<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 20, 1997
REGISTRATION NO. 333- (1)
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------
INTERNATIONAL BUSINESS MACHINES CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<CAPTION>
NEW YORK 13-0871985
<S> <C>
(STATE OR OTHER JURISDICTION OF INCORPORATION (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
OR ORGANIZATION)
</TABLE>
ARMONK, NEW YORK 10504
(914) 499-1900
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
LAWRENCE R. RICCIARDI
SENIOR VICE PRESIDENT & GENERAL COUNSEL AND CHIEF FINANCIAL OFFICER
INTERNATIONAL BUSINESS MACHINES CORPORATION
ARMONK, NEW YORK 10504
(914) 499-1900
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
-------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box: /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / /................
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /................
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(A) PER UNIT(B) PRICE(A)(B) FEE
<S> <C> <C> <C> <C>
Debt Securities....................
Preferred Stock(c).................
Depositary Shares(c)............... $3,000,000,000(1) 100% $3,000,000,000(1) $909,091
Capital Stock(c)...................
Warrants...........................
</TABLE>
(a) Subject to Rule 462(b) under the Securities Act, in no event will the
aggregate initial offering price of the securities issued under this
Registration Statement (which includes securities issued hereunder pursuant
to Rule 429 under the Securities Act) exceed $4,300,000,000, or if any
securities are issued in any foreign currency units, the U.S. dollar
equivalent of $4,300,000,000. For Debt Securities issued with an original
issue discount, the amount to be registered is calculated as the initial
accreted value of such Debt Securities.
(b) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(o).
(c) In addition to any Preferred Stock, Depositary Shares or Capital Stock that
may be issued directly under this Registration Statement, there are being
registered hereunder an indeterminate number of shares of Preferred Stock,
Depositary Shares or Capital Stock as may be issued upon conversion or
exchange of Debt Securities, Preferred Stock or Depositary Shares, as the
case may be. No separate consideration will be received for any shares of
Preferred Stock, Depositary Shares or Capital Stock so issued upon
conversion or exchange.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
--------------------------
(1) Pursuant to Rule 429 of the Rules and Regulations of the Securities and
Exchange Commission under the Securities Act of 1933, the Prospectus included in
this Registration Statement also relates to $1,300,000,000 of Securities
previously registered under the Registrant's Registration Statement on Form S-3
(File No. 333-21073). This Registration Statement also constitutes
Post-Effective Amendment No. 1 with respect to the Registrant's Registration
Statement on Form S-3 (File No. 333-21073).
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION NOVEMBER 20, 1997
PROSPECTUS
INTERNATIONAL BUSINESS MACHINES CORPORATION
DEBT SECURITIES
PREFERRED STOCK
DEPOSITARY SHARES
CAPITAL STOCK
WARRANTS
International Business Machines Corporation (the "Company") intends from
time to time to issue, in one or more series, up to an aggregate of
$4,300,000,000 of its debt securities (the "Debt Securities"), which may be
either senior (the "Senior Debt Securities") or subordinated (the "Subordinated
Debt Securities") in priority of payment, preferred stock (the "Preferred
Stock"), depositary shares (the "Depositary Shares") representing a fractional
interest in a share of Preferred Stock, Capital Stock (the "Capital Stock") and
warrants to purchase Debt Securities, Preferred Stock or Capital Stock (the
"Warrants") (the Debt Securities, Preferred Stock, Depositary Shares, Capital
Stock and Warrants being collectively referred to herein as the "Securities").
When a particular series of Securities is offered, a supplement to this
Prospectus (the "Prospectus Supplement") will be delivered with the Prospectus.
For Debt Securities, the Prospectus Supplement will set forth with respect to
such series: whether it is a series of Senior Debt Securities or Subordinated
Debt Securities; the designation and principal amount offered; the rate (or
method of calculation) and time of payment of interest, if any; the authorized
denominations; the maturity or maturities; the terms for a sinking, purchase or
analogous fund, if any; the terms for redemption or early repayment, if any; the
currency or currencies or currency unit or currency units in which principal,
premium, if any, or interest, if any, is payable; the purchase price and other
terms of the offering; and any listing on a securities exchange. For Preferred
Stock and Depositary Shares, the Prospectus Supplement will set forth with
respect to such series: the designation; aggregate number of shares; liquidation
preference per share; dividend rate (or method of calculation); dates on which
dividends shall be payable, whether dividends shall be cumulative, noncumulative
or partially cumulative and dates from which dividends shall accrue; any
redemption or sinking fund provisions; the purchase price and other terms of the
offering; any listing on a securities exchange; and if Depositary Shares will be
offered, the fraction of a share of Preferred Stock represented by each
Depositary Share. For Capital Stock, the Prospectus Supplement will set forth
with respect to such series: the number of shares; and the purchase price and
other terms of the offering. For Warrants, the Prospectus Supplement will set
forth with respect to such series: the number and terms thereof; the designation
and the number of securities issuable upon exercise; the purchase price and
other terms of the offering; the exercise price; and, where applicable, the
duration and detachability thereof.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The Securities may be sold (i) through underwriting syndicates represented
by managing underwriters or by underwriters without a syndicate; (ii) through
agents designated from time to time; or (iii) directly. The names of any
underwriters or agents of the Company involved in the sale of the Securities in
respect of which this Prospectus is being delivered and any applicable
commissions or discounts are set forth in the Prospectus Supplement. The net
proceeds to the Company from such sale are also set forth in the Prospectus
Supplement.
THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the Commission's regional offices located at 7
World Trade Center, 13th Floor, New York, New York 10048, and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and copies of such
material may be obtained from the Public Reference Section of the Commission,
Washington, D.C. 20549, at prescribed rates. Please call the Commission at
1-800-SEC-0330 for further information on the operation of the public reference
room. In addition, the Commission maintains a Website that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission ("http://www.sec.gov"). Such
reports, proxy statements and other information may also be inspected at the
offices of the New York Stock Exchange, Inc., 20 Broad Street, 7th Floor, New
York, New York, the Chicago Stock Exchange, Incorporated, 440 South LaSalle
Street, Suite 518, Chicago, Illinois and the Pacific Exchange Inc., 115 Sansome
Street, 2nd Floor, San Francisco, California.
INFORMATION INCORPORATED BY REFERENCE
The Annual Report of the Company on Form 10-K for the fiscal year ended
December 31, 1996, the Quarterly Reports of the Company on Form 10-Q for the
quarters ended March 31, 1997, June 30, 1997 and September 30, 1997, and the
Current Report of the Company on Form 8-K dated January 21, 1997, January 29,
1997, April 23, 1997, May 7, 1997, July 21, 1997, August 1, 1997, and October
20, 1997 filed by the Company under Exchange Act file number 1-2360, are
incorporated herein by reference. All documents filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and
prior to the termination of the offering of the Securities offered hereby shall
be deemed to be incorporated herein by reference.
The Company will cause to be furnished without charge to each person to whom
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all the documents described above, other than exhibits to such
documents. Requests should be addressed to: First Chicago Trust Company of New
York, Mail Suite 4688, P.O. Box 2530, Jersey City, New Jersey, 07303-2530;
telephone: (201) 324-0405.
2
<PAGE>
THE COMPANY
The Company develops, manufactures and sells advanced information processing
products, including computers and microelectronic technology, software,
networking systems and information technology-related services. The Company
offers value worldwide through its North America, Europe/Middle East/ Africa,
Latin America, Asia/Pacific, Global Services and Worldwide Client Server
Computing business units, by providing comprehensive and competitive product
choices.
The Company's principal executive offices are located at Armonk, New York
10504, and its telephone number is (914) 499-1900.
USE OF PROCEEDS
Unless otherwise indicated in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Securities for
general corporate purposes.
The Company expects that it will, on a recurring basis, engage in additional
financings in character and amount to be determined as the need arises.
RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
The ratio of earnings to fixed charges has been computed by dividing
earnings before income taxes (which excludes the cumulative and transition
effects of accounting changes) and fixed charges by fixed charges. The ratio of
earnings to combined fixed charges and preferred stock dividends has been
computed by dividing earnings before income taxes (which excludes the cumulative
and transition effects of accounting changes) and fixed charges by the sum of
fixed charges and dividends on preferred stock. For purposes of calculating the
ratio of earnings to combined fixed charges and preferred stock dividends, the
preferred stock dividend requirements were assumed to be equal to the pre-tax
earnings that would be required to cover such dividend requirements based on the
Company's effective income tax rates for the respective periods. "Fixed charges"
consist of interest on debt and that portion of rental expense deemed to be
representative of interest.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------ -------------------------------------
1997 1996 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges............................. 5.1 4.9 5.3 5.0 3.1
Ratio of earnings to combined fixed charges and preferred stock
dividends.................................................... 5.0 4.8 5.3 4.9 2.9
<CAPTION>
1993 1992
----- -----
<S> <C> <C>
Ratio of earnings to fixed charges............................. (a) (a)
Ratio of earnings to combined fixed charges and preferred stock
dividends.................................................... (a) (a)
</TABLE>
- ------------------------
(a) No ratios are shown for these periods as earnings were insufficient to
cover fixed charges and, in 1993, combined fixed charges and preferred
stock dividends. As a result of the net loss incurred for the year ended
December 31, 1993, earnings were inadequate to cover fixed charges and
combined fixed charges and preferred stock dividends by $8,478 million and
$8,525 million, respectively. As a result of the net loss incurred for the
year ended December 31, 1992, earnings were inadequate to cover fixed
charges by $8,962 million.
