escrow Agent in writing and shall
constitute a conclusive determination of the issue in question, binding upon
all parties and shall not be contested by any of them. Each party shall bear
its own fees (including its designated arbitrator's fees and attorney's fees)
and other expenses associated with the arbitration. The non-prevailing party
shall bear all other fees and costs associated with such arbitration, except
that the parties shall each pay fifty percent (50%) of the fees of the third
arbitrator.
10. Adjustments to Escrow Shares; Dividends; Voting.
(a) If the Escrow Agent shall receive any securities in respect of or in
exchange for any of the Escrow Shares held by it, whether by way of dividends,
share splits, recapitalizations, liquidations, mergers, consolidations, split-
ups, spin-offs, redemptions, exchanges or conversions of shares and the like
("New Shares"), the Escrow Agent shall hold in escrow such securities and the
same shall be subject to all of the provisions of this Escrow Agreement
relating to the Escrow Fund. Notwithstanding the foregoing, the Shareholders
shall retain the rights to receive any cash dividends or distributions payable
with respect to their Escrow Shares, and such cash dividends or distributions
shall be distributed currently to the Shareholders. New Shares issued in
respect of Escrow Shares which have been released from the Escrow Fund, if any,
shall not be added to the Escrow Fund, but shall be distributed to the holders
of such released Escrow Shares.
(b) Each Shareholder shall have all voting rights with respect to the
Escrow Shares contributed to the Escrow Fund on behalf of each of them for so
long as such Escrow Shares are held in the Escrow Fund.
<PAGE>
11. Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be delivered by hand or delivered by
overnight courier, freight prepaid, or sent via facsimile (with acknowledgment
of complete transmission) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
<TABLE>
<C> <S>
(a) if to CBT: CBT Group PLC
Beech Hill, Clonskeagh
Dublin 4
Ireland
Attention: Jack Hayes / Company
Secretary
Fax: 011-353-1-208-1296
with a copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Steven V. Bernard
Fax: (650) 493-6811
(b) if to a Shareholder: At such Shareholder's address as forth
below such Shareholder's name on the
signature pages hereto
(c) if to the Representative, to: Gethin Taylor
c/o Peregrine Company Managers Limited
Burleigh Manor
Peel Road
Douglas
Isle of Man
Fax: 011-44-0-1-624-612-960
(g) if to the Escrow Agent, to: U.S. Bank Trust National Association
One California Street, 4th Floor
San Francisco, CA 94111
Attention: Carol Andreacchi
Fax: (415) 273-4593
(h) if to the Trustee, to: Jack Hayes, as Trustee
c/o CBT Group PLC
Beech Hill, Clonskeagh
Dublin 4
Ireland
Fax: 011-353-1-208-1296
</TABLE>
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective when received, and shall in any event be
deemed to have been received (i) when delivered, if delivered personally or
sent by telecopy and confirmed in writing or (ii) four (4) business days after
the business day of deposit with overnight courier, addressed and shipped as
aforesaid.
12. Escrow Agent's Protection. In performing any duties under this
Agreement, the Escrow Agent shall not be liable to any party for consequential
damages, (including, without limitation lost profits) losses, or expenses,
except for gross negligence or willful misconduct on the part of the Escrow
Agent. The Escrow Agent shall not incur any such liability for (i) any act or
failure to act made or omitted in good faith, or (ii) any action taken or
omitted in reliance upon any written instrument, including any written
statement or affidavit provided for in this Agreement that the Escrow Agent
shall in good faith believe to be genuine, nor will the
<PAGE>
Escrow Agent be liable or responsible for forgeries, fraud, impersonations, or
determining the scope of any representative authority. The Escrow Agent shall
not act on the oral instructions of any party. In addition, the Escrow Agent
may consult with legal counsel in connection with the Escrow Agent's duties
under this Escrow Agreement and shall be fully protected in any act taken,
suffered, or permitted by him/her in good faith in accordance with the advice
of counsel. The Escrow Agent is not responsible for determining and verifying
the authority of any person acting or purporting to act on behalf of any party
to this Escrow Agreement.
13. Controversies. If any controversy arises among the parties to this
Escrow Agreement, or with any other party, concerning the subject matter of
this Escrow Agreement, its terms or conditions, the Escrow Agent will not be
required to determine the controversy or to take any action regarding it. The
Escrow Agent may hold all documents and Escrow Shares and may wait for
settlement of any such controversy pursuant to the provisions of Section 9 of
this Escrow Agreement. In such event, the Escrow Agent will not be liable for
interest or damages. Furthermore, the Escrow Agent may, at its option, file an
action of interpleader requiring the parties to such controversy to answer and
arbitrate pursuant to Section 9 of this Escrow Agreement any claims and rights
among themselves. The Escrow Agent is authorized to deposit with the clerk of
the court all documents and Escrow Shares held in escrow, except all costs,
expenses, charges and reasonable attorney fees incurred by the Escrow Agent due
to the interpleader action and which the parties to such controversy jointly
and severally agree to pay. Upon initiating such action, the Escrow Agent shall
be fully released and discharged of and from all obligations and liability
imposed by the terms of this Escrow Agreement.
14. Indemnification of Escrow Agent. The parties hereto (excluding the
Escrow Agent) and their respective successors and assigns agree jointly and
severally to indemnify and hold the Escrow Agent harmless against any and all
losses, claims, damages, liabilities, and expenses, including reasonable costs
of investigation, counsel fees, including allocated costs of in-house counsel
and disbursements that may be imposed on the Escrow Agent or incurred by the
Escrow Agent in connection with the performance of his or her duties under this
Escrow Agreement, including but not limited to any litigation arising from this
Escrow Agreement or involving its subject matter (but excluding any and all
losses, claims, damages, liabilities, and expenses attributable to the gross
negligence or wilful misconduct of the Escrow Agent).