DESCRIPTION OF THE DEBT SECURITIES
The Debt Securities will constitute either Senior Debt Securities or
Subordinated Debt Securities. The Senior Debt Securities are to be issued under
an Indenture (the "Senior Indenture") dated as of October 1, 1993, between the
Company and The Chase Manhattan Bank (National Association), as Trustee (the
"Senior Trustee"), as supplemented by the First Supplemental Indenture thereto
dated as of December 15, 1995, filed as an exhibit to the Registration Statement
of which this Prospectus is a part. The
3
<PAGE>
Subordinated Debt Securities will be issued under an Indenture (the
"Subordinated Indenture") to be entered into between the Company and the trustee
named in the applicable Prospectus Supplement (the "Subordinated Trustee"), a
form of which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part. The Senior Indenture and the Subordinated Indentures are
collectively referred to herein as the "Indentures". The following statements
are subject to the detailed provisions of the applicable Indenture; whenever
particular provisions of the applicable Indenture are referred to, such
provisions are incorporated by reference as a part of the statement made, and
the statement is qualified in its entirety by such reference. Whenever a defined
term is referred to and not defined under "Description of the Debt Securities",
the definition thereof is contained in the applicable Indenture. Cross
references to Sections of the Indentures relate to both the Senior Indenture and
the Subordinated Indenture, unless otherwise indicated.
GENERAL
Each Indenture provides for the issuance from time to time of Debt
Securities in an unlimited aggregate principal amount and an unlimited number of
series.
Reference is made to the applicable Prospectus Supplement for the following
terms of the series of Debt Securities offered thereby: (i) the title of the
Debt Securities of such series; (ii) any limit upon the aggregate principal
amount of such Debt Securities; (iii) the date or dates on which such Debt
Securities will mature or the method of determination of such date or dates;
(iv) the rate or rates, or the method of determination thereof, at which such
Debt Securities will bear interest, if any, the date or dates from which such
interest will accrue, the date or dates such interest will be payable and, for
Registered Debt Securities, the Regular Record Dates; (v) the place or places
where the principal of, and premium and interest, if any, on, such Debt
Securities will be payable; (vi) the periods, prices and terms and conditions
upon which any such Debt Security may be redeemed, in whole or in part, at the
option of the Company; (vii) any terms for redemption or repurchase pursuant to
any sinking fund or analogous provision or at the option of a Holder; (viii) any
terms for conversion of the Debt Securities into Preferred Stock, Depositary
Shares or Capital Stock or for exchange of the Debt Securities for the
securities of any other corporation at the option of a holder; (ix) any terms
for the attachment to such Debt Securities of warrants, options or other rights
to purchase or sell Debt Securities, Preferred Stock, Depositary Shares or
Capital Stock; (x) if other than the principal amount thereof, the portion of
the principal amount of such Debt Securities that will be payable upon
acceleration of maturity (Debt Securities subject to such provisions being
referred to as "Original Issue Discount Securities"); (xi) any deletions or
modifications of, or additions to, the Events of Default or covenants of the
Company under the Indenture with respect to such Debt Securities (including
whether the covenants described below under "Certain Covenants of the Company"
will not apply to such Debt Securities); (xii) if other than U.S. dollars, the
currency, currencies or currency unit or units in which such Debt Securities
will be denominated and in which the principal of, and premium and interest, if
any, on, such Securities will be payable; (xiii) whether, and the terms and
conditions on which, the Company or a Holder may elect that, or the other
circumstances under which, payment of principal of, or premium or interest, if
any, on, such Debt Securities is to be made in a currency or currencies or
currency unit or units other than that in which such Debt Securities are
denominated; (xiv) any matter of determining the amount of principal of, or
premium or interest, if any, on, any such Debt Securities to be determined with
reference to an index based on a currency or currency unit, or units other than
that in which such Debt Securities are stated to be payable or an index based on
any other method; (xv) whether such Debt Securities will be issued in fully
registered form without coupons ("Registered Debt Securities") or in bearer form
with or without coupons ("Bearer Debt Securities"), or any combination thereof,
whether such Debt Securities will be issued in the form of one or more global
securities (each a "Global Debt Security") and whether such Debt Securities are
to be issuable in temporary global form or definitive global form; (xvi) if such
Debt Securities are to be issued upon the exercise of warrants, the time, manner
and place for such Debt Securities to be authenticated and delivered; (xvii)
whether and under what circumstances the Company will pay additional amounts to
any holder of such Debt Securities who is not a
4
<PAGE>
United States person (as defined below under "Temporary Global Securities") in
respect of any tax, assessment or governmental charge withheld or deducted and,
if so, whether and on what terms the Company will have the option to redeem such
Debt Securities rather than pay any additional amounts; and (xviii) any other
terms of any of such Debt Securities not inconsistent with the Indenture.
(SECTION 202 AND 301)
Unless otherwise specified in the applicable Prospectus Supplement, (x) the
Debt Securities will be Registered Debt Securities and (y) Debt Securities
denominated in U.S. dollars will be issued, in the case of Registered Debt
Securities, in denominations of $1,000 or an integral multiple thereof and, in
the case of Bearer Debt Securities, in denominations of $5,000. Debt Securities
may bear legends required by United States Federal tax law and regulations.
(SECTION 401)
If any of the Debt Securities are sold for any foreign currency or currency
unit or if the principal of, or premium or interest, if any, on, any of the Debt
Securities is payable in any foreign currency or currency unit, the
restrictions, elections, tax consequences, specific terms and other information
with respect to such Debt Securities and such foreign currency or currency unit
will be set forth in the Prospectus Supplement relating thereto.
EXCHANGE, REGISTRATION AND TRANSFER
Registered Debt Securities of any series will be exchangeable for other
Registered Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations. If Debt Securities of
any series are issuable as both Registered Debt Securities and Bearer Debt
Securities, the Bearer Debt Securities of such series (with all unmatured
coupons, except as provided below, and all matured coupons in default) will be
exchangeable for Registered Debt Securities of the same series of any authorized
denominations and of a like aggregate principal amount and tenor. If a Bearer
Debt Security with coupons appertaining thereto is surrendered in exchange for a
Registered Debt Security after a Regular Record Date or Special Record Date and
before the relevant date for payment of interest, such Bearer Debt Security
shall be surrendered without the coupon relating to such date for payment of
interest and interest will not be payable on such date in respect of the
Registered Debt Security issued in exchange for such Bearer Debt Security, but
will be payable only to the holder of such coupon when due in accordance with
the terms thereof and of the Indenture. Bearer Debt Securities will not be
issued in exchange for Registered Debt Securities (unless otherwise specified in
the applicable Prospectus Supplement and permitted by applicable rules and
regulations). No service charge will be made for any transfer or exchange of the
Debt Securities, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge in connection therewith. (SECTION
404)
Debt Securities may be presented for exchange as provided above, and
Registered Debt Securities (other than U.S. Book-Entry Debt Securities (as
defined below under "Definitive Global Securities--U.S. BOOK-ENTRY SECURITIES"))
may be presented for registration of transfer (with the form of transfer
endorsed thereon duly executed), at the office of the Security Registrar or at
the office of any additional transfer agent designated by the Company for such
purpose with respect to any series of Debt Securities and referred to in the
applicable Prospectus Supplement. (SECTIONS 404 AND 1102) The Chase Manhattan
Bank located at 450 West 33rd Street, New York, New York 10001, is the Security
Registrar under the Senior Indenture, and the Security Registrar under the
Subordinated Indenture will be designated in the applicable Prospectus
Supplement. (SECTION 404) The Company may at any time designate, or rescind the
designation of, the Security Registrar or any additional transfer agent or
approve a change in the location through which the Security Registrar or any
such transfer agent acts, except that, if Debt Securities of a series are
issuable solely as Registered Debt Securities, the Company will be required to
maintain a transfer agent in each Place of Payment for such series and, if Debt
Securities of a series are issuable as both Registered Debt Securities and
Bearer Debt Securities or solely as Bearer Debt Securities, the Company will be
required to maintain (in addition to the Security Registrar) a transfer agent in
a Place of
5
<PAGE>
Payment for such series located outside of the United States. The Company may at
any time designate additional transfer agents with respect to any series of Debt
Securities. (SECTION 1102)
In the event of any redemption in part of any series of Debt Securities, the
Company will not be required to: (i) issue, register the transfer of, or
exchange, Debt Securities of any series during a period beginning at the opening
of business 15 Business Days before any selection of Debt Securities of that
series to be redeemed and ending at the close of business on (a) if Debt
Securities of the series are issuable only as Registered Debt Securities, the
day of mailing of the relevant notice of redemption and (b) if Debt Securities
of the series are issuable as Bearer Debt Securities, the day of the first
publication of the relevant notice of redemption or, if Debt Securities of the
series are also issuable as Registered Debt Securities and there is no
publication, the day of mailing of the relevant notice of redemption; (ii)
register the transfer of, or exchange, any Registered Debt Security selected for
redemption, in whole or in part, except the unredeemed portion of any Registered
Debt Security being redeemed in part; or (iii) exchange any Bearer Debt Security
selected for redemption, except to exchange such Bearer Debt Security for a
Registered Debt Security of that series and like tenor which is simultaneously
surrendered for redemption. (SECTION 404)
For a discussion of restrictions on the exchange, registration and transfer
of Global Debt Securities, see "Global Securities" below.
PAYMENT AND PAYING AGENTS
Payment of principal of, and premium and interest, if any, on, Registered
Debt Securities will be made in the designated currency or currency unit at the
office of such Paying Agent or Paying Agents as the Company may designate from
time to time. At the option of the Company, payment of any interest on
Registered Debt Securities may be made by check mailed to the address of the
person entitled thereto as such address shall appear in the Security Register.
Payment of any installment of interest on Registered Debt Securities will be
made to the person in whose name such Registered Debt Security is registered at
the close of business on the Regular Record Date for such interest. (SECTIONS
406 AND 410)
Payment of principal of, and premium and interest, if any, on, Bearer Debt
Securities will be made in the designated currency unit at the offices of such
Paying Agents outside the United States as the Company may designate from time
to time. On the applicable payment date therefor payments of principal of, and
premium, if any, on, Bearer Debt Securities will be made against surrender of
such Debt Securities, and payment of interest on Bearer Debt Securities with
coupons appertaining thereto on any Interest Payment Date will be made only
against surrender of the coupon relating to such Interest Payment Date.
(SECTIONS 410 AND 1102) No payment with respect to any Bearer Debt Security will
be made at any office or agency of the Company in the United States or by check
mailed to any address in the United States or by transfer to any account
maintained with a bank located in the United States. Notwithstanding the
foregoing, payments of principal of, and premium and interest, if any, on,
Bearer Debt Securities denominated and payable in U.S. dollars will be made at
the office of the Company's Paying Agent in the Borough of Manhattan, The City
of New York, if (but only if) payment of the full amount thereof in U.S. dollars
at all offices or agencies outside the United States is illegal or effectively
precluded by exchange controls or other similar restrictions. (SECTION 1102)
Unless otherwise indicated in the applicable Prospectus Supplement with
respect to Senior Debt Securities, The Chase Manhattan Bank located at 450 West
33rd Street, New York, New York 10001, will be designated as the Company's
Paying Agent for payments with respect to Senior Debt Securities that are
issuable solely as Registered Debt Securities and as the Company's Paying Agent
in the Borough of Manhattan, The City of New York for payments with respect to
Senior Debt Securities (subject to the limitations described above in the case
of Bearer Debt Securities) that are issuable solely as Bearer Debt Securities or
as both Registered Debt Securities and Bearer Debt Securities. With respect to
Subordinated Debt Securities, the Company's Paying Agent for payments with
respect to Subordinated Debt Securities
6
<PAGE>
that are issuable solely as Registered Debt Securities and the Company's Paying
Agent in the Borough of Manhattan, The City of New York for payments with
respect to Subordinated Debt Securities (subject to the limitations described
above in the case of Bearer Debt Securities) that are issuable solely as Bearer
Debt Securities or as both Registrable Debt Securities and Bearer Debt
Securities will be designated in the applicable Prospectus Supplement. Any
Paying Agents outside the United States and any other Paying Agents in the
United States initially designated by the Company for the Debt Securities of a
series will be named in the applicable Prospectus Supplement. The Company may at
any time designate additional Paying Agents or rescind the designation of any
Paying Agent or approve a change in the office through which any Paying Agent
acts, except that, if Debt Securities of a series are issuable solely as
Registered Debt Securities, the Company will be required to maintain a Paying
Agent in each Place of Payment for such series and, if Debt Securities of a
series are issuable as both Registered Debt Securities or Bearer Debt Securities
or solely as Bearer Debt Securities, the Company will be required to maintain
(i) a Paying Agent in the Borough of Manhattan, The City of New York for
payments with respect to any Registered Debt Securities of the series (and for
payments with respect to Bearer Debt Securities of the series in the
circumstances described above, but not otherwise), and (ii) a Paying Agent in a
Place of Payment located outside the United States where Debt Securities of such
series and any coupons appertaining thereto may be presented and surrendered for
payment; provided that if the Debt Securities of such series are listed on any
stock exchange located outside the United States and such stock exchange shall
so require, the Company will maintain a Paying Agent in any required city
located outside the United States for the Debt Securities of such series.
(SECTION 1102)
All moneys deposited with a Trustee or Paying Agent, or then held by the
Company, in trust for the payment of principal of, and premium and interest, if
any, on, any Debt Security or coupon that remains unclaimed at the end of two
years after such principal, premium or interest shall have become due and
payable will be repaid to the Company, or, if then held by the Company,
discharged from such trust, and the holder of such Debt Security or coupon will
thereafter look only to the Company for payment thereof. (SECTION 1103)
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part as one or
more Global Debt Securities in either registered or bearer form and in either
temporary or definitive form. The Global Debt Security or Securities of a series
will be deposited with, or on behalf of, a depositary located in the United
States (a "U.S. Depositary") or a common depositary located outside the United
States (a "Common Depositary") identified in the Prospectus Supplement relating
to such series. All temporary or definitive Global Debt Securities in bearer
form will be deposited with a Common Depositary.
The specific terms of the depositary arrangement with respect to any Debt
Securities of a series issued in global form will be described in the Prospectus
Supplement relating to such series. For purposes other than making payments on a
definitive Global Debt Security, the Company may treat a person having a
beneficial interest in such definitive Global Debt Security as the holder of
such principal amount of Outstanding Debt Securities represented by such
definitive Global Debt Security as shall be specified in a written statement of
the holder of such definitive Global Debt Security, or, in the case of a
definitive Global Debt Security in bearer form, of Euro-clear or Cedel Bank (as
defined below), which is delivered to the Trustee by such person. (SECTION 411)
None of the Company, the Trustee, any Paying Agent or the Security Registrar
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in a Global
Debt Security or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests. (SECTION 411) The Company anticipates
that the following provisions will apply to all depositary arrangements with a
U.S. Depositary or Common Depositary.
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TEMPORARY GLOBAL SECURITIES
If so specified in the applicable Prospectus Supplement, all or any portion
of the Debt Securities of a series that are issuable as Bearer Debt Securities
initially will be represented by one or more temporary Global Debt Securities,
without interest coupons, to be deposited with a Common Depositary in London for
Morgan Guaranty Trust Company of New York, Brussels Office, as operator of the
Euro-clear System ("Euro-clear"), and Cedel Bank, societe anonyme ("Cedel Bank")
for credit to the respective accounts of the beneficial owners of such Debt
Securities (or to such other accounts as they may direct). On and after the
exchange date determined as provided in any such temporary Global Debt Security
and described in the applicable Prospectus Supplement, each such temporary
Global Debt Security will be exchangeable for definitive Debt Securities in
bearer form, registered form, definitive global bearer form or any combination
thereof, as specified in the applicable Prospectus Supplement. No Bearer Debt
Security (including a Debt Security in definitive global bearer form) delivered
in exchange for a portion of a temporary Global Debt Security will be mailed or
otherwise delivered to any location in the United States in connection with such
exchange. (SECTIONS 402 AND 403)
Unless otherwise specified in the applicable Prospectus Supplement, interest
on any portion of a temporary Global Debt Security payable in respect of an
Interest Payment date occurring prior to the issuance of definitive Debt
Securities will be paid to each of Euro-clear and Cedel Bank with respect to the
portion of the temporary Global Debt Security held for its account upon delivery
to the applicable Trustee of a certificate signed by Euro-clear or Cedel Bank,
as the case may be, in the form required by the applicable Indenture dated no
earlier than such Interest Payment Date, which certificate must be based on
statements provided to it by its account holders who are beneficial owners of
interests in such temporary Global Debt Security to the effect that such portion
is not beneficially owned by a United States person, and has not been acquired
by or on behalf of a United States person or for offer to resell or for resale
to a United States person or any person inside the United States or, if a
beneficial interest in such portion has been acquired by a United States person,
(i) that such person is a financial institution, as defined in applicable
regulations promulgated under the Internal Revenue Code of 1986, as amended (the
"Code"), purchasing for its own account or has acquired such Debt Security
through a financial institution and (ii) that such Debt Securities are held by a
financial institution that has agreed in writing to comply with the requirements
of Section 165(j)(3)(A), (B) or (C) of the Code and the regulations thereunder
and that it did not purchase for offer to resell or for resale inside the United
States. Each of Euro-clear and Cedel Bank will in such circumstances credit the
interest received by it in respect of such temporary Global Debt Security to the
accounts of the beneficial owners thereof (or to such other accounts as they may
direct). (SECTION 403)
As used herein, "United States person" means a citizen or resident of the
United States, a corporation, partnership or other entity created or organized
in or under the laws of the United States or an estate or trust the income of
which is subject to United States Federal income taxation regardless of its
source, and "United States" means the United States of America (including the
States and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction.