15. Escrow Agent Fees. Reasonable fees and expenses for the services
rendered by the Escrow Agent pursuant to the provisions of this Escrow
Agreement (including reasonable fees and disbursements of its counsel incurred
in connection with the performance by it of such services) shall be paid to the
Escrow Agent. Such fees and expenses shall be paid by CBT.
16. Successor Escrow Agent. The Escrow Agent may resign at any time upon
giving at least thirty (30) days written notice to CBT and the Representative;
provided, however, that no such resignation shall become effective until the
appointment of a successor escrow agent, which shall be accomplished as
hereinafter provided. CBT and the Representative shall use their best efforts
to mutually agree on a successor escrow agent within thirty (30) days after
receiving such notice. If CBT and the Representative fail to agree upon a
successor escrow agent within such time, the Escrow Agent shall have the right
to appoint a successor escrow agent, which shall be a bank or trust company
organized under the laws of the United States of America or of the State of
California and have a combined capital and surplus of not less than
US$10,000,000. The successor escrow agent shall execute and deliver to CBT and
the Representative a written instrument accepting such appointment and it
shall, without further acts, be vested with the estates, properties, rights,
powers, and duties of the predecessor Escrow Agent as if originally named as
Escrow Agent. Upon such appointment, the Escrow Agent shall be discharged from
any further duties and liability under this Agreement.
17. Escrow Agent Acceptance and Procedures. U.S. Bank Trust, National
Association, hereby agrees to act as Escrow Agent under this Escrow Agreement.
18. Successors and Assigns. This Escrow Agreement and all action taken
hereunder in accordance with its terms shall be binding upon and inure to the
benefit of CBT, its subsidiaries, the other CBT Indemnitees, the Escrow Agent
and their respective successors and assigns, the Shareholders and their
respective successors, assigns, heirs, executors, administrators and legal
representatives, and the Representative and his or her successors.
<PAGE>
19. Counterparts. This Escrow Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute one and the same instrument.
20. Governing Law. This Escrow Agreement shall be governed by and construed
in accordance with the internal laws of the State of California, without regard
to conflicts of law principles.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed or caused this Escrow
Agreement to be duly executed as of the day and year first above written.
CBT GROUP PLC
By: /s/ Jack Hayes
----------------------------------
Name:
Title:
REPRESENTATIVE
/s/ Gethin Taylor
------------------------------------
Name: Gethin Taylor
TRUSTEE
/s/ Jack Hayes
------------------------------------
Name: Jack Hayes
ESCROW AGENT
By: /s/ Carol Andreacchi
---------------------------------
Name: Carol Andreacchi
Title: Trust Officer
SHAREHOLDER:
/s/ Shareholder
------------------------------------
Address:
----------------------------
------------------------------
------------------------------
------------------------------
<PAGE>
SCHEDULE A
TO ESCROW AGREEMENT
<TABLE>
<CAPTION>
Number of
Shareholder Escrow Shares
----------- -------------
<S> <C>
</TABLE>
<PAGE>
EXHIBIT 2.4
____________________________________________________________
CBT GROUP PLC
AND
THE BANK OF NEW YORK
As Depositary
AND
OWNERS AND BENEFICIAL OWNERS OF RESTRICTED
AMERICAN DEPOSITARY RECEIPTS
Restricted Deposit Agreement (B)
Dated as of June 8, 1999
____________________________________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PARTIES ................................................................................ 1
RECITALS ............................................................................... 1
ARTICLE 1
DEFINITIONS
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............................................................ 3
SECTION 1.11. Foreign Registrar................................................... 3
SECTION 1.12. Owner............................................................... 3
SECTION 1.13. Receipts............................................................ 3
SECTION 1.14. Registrar........................................................... 3
SECTION 1.15. Restricted American Depositary Shares............................... 3
SECTION 1.16. Restricted Deposit Agreement........................................ 3
SECTION 1.17. Rule 144............................................................ 3
SECTION 1.18. Rule 145............................................................ 4
SECTION 1.19. Securities Act...................................................... 4
SECTION 1.20. Securities Exchange Act............................................. 4
SECTION 1.21. Shares.............................................................. 4
SECTION 1.22. United States....................................................... 4
ARTICLE 2
FORM OF RECEIPTS, DEPOSIT OF SHARES, EXECUTION AND
DELIVERY, TRANSFER AND SURRENDER OF RECEIPTS
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
SECTION 2.01. Form and Transferability of
Receipts.......................................................................... 4
SECTION 2.02. Deposit of Shares.............................................................. 7
SECTION 2.03. Execution and Delivery of Receipts............................................. 8
SECTION 2.04. Transfer of Receipts; Combination
and Split-up of Receipts.................................................. 9
SECTION 2.05. Surrender of Receipts and
Withdrawal of Shares...................................................... 10
SECTION 2.06. Limitations on Execution and
Delivery, Transfer and Surrender of Receipts.............................. 12
SECTION 2.07. Lost Receipts, etc............................................................. 12
SECTION 2.08. Cancellation and Destruction of
Surrendered Receipts...................................................... 13
SECTION 2.09. Exchange of Restricted American
Depositary Shares for ADSs................................................ 13
ARTICLE 3
CERTAIN OBLIGATIONS OF OWNERS AND BENEFICIAL
OWNERS OF RECEIPTS
SECTION 3.01. Filing Proofs, Certificates and
Other Information......................................................... 14
SECTION 3.02. Liability of Owner or Beneficial