DEFINITIVE GLOBAL SECURITIES
BEARER SECURITIES. If any Debt Securities of a series are issuable in
definitive global bearer form, the applicable Prospectus Supplement will
describe the circumstances, if any, under which beneficial owners of interests
in any such definitive global Bearer Debt Security may exchange such interests
for Debt Securities of such series and of like tenor and principal amount in any
authorized form and denomination. No Bearer Debt Security delivered in exchange
for a portion of a definitive Global Debt Security will be mailed or otherwise
delivered to any location in the United States in connection with such exchange.
(SECTION 404) Principal of, and premium and interest, if any, on, a definitive
global Bearer Debt Security will be payable in the manner described in the
applicable Prospectus Supplement.
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U.S. BOOK-ENTRY SECURITIES. If Debt Securities of a series are to be
represented by a definitive global Registered Debt Security to be deposited with
or on behalf of a U.S. Depositary, such Debt Securities ("U.S. Book-Entry Debt
Securities") will be represented by a definitive Global Debt Security registered
in the name of the U.S. Depositary or its nominee. Upon the issuance of a
definitive Global Debt Security registered in the name of the U.S. Depositary,
the U.S. Depositary will credit, on its book-entry registration and transfer
system, the respective principal amounts of the U.S. Book-Entry Debt Securities
represented by such Global Debt Security to the accounts of institutions that
have accounts with such depositary or its nominee ("participants"). The accounts
to be credited shall be designated by the underwriters or agents for the sale of
such U.S. Book-Entry Debt Securities or by the Company, if such Debt Securities
are offered and sold directly by the Company. Ownership of U.S. Book-Entry Debt
Securities will be limited to participants or persons that may hold interests
through participants. Ownership of U.S. Book-Entry Debt Securities will be shown
on, and the transfer of that ownership will be effected only through, records
maintained by the U.S. Depositary or its nominee for the applicable definitive
Global Security or by participants or persons that hold through participants. So
long as the U.S. Depositary, or its nominee, is the registered owner of such
Global Debt Security, such depositary or such nominee, as the case may be, will
be considered the sole owner or holder of the U.S. Book-Entry Debt Securities
represented by such Global Debt Security for all purposes under the Indenture.
Payment of principal of, and premium and interest, if any, on, U.S. Book-Entry
Debt Securities will be made to the U.S. Depositary or its nominee, as the case
may be, as the registered owner or the holder of the Global Debt Security
representing such U.S. Book-Entry Debt Securities. Owners of U.S. Book-Entry
Debt Securities will not be entitled to have such Debt Securities registered in
their names in the Security Register, will not receive or be entitled to receive
physical delivery of such Debt Securities in definitive form and will not be
considered the owners or holders thereof under the Indenture. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws impair
the ability to purchase or transfer U.S. Book-Entry Debt Securities.
The Company expects that the U.S. Depositary for U.S. Book-Entry Debt
Securities of a series, upon receipt of any payment of principal of, or premium
or interest, if any, on, the related definitive Global Debt Security, will
immediately credit participants' accounts with payments in amounts proportionate
to their respective beneficial interests in the principal amount of such Global
Debt Security as shown on the records of such Depositary. The Company also
expects that payments by participants to owners of beneficial interests in such
Global Debt Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name", and
will be the responsibility of such participants.
CERTAIN COVENANTS OF THE COMPANY
LIMITATION ON MERGER, CONSOLIDATION AND CERTAIN SALES OF ASSETS. The
Company will covenant that it will not merge into or consolidate with any other
corporation, or convey or transfer its properties and assets substantially as an
entirety, to, any person unless (a) the successor is a U.S. corporation, (b) the
successor assumes on the same terms and conditions all the obligations under the
Debt Securities and the Indentures and (c) immediately after giving effect to
the transaction, there is no default under the applicable Indenture. (SECTION
901) Upon any such merger, consolidation, conveyance or transfer, the successor
will succeed to, and will be substituted in lieu of, the Company. (SECTION 902)
EVENT RISK. Except for the limitations on Secured Indebtedness and Sale and
Leaseback Transactions described below under Senior Debt Securities, the
Indentures and Debt Securities do not contain any covenants or other provisions
designed to afford holders of the Debt Securities protection in the event of a
highly leveraged transaction involving the Company.
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SATISFACTION AND DISCHARGE; DEFEASANCE
At the request of the Company, the applicable Indenture will cease to be in
effect as to the Debt Securities of any series (except for certain obligations
to register the transfer or exchange of such Debt Securities and related
coupons, if any, and hold moneys for payment of such Debt Securities and coupons
in trust) when either (a) all such Debt Securities and coupons have been
delivered to the applicable Trustee for cancellation or (b) all such Debt
Securities and coupons have become due and payable or will become due and
payable at their stated maturity within one year, or are to be called for
redemption within one year, and the Company has deposited with the applicable
Trustee, in trust money, in the currency, currencies or currency unit or units
in which such Debt Securities are payable, in an amount sufficient to pay all
the principal of, and premium and interest, if any, on, such Debt Securities on
the dates such payments are due in accordance with the terms of such Debt
Securities. (SECTION 501)
Unless otherwise specified in the applicable Prospectus Supplement, the
Company, at its option, (a) will be Discharged after 90 days from any and all
obligations in respect of any series of Debt Securities (except for certain
obligations to register the transfer of or exchange Debt Securities and related
coupons, replace stolen, lost or mutilated Debt Securities and coupons, maintain
paying agencies and hold moneys for payment in trust) or (b) need not comply
with certain restrictive covenants of the Indenture in respect of such series
(including those described under "Certain Covenants of the Company"), in each
case if the Company deposits with the trustee in trust, money, or, in the case
of Debt Securities and coupons denominated in U.S. dollars, U.S. Government
Obligations or, in the case of Debt Securities and coupons denominated in a
foreign currency, Foreign Government Securities, which through the payment of
interest thereon and principal thereof in accordance with their terms will
provide money, in an amount sufficient to pay in the currency, currencies or
currency unit or units in which such Debt Securities are payable all the
principal (including any mandatory sinking fund payments) of, and interest on,
such series on the dates such payments are due in accordance with the terms of
such series. Among the conditions to the Company's exercising any such option,
the Company is required to deliver to the applicable Trustee an opinion of
counsel to the effect that the deposit and related defeasance would not cause
the holders of such series to recognize income, gain or loss for United States
Federal income tax purposes and that the holders of such series will be subject
to United States Federal income tax in the same amounts, in the same manner and
at the same times as would have been the case if such option had not been
exercised. (SECTION 503)
EVENTS OF DEFAULT, NOTICE AND WAIVER
Each Indenture provides that, if an Event of Default specified therein with
respect to any series of Debt Securities shall have happened and be continuing,
either the applicable Trustee or the holders of 25% in principal amount of the
outstanding Debt Securities of such series (in the case of certain events of
bankruptcy, insolvency and reorganization, voting as one class with all other
outstanding Debt Securities) may declare the principal of all the Debt
Securities of such series, together with accrued interest thereon, if any, to be
immediately due and payable by notice in writing to the Company (and to the
applicable Trustee if given by the holders). (SECTION 602)
Events of Default in respect of any series are defined in the Indentures as
being: default for 30 days in payment of any interest installment when due;
default in payment of principal of, or premium, if any, on, Debt Securities of
such series when due (other than any sinking fund payments) at their stated
maturity, by declaration, when called for redemption or otherwise; default for
30 days in the making of any sinking fund payment when due; default for 90 days
after notice to the Company by the applicable Trustee or by holders of 25% in
principal amount of the outstanding Debt Securities of such series in the
performance of any covenant in the Debt Securities of such series or in the
applicable Indenture with respect to Debt Securities of such series; and certain
events of bankruptcy, insolvency and reorganization. No Event of Default with
respect to a single series of indebtedness issued under an Indenture (and any
supplemental
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indentures) necessarily constitutes an Event of Default with respect to any
other series of indebtedness issued thereunder. (SECTION 601)
Each Indenture provides that the applicable Trustee will, within 90 days
after the occurrence of a default with respect to the Debt Securities of any
series, give to the holders of the Debt Securities of such series notice of all
uncured and unwaived defaults known to it; provided that, except in the case of
default in the payment of principal of, or premiums or interest, if any, on, or
a sinking fund installment, if any, with respect to any of the Debt Securities
of such series, such Trustee will be protected in withholding such notice if it
in good faith determines that the withholding of such notice is in the interest
of the holders of the Debt Securities of such series. The term "default" for the
purpose of this provision only means the happening of any of the Events of