Owner for Taxes........................................................... 15
SECTION 3.03. Warranties on Deposit of Shares................................................ 15
ARTICLE 4
THE DEPOSITED SECURITIES
SECTION 4.01. Cash Distributions............................................................. 15
SECTION 4.02. Distributions Other Than Cash,
Shares or Rights.......................................................... 16
SECTION 4.03. Distributions in Shares........................................................ 17
SECTION 4.04. Rights......................................................................... 17
SECTION 4.05. Conversion of Foreign Currency................................................. 19
SECTION 4.06. Fixing of Record Date.......................................................... 20
SECTION 4.07. Voting of Deposited Securities................................................. 21
SECTION 4.08. Changes Affecting Deposited
</TABLE>
-II-
<PAGE>
<TABLE>
<S> <C>
Securities................................................................. 24
SECTION 4.09. Reports........................................................................ 25
SECTION 4.10. Lists of Owners................................................................ 25
SECTION 4.11. Withholding.................................................................... 25
ARTICLE 5
THE DEPOSITARY, THE CUSTODIANS AND THE COMPANY
SECTION 5.01. Maintenance of Office and Transfer
Books by the Depositary................................................... 26
SECTION 5.02. Prevention or Delay in Performance
by the Depositary or the Company.......................................... 27
SECTION 5.03. Obligations of the Depositary, the
Custodian and the Company................................................. 27
SECTION 5.04. Resignation and Removal of the
Depositary................................................................ 28
SECTION 5.05. The Custodians................................................................. 29
SECTION 5.06. Notices and Reports............................................................ 29
SECTION 5.07. Distribution of Additional Shares,
Rights, etc............................................................... 30
SECTION 5.08. Indemnification................................................................ 30
SECTION 5.09. Charges of Depositary.......................................................... 31
SECTION 5.10. Retention of Depositary Documents.............................................. 32
SECTION 5.11. Exclusivity.................................................................... 32
ARTICLE 6
AMENDMENT AND TERMINATION
SECTION 6.01. Amendment...................................................................... 32
SECTION 6.02. Termination.................................................................... 33
ARTICLE 7
MISCELLANEOUS
SECTION 7.01. Counterparts................................................................... 34
SECTION 7.02. No Third Party Beneficiaries................................................... 34
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
SECTION 7.03. Severability................................................................... 34
SECTION 7.04. Owners and Beneficial Owners as
Parties; Binding Effect................................................... 35
SECTION 7.05. Notices........................................................................ 35
SECTION 7.06. Governing Law.................................................................. 35
</TABLE>
ANNEX I
Certification and Agreement of Acquirors of
Receipts Upon Deposit of Shares Pursuant to
Section 2.02 of the Restricted Deposit Agreement (B)
ANNEX II
Certification and Agreement of Certain Persons
Transferring Receipts Pursuant to
Sections 2.01 and 2.04 of
the Restricted Deposit Agreement (B)
ANNEX III
Certification and Agreement of Persons Receiving
Deposited Securities Upon Withdrawal
Pursuant to Section 2.05 of
the Restricted Deposit Agreement (B)
EXHIBIT A
FORM OF RESTRICTED AMERICAN DEPOSITARY RECEIPT
-IV-
<PAGE>
RESTRICTED DEPOSIT AGREEMENT (B)
RESTRICTED DEPOSIT AGREEMENT (B), dated as of June 8, 1999, 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 (B), 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, as amended and
restated as of May 22, 1998, 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.
SECTION 1.02. ADSs; ADRs. The term "ADSs" shall mean the
----------
unrestricted American Depositary Shares issued pursuant to the ADR Deposit
Agreement.
<PAGE>
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; provided, however, that at such time
- ----- -------- -------
as the Company redenominates its accounts in euro, all references herein to
Pounds or Pence shall be deemed to refer to euro in the redenominated amounts.
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.
-2-
<PAGE>
SECTION 1.11. Foreign Registrar. The term "Foreign Registrar" shall
-----------------
mean Bank of Ireland, Registrar 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 (B), 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.
-3-
<PAGE>
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; provided, however, that if there shall occur any change in nominal
-------- -------
value (including, if applicable, any redenomination in euro), a split-up or
consolidation or any other reclassification described in Section 4.08, the term
"Shares" shall thereafter also mean the successor securities resulting from such
change in nominal value, split-up or consolidation or such other
reclassification.
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.
-4-
<PAGE>
No Receipt shall be entitled to any benefits under this Restricted
Deposit Agreement or be valid or obligatory for any purpose, unless such Receipt
shall have been executed by the Depositary by the manual signature of a duly
authorized signatory of the Depositary; provided, however, that such signature
-------- -------
may be a facsimile if a Registrar for the Receipts shall have been appointed and
such Receipts are countersigned by the manual signature of a duly authorized
officer of the Registrar. Receipts bearing the manual or facsimile signature of
a duly authorized signatory of the Depositary who was at any time a proper
signatory of the Depositary shall bind the Depositary, notwithstanding that such
signatory has ceased to hold such office prior to the execution and delivery of
such Receipts by the Registrar or did not hold such office on the date of
issuance of such Receipts.