Default specified above, except that any grace period of notice requirement is
eliminated. (SECTION 702)
Each Indenture contains provisions entitling the applicable Trustee, subject
to the duty of such Trustee during an Event of Default to act with the required
standard of care, to be indemnified by the holders of the Debt Securities before
proceeding to exercise any right or power under such Indenture at the request of
holders of the Debt Securities. (SECTION 703)
Each Indenture provides that the holders of a majority in principal amount
of the outstanding Debt Securities of any series may in certain circumstances
direct the time, method and place of conducting proceedings for remedies
available to the applicable Trustee or exercising any trust or power conferred
on such Trustee in respect of such series. (SECTION 612)
Each Indenture includes a covenant that the Company will file annually with
the applicable Trustee an Officers' Certificate stating whether any default
exists and specifying any default that exists. (SECTION 1106)
In certain cases, the holders of a majority in principal amount of the
outstanding Debt Securities of any series may on behalf of the holders of all
Debt Securities of such series waive any past default or Event of Default with
respect to the Debt Securities of such series or compliance with certain
provisions of the Indenture, except, among other things, a default not
theretofore cured in payment of the principal of, or premium or interest, if
any, on, any of the Debt Securities of such series. (SECTION 613) The holders of
a majority in principal amount of a series of outstanding Debt Securities also
have certain rights to rescind any declaration of acceleration with respect to
such series after all Events of Default with respect to such series not arising
from such declaration shall have been cured. (SECTION 602)
MODIFICATION OF THE INDENTURES
Each Indenture provides that the Company and the Trustee thereunder may,
without the consent of any holders of Debt Securities, enter into supplemental
indentures for the purposes, among other things, of adding to the Company's
covenants, adding additional Events of Default, establishing the form or terms
of any series of Debt Securities issued under such supplemental indentures or
curing ambiguities or inconsistencies in the applicable Indenture or making
other provisions, provided such other provisions shall not adversely affect the
interests of the holders of any series of Debt Securities in any material
respect. (SECTION 1001)
Each Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in principal amount
of the outstanding Debt Securities of all affected series (acting as one class),
to execute supplemental indentures adding any provisions to or changing or
eliminating any of the provisions of the applicable Indenture or modifying the
rights of the holders of the Debt Securities of such series, except that no such
supplemental indenture may, without the consent of the holders of all the
outstanding Debt Securities affected thereby, among other things: (i) change the
Stated Maturity of the principal of, or any installment of principal of or
interest on, any Debt Security; (ii) reduce the principal amount of, the rate of
interest on, or any premium payable upon the redemption of, any Debt Security;
(iii) reduce the amount of the principal of an Original Issue Discount Security
that would be due
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and payable upon acceleration of the Maturity thereof; (iv) change any Place of
Payment where, or the currency, currencies or currency unit or units in which,
any Debt Security or any premium or interest thereon is payable; (v) impair the
right to institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date); (vi) affect adversely the terms, if any, of conversion of any
Debt Security into stock or other securities of the Company or of any other
corporation; (vii) reduce the percentage in principal amount of the outstanding
Debt Securities of any series, the consent of whose holders is required for any
such supplemental indenture, or the consent of whose holders is required for any
waiver (of compliance with certain provisions of the applicable Indenture or
certain defaults thereunder and their consequences) provided for in such
Indenture; (viii) change any obligation of the Company, with respect to
outstanding Debt Securities of a series, to maintain an office or agency in the
places and for the purposes specified in the Indenture for such series; or (ix)
modify any of the foregoing provisions or the provisions for the waiver of
certain covenants and defaults, except to increase any applicable percentage of
the aggregate principal amount of outstanding Debt Securities the consent of the
holders of which is required or to provide with respect to any particular series
the right to condition the effectiveness of any supplemental indenture as to
that series on the consent of the holders of a specified percentage of the
aggregate principal amount of outstanding Debt Securities of such series or to
provide that certain other provisions of the Indentures cannot be modified or
waived without the consent of the holder of each outstanding Debt Security
affected thereby. (SECTION 1002)
MEETINGS
The Indentures contain provisions for convening meetings of the holders of
Debt Securities of any series. (SECTION 1401) A meeting may be called at any
time by the Trustee under the applicable Indenture, and also, upon request, by
the Company or the holders of at least 10% in principal amount of the
outstanding Debt Securities of such series, in any such case upon notice given
in accordance with "Notices" below. (SECTION 1402) Persons entitled to vote a
majority in principal amount of the outstanding Debt Securities of a series will
constitute a quorum at a meeting of holders of Debt Securities of such series,
except that in the absence of a quorum, if the meeting was called by the Company
or the Trustee, it may be adjourned for a period of not less than 10 days, and
in the absence of a quorum at any such adjourned meeting, the meeting may be
further adjourned for a period of not less than 10 days. Except for any consent
which must be given by the holder of each outstanding Debt Security affected
thereby, as described above under "Modification of the Indentures", and subject
to the provisions described in the last sentence under this subheading, any
resolution presented at a meeting or adjourned meeting duly reconvened at which
a quorum is present may be adopted by the affirmative vote of the holders of a
majority in principal amount of the outstanding Debt Securities of that series;
PROVIDED, HOWEVER, that any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action which may be
made, given or taken by the holders of a specified percentage, which is equal to
or less than a majority, in principal amount of outstanding Debt Securities of a
series may be adopted at a meeting or an adjourned meeting duly reconvened at
which a quorum is present by the affirmative vote of the holders of such
specified percentage in principal amount of the outstanding Debt Securities of
that series. Any resolution passed or decision taken at any meeting of holders
of Debt Securities of any series duly held in accordance with an Indenture will
be binding on all holders of Debt Securities of that series and the related
coupons. With respect to any consent, waiver or other action which the
Indentures expressly provide may be given by the holders of a specified
percentage of outstanding Debt Securities of all series affected thereby (acting
as one class), only the principal amount of outstanding Debt Securities of any
series represented at a meeting or an adjourned meeting duly reconvened at which
a quorum is present as aforesaid and voting in favor of such action will be
counted for purposes of calculating the aggregate principal amount of
outstanding Debt Securities of all series affected thereby favoring such action.
(SECTION 1404)
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NOTICES
Except as otherwise provided in the applicable Indenture, notices to holders
of Bearer Debt Securities will be given by publication at least once in a daily
newspaper in The City of New York and in London and in such other city or cities
as may be specified in such Bearer Debt Securities and will be mailed to such
persons whose names and addresses were previously filed with the applicable
Trustee, within the time prescribed for the giving of such notice. Notice to
holders of Registered Debt Securities will be given by mail to the addresses of
such holders as they appear in the Security Register. (SECTION 106)
TITLE
Title to any Bearer Debt Securities and any coupons appertaining thereto
will pass by delivery. The Company, the Trustee and any agent of the Company or
the Trustee may treat the bearer of any Bearer Debt Security or related coupon
and, prior to due presentment for registration of transfer, the registered owner
of any Registered Debt Security (including Registered Debt Securities in global
registered form), as the absolute owner thereof (whether or not such Debt
Security or coupon shall be overdue and notwithstanding any notice to the
contrary) for the purpose of making payment and for all other purposes. (SECTION
407)
REPLACEMENT OF SECURITIES COUPONS
Any mutilated Debt Security and any Debt Security with a mutilated coupon
appertaining thereto will be replaced by the Company at the expense of the
holder upon surrender of such mutilated Debt Security or Debt Security with a
mutilated coupon to the Security Registrar. Debt Securities or coupons that
become destroyed, stolen or lost will be replaced by the Company at the expense
of the holder upon delivery to the Security Registrar of evidence of the
destruction, loss or theft thereof satisfactory to the Company and the Security
Registrar; in the case of any coupon which becomes destroyed, stolen or lost,
such coupon will be replaced (upon surrender to the Security Registrar of the
Debt Security with all appurtenant coupons not destroyed, stolen or lost) by
issuance of a new Debt Security in exchange for the Debt Security to which such
coupon appertains. In the case of a destroyed, lost or stolen Debt Security or
coupon, an indemnity satisfactory to the Security Registrar and the Company may
be required at the expense of the holder of such Debt Security or coupon before
a replacement Debt Security will be issued. (SECTION 405)
GOVERNING LAW
The Indentures, the Debt Securities and the coupons will be governed by, and
construed in accordance with, the laws of the State of New York.