Each Receipt shall bear the following legend:
THIS RESTRICTED AMERICAN DEPOSITARY RECEIPT, THE RESTRICTED
AMERICAN DEPOSITARY SHARES EVIDENCED HEREBY AND THE ORDINARY
SHARES OF CBT GROUP PLC (THE "ORDINARY SHARES") WHICH MAY BE
RECEIVED UPON SURRENDER OF THIS RESTRICTED AMERICAN DEPOSITARY
RECEIPT OR CANCELLATION OF THE RESTRICTED AMERICAN DEPOSITARY
SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
REGISTERED UNDER THE SECURITIES ACT OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE. EACH PERSON DEPOSITING ORDINARY SHARES
AGREES THAT THIS RESTRICTED AMERICAN DEPOSITARY RECEIPT, THE
RESTRICTED AMERICAN DEPOSITARY SHARES EVIDENCED HEREBY AND THE
ORDINARY SHARES REPRESENTED THEREBY MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT REGISTERING THE RESALE OF THE RESTRICTED
AMERICAN DEPOSITARY SHARES OR 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
-5-
<PAGE>
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 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
-6-
<PAGE>
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 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
-7-
<PAGE>
certificate or certificates to the Company or the Foreign Registrar, if
applicable, for transfer and recordation of the Shares being deposited in the
name of the Depositary or its nominee or such Custodian or its nominee.
(b) Deposited Securities shall be held by the Depositary or by a
Custodian for the account and to the order of the Depositary or at such other
place or places as the Depositary shall determine. The Depositary agrees to
instruct the Custodian to place all Shares accepted for deposit under this
Restricted Deposit Agreement into segregated accounts separate from any Shares
of the Company that may be held by such Custodian under any other depositary
receipt facility relating to the Shares.
SECTION 2.03. Execution and Delivery of Receipts. Upon receipt by
----------------------------------
any Custodian of any deposit pursuant to Section 2.02 hereunder (and in
addition, if the transfer books of the Company or the Foreign Registrar, if
applicable, are open, the Depositary may in its sole discretion require a proper
acknowledgment or other evidence from the Company that any Deposited Securities
have been recorded upon the books of the Company or the Foreign Registrar, if
applicable, in the name of the Depositary or its nominee or such Custodian or
its nominee), together with the other documents required as above specified,
such Custodian shall notify the Depositary of such deposit and the person or
persons to whom or upon whose written order a Receipt or Receipts are
deliverable in respect thereof and the number of Restricted American Depositary
Shares to be evidenced thereby. Such notification shall be made by letter or, at
the request, risk and expense of the person making the deposit, by cable, telex
or facsimile transmission. Upon receiving such notice from such Custodian, or
upon the receipt of Shares by the Depositary, in either case together with a
duly executed and completed Depositor Certificate in substantially the form
attached hereto as Annex I, the Depositary, subject to the terms and conditions
of this Restricted Deposit Agreement, shall execute and deliver at its Corporate
Trust Office, to or upon the order of the person or persons named in the notice
delivered to the Depositary (which shall be the beneficial owner furnishing the
Depositor Certificate), a Receipt or 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 pursuant to
an effective registration statement registering the resale of the Restricted
American Depositary Shares or 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,
-8-
<PAGE>
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 pursuant to an effective registration statement registering the resale
of the Restricted American Depositary Shares or in accordance with paragraphs
(c), (e), (f), (g) and, if applicable, (h) of Rule 144 under the Securities Act,
without regard to any termination of certain restrictions by operation of
paragraph (k) of that rule, the Depositary, subject to the terms and conditions
of this Restricted Deposit Agreement, including payment of the fees of the
Depositary as provided in Section 5.09, shall exchange, upon any surrender of a
Receipt, by the Owner in person or by a duly authorized attorney, properly
endorsed or accompanied by proper instruments of transfer, and duly stamped as
may be required by the laws of the State of New York and of the United States of
America, the Receipts evidencing Restricted American Depositary Shares for ADRs
evidencing ADSs issued pursuant to the ADR Deposit Agreement, subject to the
provisions of Section 2.09 of this Restricted Deposit Agreement. The Depositary
shall not be required to register any transfer of a Receipt unless it shall have
received from the Beneficial Owner a duly executed and completed Transfer
Certificate, in form and substance satisfactory to the Depositary.
The Depositary, subject to the terms and conditions of this Restricted
Deposit Agreement, including, if the Depositary shall so require, delivery of a
written opinion of U.S. counsel and a duly executed and completed Transfer
Certificate substantially in the form of Annex II hereto, shall upon surrender
of a Receipt or Receipts for the purpose of effecting a split-up or combination
of such Receipt or Receipts, execute and deliver a new Receipt or Receipts for
any authorized number of Restricted American 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
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<PAGE>
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,
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 pursuant to an
effective registration statement registering the resale of the Restricted
American Depositary Shares or 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
-10-
<PAGE>
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.
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
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<PAGE>
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.
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 pursuant to an effective registration statement registering the
resale of the Restricted American Depositary Shares or 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
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<PAGE>
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
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
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<PAGE>
represent and warrant, in addition to such representations and warranties as are
set forth in the Depositor Certificate, that such Shares and each certificate
therefor are validly issued, fully paid, nonassessable and free of any
preemptive rights of the holders of outstanding Shares and that the person
making such deposit is duly authorized so to do. Such representations and
warranties shall survive the deposit of Shares and issuance of Receipts.
ARTICLE 4
THE DEPOSITED SECURITIES
SECTION 4.01. Cash Distributions. Whenever the Depositary shall
------------------
receive any cash dividend or other cash distribution on any Deposited
Securities, the Depositary shall, subject to the provisions of Section 4.05,
convert such dividend or distribution into Dollars and shall distribute the
amount thus received (net of the fees and expenses of the Depositary as provided
in Section 5.09) to the Owners entitled thereto, in proportion to the number of
Restricted American Depositary Shares representing such Deposited Securities
held by them respectively; provided, however, that in the event that the Company
-------- -------
or the Depositary shall be required to withhold and does withhold from such cash
dividend or such other cash distribution an amount on account of taxes, the
amount distributed to the Owner of the Receipts evidencing Restricted American
Depositary Shares representing such Deposited Securities shall be reduced
accordingly. The Depositary shall distribute only such amount, however, as can
be distributed without attributing to any Owner a fraction of one cent. Any
such fractional amounts shall be rounded to the nearest whole cent and so
distributed to Owners entitled thereto. The Company or its agent will remit to
the appropriate governmental agency in The Republic of Ireland all amounts
withheld and owing to such agency. The Depositary will forward to the Company
or its agent such information from its records as the Company may reasonably
request to enable the Company or its agent to file necessary reports with
governmental agencies, and the Depositary or the Company or its agent may file
any such reports necessary to obtain 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
-14-
<PAGE>
for accomplishing such distribution; provided, however, that if in the opinion
-------- -------
of the Depositary such distribution cannot be made proportionately among the
Owners entitled thereto, or if for any other reason (including, but not limited
to, any requirement that the Company or the Depositary withhold an amount on
account of taxes or other governmental charges or that such securities must be
registered under the Securities Act in order to be distributed to Owners or
Beneficial Owners) the Depositary deems such distribution not to be feasible,
the Depositary may adopt such method as it may deem equitable and practicable
for the purpose of effecting such distribution, including, but not limited to,
the public or private sale of the securities or property thus received, or any
part thereof, and the net proceeds of any such sale (net of the fees and
expenses of the Depositary as provided in Section 5.09) shall be distributed by
the Depositary to the Owners entitled thereto, all in the manner and subject to
the conditions described in Section 4.01. Each beneficial owner of Receipts or
Shares so distributed shall be deemed to have acknowledged that the Shares have
not been registered under the Securities Act and to have agreed to comply with
the restrictions on transfer described in the form of legend set forth in
Section 2.01 hereof.
SECTION 4.03. Distributions in Shares. If any distribution upon any
-----------------------
Deposited Securities consists of a dividend in, or free distribution of, Shares,
the Depositary may distribute to the Owners of outstanding Receipts entitled
thereto, in proportion to the number of Restricted American Depositary Shares
representing such Deposited Securities held by them respectively, additional
Receipts evidencing an aggregate number of Restricted American Depositary Shares
representing the amount of Shares received as such dividend or free
distribution, subject to the terms and conditions of the Restricted Deposit
Agreement with 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.
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<PAGE>
SECTION 4.04. Rights. In the event that the Company shall offer or
------
cause to be offered to the holders of any Deposited Securities any rights to
subscribe for additional Shares or any rights of any other nature, the
Depositary shall have discretion as to the procedure to be followed in making
such rights available to any Owners or in disposing of such rights on behalf of
any Owners and making the net proceeds available to such Owners or, if by the
terms of such rights offering or for any other reason, the Depositary may not
either make such rights available to any Owners or dispose of such rights and
make the net proceeds available to such Owners, then the Depositary shall allow
the rights to lapse. If at the time of the offering of any rights the
Depositary determines in its discretion that it is lawful and feasible to make
such rights available to all or certain Owners but not to other Owners, the
Depositary may distribute to any Owner to whom it determines the distribution to
be lawful and feasible, in proportion to the number of Restricted American
Depositary Shares held by such Owner, warrants or other instruments therefor in
such form as it deems appropriate.
In circumstances in which rights would otherwise not be distributed,
if an Owner of Receipts requests the distribution of warrants or other
instruments in order to exercise the rights allocable to the Restricted American
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,
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<PAGE>
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 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.
-17-
<PAGE>
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.
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.
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<PAGE>
SECTION 4.07. Voting of Deposited Securities. Upon receipt of notice
------------------------------
of any meeting of holders of Shares or other Deposited Securities, if requested
in writing by the Company, the Depositary shall, as soon as practicable
thereafter, mail to the Owners a notice, the form of which notice shall be in
the sole discretion of the Depositary, which shall contain (a) all of the
information contained in such notice of meeting received by the Depositary from
the Company, (b) a statement that the Owners as of the close of business on a
specified record date will be entitled, subject to any applicable provision of
Irish law and of the Memorandum and Articles of Association of the Company, to
instruct the Depositary as to the exercise of the voting rights, if any,
pertaining to the amount of Shares or other Deposited Securities represented by
their respective Restricted American Depositary Shares, (c) a statement that
Owners who instruct the Depositary as to the exercise of their voting rights
will be deemed to have instructed the Depositary or its authorized
representative to call for a poll with respect to each matter for which such
instructions are given, subject to any applicable provisions of Irish law and of
the Memorandum and Articles of Association of the Company and (d) if applicable,
a statement as to the manner in which such instructions may be given, including
an express indication that instructions may be given or deemed given in
accordance with the last sentence of this paragraph if no instruction is
received, to the Depositary to give a discretionary proxy to a person designated
by the Company. Upon the written request of an Owner on such record date,
received on or before the date established by the Depositary for such purpose,
the Depositary shall endeavor, in so far as practicable, to vote or cause to be
voted the amount of Shares or other Deposited Securities represented by the
American Depositary Shares evidenced by such Receipt in accordance with the
instructions set forth in such request. Accordingly, pursuant to the Company's
Memorandum and Articles of Association and applicable Irish law, the Depositary
will cause its authorized representative to attend each meeting of holders of
Shares and call for a poll as instructed in accordance with clause (c) above for