CONCERNING THE TRUSTEES
The Company may from time to time maintain lines of credit, and have other
customary banking relationships, with the Senior Trustee or the Subordinated
Trustee.
SENIOR DEBT SECURITIES
The Senior Debt Securities will be unsecured and will rank PARI PASSU with
all other unsecured and non-subordinated debt of the Company.
CERTAIN COVENANTS IN SENIOR INDENTURE
LIMITATION ON SECURED INDEBTEDNESS. The Senior Indenture provides that the
Company will not, and will not permit any Restricted Subsidiary to, create,
assume, incur or guarantee any Secured Indebtedness without securing the Debt
Securities equally and ratably with, or prior to, such Secured Indebtedness
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unless immediately thereafter the aggregate amount of all Secured Indebtedness
(exclusive of Secured Indebtedness if the Debt Securities are secured equally
and ratably with, or prior to, such Secured Indebtedness) and the discounted
present value of all net rentals payable under leases entered into in connection
with Sale and Leaseback Transactions (as defined below) entered into after July
15, 1985 (except any such leases entered into by a Restricted Subsidiary before
the time it became a Restricted Subsidiary) would not exceed 10% of Consolidated
Net Tangible Assets. (SECTION 1104 OF SENIOR INDENTURE)
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS. The Senior Indenture
provides that the Company will not, and will not permit any Restricted
Subsidiary to, enter any lease longer than three years (excluding leases of
newly acquired, improved or constructed property) covering any Principal
Property of the Company or any Restricted Subsidiary that is sold to any other
person in connection with such lease (a "Sale and Leaseback Transaction"),
unless either (a) immediately thereafter, the sum of (i) the discounted present
value of all net rentals payable under all such leases entered into after July
15, 1985 (except any such leases entered into by a Restricted Subsidiary before
the time it became a Restricted Subsidiary) and (ii) the aggregate amount of all
Secured Indebtedness (exclusive of Secured Indebtedness if the Debt Securities
are secured equally and ratably with, or prior to, such Secured Indebtedness)
does not exceed 10% of Consolidated Net Tangible Assets, or (b) an amount equal
to the greater of (x) the net proceeds to the Company or a Restricted Subsidiary
from such sale and (y) the discounted present value of all net rentals payable
thereunder, is applied within 180 days to the retirement of long-term debt of
the Company or a Restricted Subsidiary (other than such debt which is
subordinated to the Debt Securities or which is owing to the Company or a
Restricted Subsidiary). (SECTION 1105 OF SENIOR INDENTURE)
CERTAIN DEFINITIONS. "SECURED INDEBTEDNESS" will mean indebtedness of the
Company or any Restricted Subsidiary for borrowed money secured by any lien upon
(or in respect of any conditional sale or other title retention agreement
covering) any Principal Property or any stock or indebtedness of a Restricted
Subsidiary, but excluding from such definition all indebtedness: (i) outstanding
on July 15, 1985, secured by liens (or arising from conditional sale or other
title retention agreements) existing on that date; (ii) incurred after July 15,
1985 to finance the acquisition, improvement or construction of property and
either secured by purchase money mortgages or liens placed on such property
within 180 days of acquisition, improvement or construction or arising from
conditional sale or other title retention agreements; (iii) secured by liens on
Principal Property or on the stock or indebtedness of Restricted Subsidiaries,
and, in either case, existing at the time of acquisition thereof; (iv) owing to
the Company or any Restricted Subsidiary; (v) secured by liens (or conditional
sale or other title retention devices) existing at the time a corporation became
or becomes a Restricted Subsidiary in the case of a corporation which shall have
become or becomes a Restricted Subsidiary after July 15, 1985; (vi) arising from
any Sale and Leaseback Transaction; (vii) incurred to finance the acquisition or
construction of property secured by liens in favor of any country or any
political subdivision thereof; and (viii) constituting any replacement,
extension or renewal of any such indebtedness (to the extent such indebtedness
is not increased). "PRINCIPAL PROPERTY" will mean land, land improvements,
buildings and associated factory, laboratory and office equipment (excluding all
products marketed by the Company or any of its subsidiaries) constituting a
manufacturing, development, warehouse, service or office facility owned by or
leased to the Company or a Restricted Subsidiary, located within the United
States and having an acquisition cost plus capitalized improvements in excess of
0.15% of Consolidated Net Tangible Assets as of the date of such determination,
other than any such property financed through the issuance of tax-exempt
governmental obligations, or which the Board of Directors determines is not of
material importance to the Company and its Restricted Subsidiaries taken as a
whole, or in which the interest of the Company and all its subsidiaries does not
exceed 50%. "CONSOLIDATED NET TANGIBLE ASSETS" will mean the total assets of the
Company and its subsidiaries, less current liabilities and certain intangible
assets (not including program products). "RESTRICTED SUBSIDIARY" will mean (i)
any subsidiary of the Company which has substantially all its property in the
United States, which owns or is a lessee of any Principal Property and in which
the investment of the Company and all its subsidiaries exceeds 0.15% of
Consolidated Net Tangible Assets as of the date of such determination, other
than certain financing subsidiaries and subsidiaries formed or acquired after
July 15,
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1985 for the purpose of acquiring the stock, business or assets of another
person and that have not and do not acquire all or any substantial part of the
business or assets of the Company or any Restricted Subsidiary and (ii) any
other subsidiary designated by the Board of Directors as a Restricted
Subsidiary. (SECTION 101 OF SENIOR INDENTURE)
The Senior Indenture provides that the Company may omit to comply with the
restrictive covenants described above under "Limitation on Secured Indebtedness"
and "Limitation on Sale and Leaseback Transactions" if the holders of not less
than a majority in principal amount of all series of outstanding Debt Securities
affected thereby (acting as one class) waive compliance with such restrictive
covenants. (SECTION 1107 OF SENIOR INDENTURE)
SUBORDINATED DEBT SECURITIES
The Subordinated Debt Securities will be unsecured and will be subject to
the subordination provisions described below.
The payment of the principal of, premium (if any) and interest on the
Subordinated Debt Securities is subordinated in right of payment, as set forth
in the Subordinated Indenture, to the payment when due of all Senior
Indebtedness. (SECTION 1501 OF SUBORDINATED INDENTURE) However, payment from the
money or the proceeds of U.S. government obligations held in any defeasance
trust is not subordinate to any Senior Indebtedness or subject to the
restrictions described herein. (SECTION 1512 OF SUBORDINATED INDENTURE). Claims
of creditors of the Company's subsidiaries, including trade creditors, secured
creditors and creditors holding guarantees issued by such subsidiaries, and
claims of preferred stockholders (if any) of such subsidiaries generally will
have priority with respect to the assets and earnings of such subsidiaries over
the claims of creditors of the Company, including holders of the Subordinated
Debt Securities, even though such obligations may not constitute Senior
Indebtedness. The Subordinated Debt Securities therefore will be effectively
subordinated to creditors (including trade creditors) and preferred stockholders
(if any) of subsidiaries of the Company.
Senior Indebtedness is defined in the Subordinated Indenture as the
principal of, premium, if any, and interest on, (i) all the Company's
indebtedness for money borrowed, other than the subordinated securities issued
under the Subordinated Indenture, whether outstanding on the date of execution
of the Subordinated Indenture or thereafter created, assumed or incurred, except
such indebtedness as is by its terms expressly stated to be not superior in
right of payment to the subordinated securities issued under the Subordinated
Indenture or to rank PARI PASSU with the subordinated securities issued under
the Subordinated Indenture and (ii) any deferrals, renewals or extensions of any
such Senior Indebtedness, except that Senior Indebtedness will not include (1)
any obligation of the Company to any subsidiary, (2) any liability for Federal,
state, local or other taxes owed or owing by the Company, (3) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business (including guarantees thereof or instruments evidencing such
liabilities), (4) any indebtedness, guarantee or obligation of the Company which
is expressly subordinate or junior in right of payment in any respect to any
other indebtedness, guarantee or obligation of the Company, including any senior
subordinated indebtedness and any subordinated obligations, (5) any obligations
with respect to any capital stock, or (6) any indebtedness incurred in violation
of the Subordinated Indenture. The term "indebtedness for money borrowed" as
used in the foregoing sentence includes, without limitation, any obligation of,
or any obligation guaranteed by, the Company for the repayment of borrowed
money, whether or not evidenced by bonds, debentures, notes or other written
instruments, and any deferred obligation for the payment of the purchase price
of property or assets. (SECTION 101 OF SUBORDINATED INDENTURE) There is no
limitation on the issuance of additional Senior Indebtedness of the Company. The
Senior Debt Securities constitute Senior Indebtedness under the Subordinated
Indenture. The Subordinated Debt Securities will rank PARI PASSU with other
subordinated indebtedness of the Company.