the purpose of effecting such vote. The Depositary shall not vote or attempt to
exercise the right to vote that attaches to the Shares or other Deposited
Securities, other than in accordance with such instructions or deemed
instructions. If no instructions are received by the Depositary from any Owner
with respect to any of the Deposited Securities represented by the American
Depositary Shares evidenced by such Owner's Receipts on or before the date
established by the Depositary for such purpose, the Depositary will deem such
Owner to have instructed the Depositary to give a discretionary proxy to a
person designated by the Company with respect to such Deposited Securities and
the Depositary will give a discretionary proxy to a person designated by the
Company to vote such Deposited Securities; provided, that no such instructions
--------
will be deemed given and no such discretionary proxy will be given when the
Company notifies the Depositary (and the Company agrees to provide such notice
as promptly as practicable in writing) that the matter to be voted upon is one
of the following:
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<PAGE>
1. is a matter not submitted to shareholders by means of a proxy
statement comparable to that specified in Schedule 14-A of the
Commission;
2. is the subject of a counter-solicitation, or is part of a proposal
made by a shareholder which is being opposed by management (i.e., a
- -
contest);
3. relates to a merger or consolidation (except when the Company's
proposal is to merge with its own wholly-owned subsidiary, provided
its shareholders dissenting thereto do not have rights of appraisal);
4. involves right of appraisal;
5. authorizes mortgaging of property;
6. authorizes or creates indebtedness or increases the authorized
amount of indebtedness;
7. authorizes or creates preferred shares or increases the authorized
amount of existing preferred shares;
8. alters the terms or conditions of any shares of the Company's
stock then outstanding or existing indebtedness;
9. involves waiver or modification of preemptive rights (except when
the Company's proposal is to waive such rights with respect to
ordinary shares being offered pursuant to stock option or purchase
plans involving the additional issuance of not more than 5% of the
Company's outstanding ordinary shares (see Item 12 below));
10. alters voting provisions or the proportionate voting power of a
class of shares, or the number of its votes per share (except where
cumulative voting provisions govern the number of votes per share for
election of directors and the Company's proposal involves a change in
the number of its directors by not more than 10% or not more than
one);
11. changes existing quorum requirements with respect to shareholder
meetings;
12. authorizes issuance of ordinary shares, or options to purchase
ordinary shares, to directors, officers, or employees in an amount
which exceeds 5% of the total amount of the class outstanding (when no
plan is
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<PAGE>
amended to extend its duration, the Company shall factor into the
calculation the number of ordinary shares that remain available for
issuance, the number of ordinary shares subject to outstanding options
and any ordinary shares being added; should there be more than one
plan being considered at the same meeting, all ordinary shares are
aggregated);
13. authorizes
(a) a new profit-sharing or special remuneration plan, or a new
retirement plan, the annual cost of which will amount to more
than 10% of average annual income before taxes for the preceding
five years; or
(b) the amendment of an existing plan which would bring its costs
above 10% of such average annual income before taxes (should
there be more than one plan being considered at the same meeting,
all costs are aggregated; exceptions may be made in cases of (a)
retirement plans based on agreement or negotiations with labor
unions (or which have been or are to be approved by such unions);
and (b) any related retirement plan for benefit of non-union
employees having terms substantially equivalent to the terms of
such union-negotiated plan, which is submitted for action of
stockholders concurrently with such union-negotiated plan);
14. changes the purposes or powers of the Company to an extent which
would permit it to change a materially different line of business and
it is the Company's stated intention to make such a change;
15. authorizes the acquisition of property, assets, or a company,
where the consideration to be given has a fair value of 20% or more of
the market value of the previously outstanding shares;
16. authorizes the sale or other disposition of assets or earning
power of 20% or more of those existing prior to the transaction;
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.
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<PAGE>
SECTION 4.08. Changes Affecting Deposited Securities. In
--------------------------------------
circumstances where the provisions of Section 4.03 do not apply, upon any change
in nominal value, change in par value, split-up, consolidation or any other
reclassification of Deposited Securities, or upon any recapitalization,
reorganization, merger or consolidation or sale of assets affecting the Company
or to which it is a party, any securities which shall be received by the
Depositary or a Custodian in exchange for or in conversion of or in respect of
Deposited Securities, shall be treated as new Deposited Securities under this
Restricted Deposit Agreement, and Restricted American Depositary Shares shall
thenceforth represent, in addition to the existing Deposited Securities, the
right to receive the new Deposited Securities so received in exchange or
conversion, unless additional Receipts are delivered pursuant to the following
sentence. In any such case the Depositary may execute and deliver additional
Receipts as in the case of a dividend in Shares, or call for the surrender of
outstanding Receipts to be exchanged for new Receipts specifically describing
such new Deposited Securities.
SECTION 4.09. Reports. The Depositary shall make available for
-------
inspection by Owners at its Corporate Trust Office any reports and
communications, including any proxy soliciting material, received from the
Company which are both (a) received by the Depositary as the holder of the
Deposited Securities and (b) made generally available to the 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.
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<PAGE>
ARTICLE 5
THE DEPOSITARY, THE CUSTODIANS AND THE COMPANY
SECTION 5.01. Maintenance of Office and Transfer Books by the
-----------------------------------------------
Depositary. Until termination of this Restricted Deposit Agreement in
- ----------
accordance with its terms, the Depositary shall maintain in the Borough of
Manhattan, The City of New York, facilities for the execution and delivery,
registration, registration of transfers and surrender of Receipts in accordance
with the provisions of this Restricted Deposit Agreement.
The Depositary shall keep books, at its Corporate Trust Office, for
the registration of Receipts and transfers of Receipts which at all reasonable
times shall be open for inspection by the Owners, provided that such inspection
shall not be for the purpose of communicating with Owners in the interest of a
business or object other than the business 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
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<PAGE>
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.
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
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<PAGE>
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.
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
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<PAGE>
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 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.
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<PAGE>
SECTION 5.07. Distribution of Additional Shares, Rights, etc. The
-----------------------------------------------
Company agrees that in the event of any issuance or distribution of (1)
additional Shares, (2) rights to subscribe for Shares, (3) securities
convertible into Shares, or (4) rights to subscribe for such securities (each a
"Distribution"), the Company will promptly furnish to the Depositary a written
opinion from U.S. counsel for the Company, which counsel shall be satisfactory
to the Depositary, stating whether or not the Distribution requires a
Registration Statement under the Securities Act to be in effect prior to making
such Distribution available to Owners entitled thereto. If in the opinion of
such counsel a Registration Statement is required, such counsel shall furnish to
the Depositary a written opinion as to whether or not there is a Registration
Statement in effect which will cover such Distribution.
The Company agrees with the Depositary that neither the Company nor
any person controlled by, 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.
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<PAGE>
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 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
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<PAGE>
SECTION 6.01. Amendment. The form of the Receipts and any provisions
---------
of this Restricted Deposit Agreement may at any time and from time to time be
amended by agreement between the Company and the Depositary without the consent
of Owners or Beneficial Owners of Receipts in any respect which they may deem
necessary or desirable, including, without limitation, amendments agreed upon
pursuant to Section 2.09(b) hereof. Any amendment which shall impose or
increase any fees or charges (other than taxes and other governmental charges,
registration fees, cable, telex or facsimile transmission costs, delivery costs
or other such expenses), or which shall otherwise prejudice any substantial
existing right of Owners, shall, however, not become effective as to outstanding
Receipts until the expiration of thirty days after notice of such amendment
shall have been given to the Owners of outstanding Receipts. Every Owner, at
the time any amendment so becomes effective, shall be deemed, by continuing to
hold such Receipt, to consent and agree to such amendment and to be bound by the
Restricted Deposit Agreement as amended thereby. In no event shall any
amendment impair the right of the Owner of any Receipt to surrender such Receipt
and receive therefor the Deposited Securities represented thereby, except in
order to comply with mandatory provisions of applicable law.
SECTION 6.02. Termination. The Depositary shall, at any time at the
-----------
direction of the Company, terminate this Restricted Deposit Agreement by mailing
notice of such 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
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<PAGE>
Receipt, any expenses for the account of the Owner of such Receipt in accordance
with the terms and conditions of this Restricted Deposit Agreement, and any
applicable taxes or governmental charges). At any time after the expiration of
one year from the date of termination, the Depositary may sell the Deposited
Securities then held hereunder and may thereafter hold uninvested the net
proceeds of any such sale, together with any other cash then held by it
hereunder, unsegregated and without liability for interest, for the pro rata
benefit of the Owners of Receipts which have not theretofore been surrendered,
such Owners thereupon becoming general creditors of the Depositary with respect
to such net proceeds. After making such sale, the Depositary shall be discharged
from all obligations under this Restricted Deposit Agreement, except to account
for such net proceeds and other cash (after deducting, in each case, the fee of
the Depositary for the surrender of a Receipt, any expenses 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
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<PAGE>
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, Belfield Office Park, Clonskeagh, Dublin 4, The Republic of
Ireland, Attention: President, or any other place to which the Company may have
transferred its principal office.
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.
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<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/ Jack Hayes
-----------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Depositary
By: /s/ Nancy Fitzsimmons
-----------------------------
-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 (B)
We refer to the Restricted Deposit Agreement (B), dated as of June 8,
1999, (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 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 pursuant to an effective
registration statement registering the resale of the Restricted American
Depositary Shares or in accordance with the transfer restrictions imposed by
paragraphs (c), (e), (f), (g) and, if applicable, (h) of Rule 144 under the Act,
without reliance on any termination of any such restriction by operation of
Annex I-2
<PAGE>
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 (B)
We refer to the Restricted Deposit Agreement (B), dated as of June 8,
1999 (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
pursuant to an effective registration statement registering the resale of the
Restricted American Depositary Shares or 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 pursuant to an effective registration statement
registering the resale of the Restricted American Depositary Shares or in
accordance with paragraphs (c), (e), (f), (g) and, if applicable, (h)
Annex II-1
<PAGE>
of Rule 144 under the Act, for ADRs evidencing ADSs issued pursuant to the ADR
Agreement.
4. 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 June 8, 1999
(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
____________, 1999, executed by us, and
(iii) We agree that the Shares may not be offered, sold, pledged
or otherwise transferred except pursuant to an effective
registration statement registering the resale of the
Restricted American Depositary Shares or in accordance with
paragraphs (c), (e), (f),
Annex III-1
<PAGE>
(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 PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT REGISTERING THE RESALE OF THE RESTRICTED
AMERICAN DEPOSITARY SHARES OR 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
<PAGE>
(C) IN EACH CASE UPON THE DELIVERY OF A TRANSFER CERTIFICATE
SUBSTANTIALLY IN THE FORM ATTACHED TO THE RESTRICTED DEPOSIT
AGREEMENT AS ANNEX II DULY EXECUTED AND COMPLETED BY THE
TRANSFEROR. THE BENEFICIAL OWNER OF ORDINARY SHARES RECEIVED UPON
CANCELLATION OF ANY AMERICAN DEPOSITARY RECEIPTS MAY NOT DEPOSIT
OR CAUSE TO BE DEPOSITED SUCH ORDINARY SHARES INTO ANY DEPOSITARY
RECEIPT FACILITY ESTABLISHED OR MAINTAINED BY A DEPOSITARY 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 June 8, 1999, (herein
called the "Restricted Deposit Agreement"), by and among the Company, the
Depositary, and all Owners and Beneficial Owners from time to time of Receipts
issued thereunder, each of whom by accepting a Receipt agrees to become a party
thereto and become bound by all the terms and conditions thereof. The
Restricted Deposit Agreement sets forth the rights of Owners and Beneficial
Owners of the Receipts and the rights and duties of the Depositary in respect of
the Shares deposited thereunder and any and all other securities, property and
cash from time to time received in respect of such Shares and held thereunder
(such Shares, securities, property, and cash are herein called "Deposited
Securities"). Copies of the Restricted Deposit Agreement are on file at the
Depositary's Corporate Trust Office in New York City and at the office of the
Custodian.