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The Company may not pay principal of, premium (if any) or interest on the
Subordinated Debt Securities, make any deposits pursuant to the defeasance
provisions in the Subordinated Indenture or otherwise purchase, redeem or retire
any Subordinated Debt Securities (collectively, "pay the Subordinated Debt
Securities") if (i) any Senior Indebtedness is not paid when due or (ii) any
other default on Senior Indebtedness occurs and the maturity of such Senior
Indebtedness is accelerated in accordance with its terms unless the default has
been cured or waived and any such acceleration has been rescinded or such Senior
Indebtedness has been paid in full. However, the Company may pay the
Subordinated Securities without regard to the foregoing if the Company and the
Subordinated Trustee receive written notice approving such payment from the
Representatives of the holders of Senior Indebtedness with respect to which
either of the events set forth in clause (i) or (ii) of the immediately
preceding sentence has occurred and is continuing. During the continuance of any
default (other than a default described in clause (i) or (ii) of the second
preceding sentence) with respect to any Senior Indebtedness pursuant to which
the maturity thereof may be accelerated immediately without further notice
(except such notice as may be required to effect such acceleration) or the
expiration of any applicable grace periods, the Company may not pay the
Subordinated Securities for a period (a "Payment Blockage Period") commencing
upon the receipt by the Subordinated Trustee (with a copy to the Company) of
written notice (a "Blockage Notice") of such default from the Representatives of
the holders of Senior Indebtedness specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (1) by written notice to the Subordinated Trustee
and the Company from the Person or Persons who gave such Blockage Notice, (2)
because the default giving rise to such Blockage Notice is no longer continuing
or (3) because such Senior Indebtedness has been repaid in full).
Notwithstanding the provisions described in the immediately preceding sentence,
unless the holders of Senior Indebtedness or the Representatives of such holders
have accelerated the maturity of such Senior Indebtedness, the Company may
resume payments on the Subordinated Debt Securities after the end of such
Payment Blockage Period. Not more than one Blockage Notice may be given in any
consecutive 360-day period, irrespective of the number of defaults with respect
to Senior Indebtedness during such period. (SECTION 1503 OF SUBORDINATED
INDENTURE)
Upon any payment or distribution of the assets of the Company to creditors
upon a total or partial liquidation or dissolution or reorganization of or
similar proceeding relating to the Company or their property, the holders of
Senior Indebtedness will be entitled to receive payment in full of the Senior
Indebtedness before the holders of Subordinated Debt Securities are entitled to
receive any payment, and until the Senior Indebtedness is paid in full, any
payment or distribution to which holders of Subordinated Debt Securities would
be entitled but for the subordination provisions of the Subordinated Indenture
(other than distributions of stock and certain debt securities subordinated to
the Senior Indebtedness) will be made to holders of the Senior Indebtedness as
their interests may appear. (SECTION 1502 OF SUBORDINATED INDENTURE) If a
distribution is made to holders of Subordinated Debt Securities that, due to the
subordination provisions, should not have been made to them, such holders of
Subordinated Debt Securities are required to hold it in trust for the holders of
Senior Indebtedness, and pay it over to them as their interests may appear.
(SECTION 1505 OF SUBORDINATED INDENTURE)
If payment of the Subordinated Debt Securities is accelerated because of an
Event of Default, the Company or the Subordinated Trustee will promptly notify
the holders of Senior Indebtedness or the Representatives of such holders of the
acceleration. The Company may not pay the Subordinated Securities until five
Business Days after such holders or the Representatives of the Senior
Indebtedness receive notice of such acceleration and, thereafter, may pay the
Subordinated Securities only if the subordination provisions of the Subordinated
Indenture otherwise permit payment at that time. (SECTION 1505 OF SUBORDINATED
INDENTURE)
By reason of such subordination provisions contained in the Subordinated
Indenture, in the event of insolvency, creditors of the Company who are holders
of Senior Indebtedness may recover more, ratably, than the holders of
Subordinated Debt Securities, and creditors of the Company who are not holders
of Senior Indebtedness may recover less, ratably, than holders of Senior
Indebtedness and may recover more, ratably, than the holders of Subordinated
Indebtedness.
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DESCRIPTION OF THE PREFERRED STOCK
The following is a description of certain general terms and provisions of
the Preferred Stock. The particular terms of any series of Preferred Stock will
be described in the applicable Prospectus Supplement. If so indicated in a
Prospectus Supplement, the terms of any such series may differ from the terms
set forth below.
The summary of terms of the Company's Preferred Stock contained in this
Prospectus does not purport to be complete and is subject to, and qualified in
its entirety by, the provisions of the Company's Certificate of Incorporation
and the certificate of amendment relating to each series of the Preferred Stock
(the "Certificate of Amendment"), which will be filed as an exhibit to or
incorporated by reference in the Registration Statement of which this Prospectus
is a part at or prior to the time of issuance of such series of the Preferred
Stock.
The Company's Certificate of Incorporation authorizes the issuance of
150,000,000 shares of Preferred Stock, par value $.01 per share. As of September
30, 1997, 2,597,261 shares of Series A 7 1/2% Preferred Stock, liquidation
preference $100 per share, were outstanding. Subject to limitations prescribed
by law, the Board of Directors is authorized at any time to issue one or more
series of Preferred Stock; to determine the designation for any such series by
number, letter, or title that shall distinguish such series from any other
series of Preferred Stock; and to determine the number of shares in any such
series (including a determination that such series shall consist of a single
share).
The Board of Directors is authorized to determine, for each series of
Preferred Stock, and the Prospectus Supplement shall set forth with respect to
such series: (i) whether the holders thereof shall be entitled to cumulative,
noncumulative, or partially cumulative dividends and, with respect to shares
entitled to dividends, the dividend rate or rates, including without limitation
the methods and procedures for determining such rate or rates, and any other
terms and conditions relating to such dividends; (ii) whether, and if so to what
extent and upon what terms and conditions, the holders thereof shall be entitled
to rights upon the liquidation of, or upon any distribution of the assets of,
the Company; (iii) whether, and if so upon what terms and conditions, such
shares shall be convertible into Debt Securities, any other series of Preferred
Stock, Depositary Shares or Capital Stock, or exchangeable for the securities of
any other corporation; (iv) whether, and if so upon what terms and conditions,
such shares shall be redeemable; (v) whether the shares shall be redeemable and
subject to any sinking fund provided for the purchase or redemption of such
shares and, if so, the terms of such fund; (vi) whether the holders thereof
shall be entitled to voting rights and, if so, the terms and conditions for the
exercise thereof; PROVIDED that the holders of shares of Preferred Stock (A)
will not be entitled to more than the lesser of (x) one vote per $100 of
liquidation value or (y) one vote per share, when voting as a class with the
holders of shares of capital stock, and (B) will not be entitled to vote on any
matter separately as a class, except to the extent specified with respect to
each series, (x) with respect to any amendment or alteration of the provisions
of the Certificate of Incorporation that would adversely affect the powers,
preferences, or special rights of the applicable series of Preferred Stock or
(y) in the event the Corporation fails to pay dividends on any series of
Preferred Stock in full for any six quarterly dividend payment periods, whether
or not consecutive, in which event the number of directors may be increased by
two and the holders of outstanding shares of Preferred Stock then similarly
entitled shall be entitled to elect the two additional directors until full
accumulated dividends on all such shares of Preferred Stock shall have been
paid; and (vii) whether the holders thereof shall be entitled to other
preferences or rights, and, if so, the qualifications, limitations, or
restrictions of such preferences or rights.
DIVIDENDS
Holders of shares of Preferred Stock shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds of the Company legally
available for payment, cash dividends payable at such dates and at such rates
per share per annum as set forth in the applicable Prospectus Supplement. The
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Prospectus Supplement will also state applicable record dates regarding the
payment of dividends. Except as set forth below, no dividends shall be declared
or paid or set apart for payment on any series of Preferred Stock unless full
dividends for all series of Preferred Stock (including any accumulation in
respect of unpaid dividends for prior dividend periods, if dividends on such
Preferred Stock are cumulative) have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof is set apart for
such payment. When dividends are not so paid in full (or a sum sufficient for
such full payment is not so set apart) upon the Preferred Stock, dividends
declared (if any) on the Preferred Stock shall be declared pro-rata so that the
amount of dividends declared per share on each series of Preferred Stock shall
in all cases bear to each other series the same ratio that (x) accrued dividends
(including any accumulation with respect to unpaid dividends for prior dividend
periods, if dividends for such series are cumulative) for the then-current
dividend period per share for each respective series of Preferred Stock bear to
(y) aggregate accrued dividends for the then-current dividend period (including
all accumulations with respect to unpaid dividends for prior periods for all
series which are cumulative) for all outstanding shares of Preferred Stock.