A-3
<PAGE>
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 pursuant to an effective registration statement registering the
resale of the Restricted American Depositary Shares or 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 pursuant to
an effective registration statement registering the resale of the Restricted
American Depositary Shares or in accordance with paragraphs (c), (e), (f), (g)
and, if applicable, (h) of Rule 144 under
A-4
<PAGE>
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.
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
A-5
<PAGE>
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
pursuant to an effective registration statement registering the resale of the
Restricted American Depositary Shares or 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
Agreement, (6) a fee of $.02 or less per Restricted American Depositary Share
(or portion
A-7
<PAGE>
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 Depositary as the holder of the Deposited Securities and (b)
made generally available to
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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
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distribution cannot be made proportionately among the Owners of Receipts
entitled thereto, or if for any other reason the Depositary deems such
distribution not to be feasible, the Depositary may adopt such method as it may
deem equitable and practicable for the purpose of effecting such distribution,
including, but not limited to, the public or private sale of the securities or
property thus received, or any part thereof, and the net proceeds of any such
sale (net of the fees and expenses of the Depositary as provided in Article 7
hereof and Section 5.09 of the Restricted Deposit Agreement) will
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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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<PAGE>
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 recapitalization, reorganization, merger or
consolidation, or sale of assets affecting the
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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 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
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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.
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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 as provided in the Restricted
Deposit Agreement, and shall continue to deliver Deposited
A-19
<PAGE>
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).
If the Company requests information from the Depositary or the
Custodian, as the registered owners of Shares, pursuant to Irish law or the
Memorandum
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<PAGE>
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 99.1
Company Press Release
CBT Group Completes Acquisition of Knowledge Well
CBT Group Gains Access to Major New Market Opportunities Through Knowledge Well
Business Offerings
REDWOOD CITY, Calif., June 24 /PRNewswire/ -- CBT Group (Nasdaq: CBTSY - news),
----- ----
a leading provider of interactive education software for information technology
training, today announced that it has completed the acquisition of Knowledge
Well, a provider of business, management and professional education using online
learning technologies. The acquisition was approved overwhelmingly by CBT's
shareholders earlier this month, with approximately 99 percent of the
shareholders that voted ratifying the acquisition.
"This is a major development for CBT Group," commented William G. McCabe, CBT
Group chairman. "CBT Group was instrumental in creating and defining the
interactive education software space in the information technology arena and has
continually advanced the boundaries of that marketplace. Knowledge Well has
also been a leader, creating a new model for the delivery of business degrees
and business and professional education using online learning technologies.
This acquisition brings together an established industry powerhouse and an
innovative pioneer. We expect the combination to be a powerful one."
"We now have a major opportunity to apply online learning technologies to a
broader professional marketplace," added Gregory M. Priest, CBT Group's
president and chief executive officer. "The completion of our acquisition of
Knowledge Well is an important step in our ongoing strategy to move CBT Group
forward into the next century. CBT Group has established itself in the
marketplace by creating a powerful development process and organization and
strong customer relationships. Throughout the different areas of our business,
CBT Group has made further major strides forward over the last few quarters. We
have established what we believe is a very strong foundation from which to
address the opportunities that lie before us. We confidently expect Knowledge
Well to be an important part of our future."
Under the terms of the acquisition agreement signed late last year, CBT Group
issued approximately four million shares in exchange for all of the outstanding
capital stock of Knowledge Well. In addition, CBT Group assumed outstanding
Knowledge Well options.
The Company expects to account for the transaction as a purchase. Accordingly,
the company expects to record a one-time charge of approximately $8 million
during the second quarter in connection with the write-off of acquired in-
process research and development, as well as professional fees and other costs
associated with the acquisition. CBT Group will also record goodwill in
connection with the acquisition, which it plans to amortize at the rate of
approximately
<PAGE>
$2 million per quarter. Knowledge Well's results will be included in CBT Group's
financial reports beginning on the closing date.
This press release may contain 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. Any forward-looking statements in
the press release are subject to certain risks and uncertainties that could
cause actual results to differ materially from those stated. Factors that could
cause or contribute to such differences include those discussed in CBT Group's
Form 10-K for the year ended December 31, 1998. Any forward-looking statements
in this press release reflect management's opinions only as of the date hereof
and CBT Group assumes no obligation unless required by law to revise or publicly
release the results of any such forward-looking statements.
About CBT Group
CBT Group PLC is a leading provider of interactive education software for
information technology professionals in business, education and government
markets worldwide. The company's comprehensive library, which covers a range of
client-server, mainframe and Internet and intranet technologies, is used by the
world's leading organizations to train employees to develop and apply mission-
critical technologies in the workplace.
For information about CBT Group's products, call 888-714-5900, fax 800-387-0933,
or send an email to [email protected]. CBT Systems is located on the World
--------------------
Wide Web at http://www.cbtsys.com.
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CBT Systems and the CBT Systems logo are trademarks of CBT Group PLC. All other
company and product names may be trademarks of the respective companies with
which they are associated.