Unless all dividends on the Preferred Stock shall have been paid in full (i)
no dividend shall be declared and paid or declared and a sum sufficient thereof
set apart for payment (other than a dividend in the Company's capital stock or
in any other class ranking junior to the Preferred Stock as to dividends and
liquidation preferences) or other distribution declared or made upon the shares
of the Company's capital stock or upon any other class ranking junior to the
Preferred Stock as to dividends or liquidation preferences and (ii) no shares of
the Company's capital stock or class of stock ranking junior to the Preferred
Stock as to dividends or liquidation preferences may be redeemed, purchased or
otherwise acquired by the Company except by conversion into or exchange for
shares of the Company ranking junior to the Preferred Stock as to dividends and
liquidation preferences.
CONVERTIBILITY
No series of Preferred Stock will be convertible into, or exchangeable for,
other securities or property except as set forth in the related Prospectus
Supplement.
REDEMPTION AND SINKING FUND
No series of Preferred Stock will be redeemable or receive the benefit of a
sinking fund except as set forth in the related Prospectus Supplement.
LIQUIDATION
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Company, holders of any series of Preferred Stock will be entitled to
receive the liquidation preference per share specified in the Prospectus
Supplement, if any, in each case together with any applicable accrued and unpaid
dividends and before any distribution to holders of the Company's capital stock
or any class of stock ranking junior to the Preferred Stock as to dividends and
liquidation preferences. In the event there are insufficient assets to pay such
liquidation preferences for all classes of Preferred Stock in full, the
remaining assets shall be allocated ratably among all series of Preferred Stock
based upon the aggregate liquidation preference for all outstanding shares for
each such series. After payment of the full amount of the liquidation preference
to which they are entitled, the holders of shares of Preferred Stock will not be
entitled to any further participation in any distribution of assets by the
Company unless otherwise provided in a Prospectus Supplement, and the remaining
assets of the Company shall be distributable exclusively among the holders of
the Company's capital stock and any class of stock ranking junior to the
Preferred Stock as to dividends and liquidation preferences, according to their
respective interests.
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VOTING
No series of Preferred Stock will be entitled to vote except as provided
below or in the related Prospectus Supplement. Unless otherwise specified in the
related Prospectus Supplement, if at any time the Company shall have failed to
declare and pay in full dividends for six quarterly periods, whether consecutive
or not, on any applicable series of Preferred Stock and all such preferred
dividends remain unpaid (a "Preferred Dividend Default"), the number of
directors of the Company shall be increased by two and the holders of such
series of Preferred Stock, voting together as a class with all other series of
Preferred Stock then entitled to vote on such election of directors, shall be
entitled to elect such two additional directors until the full dividends
accumulated on all outstanding shares of such series shall have been declared
and paid in full. Upon the occurrence of a Preferred Dividend Default, the Board
of Directors shall within 10 business days of such default call a special
meeting of the holders of shares of all affected series, for which there is a
Preferred Dividend Default, for the purpose of electing the additional
directors. In lieu of holding such meeting, the holders of record of a majority
of the outstanding shares of all series for which there is a Preferred Dividend
Default who are then entitled to participate in the election of directors may,
by action taken by written consent, elect such additional directors. If and when
all accumulated dividends on any series of Preferred Stock have been paid in
full, the holders of shares of such series shall be divested of the foregoing
voting rights subject to revesting in the event of each and every Preferred
Dividend Default. Upon termination of such special voting rights attributable to
all series for which there has been a Preferred Dividend Default, the term of
office of each director so elected (a "Preferred Stock Director") shall
terminate and the number of directors of the Company shall, without further
action, be reduced by two, subject always to the increase in the number of
directors pursuant to the foregoing provisions in case of a future Preferred
Dividend Default. Any Preferred Stock Director may be removed at any time with
or without cause by, and shall not be removed otherwise than by, the vote of the
holders of record of a majority of the outstanding shares of all series of
Preferred Stock who were entitled to participate in such director's election,
voting as a separate class, at a meeting called for such purpose or by written
consent. So long as a Preferred Stock Default shall continue, any vacancy in the
office of a Preferred Stock Director may be filled by written consent of the
Preferred Stock Director remaining in office, or if none remains in office, by a
vote of the holders of record of a majority of the outstanding series of
Preferred Stock who are then entitled to participate in the election of such
Preferred Stock Directors as provided above. As long as the Preferred Dividend
Default shall continue, holders of the Preferred Stock shall not, as such
stockholders, be entitled to vote on the election or removal of directors, other
than Preferred Stock Directors, but shall not be divested of any other voting
rights provided to the holders of Preferred Stock by law with respect to any
other matter to be acted upon by the stockholders of the Company. The Preferred
Stock Directors shall each be entitled to one vote per director on any matter.
Additionally, unless otherwise specified in a Prospectus Supplement, the
affirmative vote of the holders of a majority of the outstanding shares of each
series of Preferred Stock voting together as a class, is required to authorize
any amendment, alteration or repeal of the Restated Certificate of Incorporation
or any Certificate of Amendment which would adversely affect the powers,
preferences, or special rights of the Preferred Stock including authorizing any
class of stock with superior dividend and liquidation preferences.
MISCELLANEOUS
The holders of Preferred Stock will have no preemptive rights. The Preferred
Stock, upon issuance against full payment of the purchase price therefor, will
be fully paid and nonassessable. Shares of Preferred Stock redeemed or otherwise
reacquired by the Company shall resume the status of authorized and unissued
shares of Preferred Stock undesignated as to series, and shall be available for
subsequent issuance. There are no restrictions on repurchase or redemption of
the Preferred Stock while there is any arrearage on sinking fund installments
except as may be set forth in a Prospectus Supplement. Neither the par value nor
the liquidation preference is indicative of the price at which the Preferred
Stock will actually trade on or after the date of issuance. Payment of dividends
on any series of Preferred Stock may be restricted by loan agreements,
indentures and other transactions entered into by the Company.
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NO OTHER RIGHTS
The shares of a series of Preferred Stock will not have any preferences,
voting powers or relative, participating, optional or other special rights
except as set forth above or in the related Prospectus Supplement, the
Certificate of Incorporation or Certificate of Amendment or as otherwise
required by law.
TRANSFER AGENT AND REGISTRAR
The transfer agent for each series of Preferred Stock will be described in
the related Prospectus Supplement.
DESCRIPTION OF THE DEPOSITARY SHARES
The Company may, at its option, elect to offer Depositary Shares rather than
full shares of Preferred Stock. In the event such option is exercised, each of
the Depositary Shares will represent ownership of and entitlement to all rights
and preferences of a fraction of a share of Preferred Stock of a specified
series (including dividend, voting, redemption and liquidation rights). The
applicable fraction will be specified in the Prospectus Supplement. The shares
of Preferred Stock represented by the Depositary Shares will be deposited with a
Depositary (the "Depositary") named in the applicable Prospectus Supplement,
under a Deposit Agreement (the "Deposit Agreement"), among the Company, the
Depositary and the holders of the Depositary Receipts. Certificates evidencing
Depositary Shares ("Depositary Receipts") will be delivered to those persons
purchasing Depositary Shares in the offering. The Depositary will be the
transfer agent, registrar and dividend disbursing agent for the Depositary
Shares. Holders of Depositary Receipts agree to be bound by the Deposit
Agreement, which requires holders to take certain actions such as filing proof
of residence and paying certain charges.
The summary of terms of the Company's Depositary Shares contained in this
Prospectus does not purport to be complete and is subject to, and qualified in
its entirety by, the provisions of the Deposit Agreement, the Company's
Certificate of Incorporation and the Certificate of Amendment for the applicable
series of Preferred Stock.
DIVIDENDS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the series of Preferred Stock represented
by the Depositary Shares to the record holders of Depositary Receipts in
proportion to the number of Depositary Shares owned by such holders on the
relevant record date, which will be the same date as the record date fixed by
the Company for the applicable series of Preferred Stock. The Depositary,
however, will distribute only such amount as can be distributed without
attributing to any Depositary Share a fraction of one cent, and any balance not
so distributed will be added to and treated as part of the next sum received by
the Depositary for distribution to record holders of Depositary Receipts then
outstanding.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Receipts
entitled thereto, in proportion, as nearly as may be practicable, to the number
of Depositary Shares owned by such holders on the relevant record date, unless
the Depositary determines (after consultation with the Company) that it is not
feasible to make such distribution, in which case the Depositary may (with the
approval of the Company) adopt any other method for such distribution as it
deems appropriate, including the sale of such property and distribution of the
net proceeds from such sale to such holders.
LIQUIDATION PREFERENCE
In the event of the liquidation, dissolution or winding up of the affairs of
the Company, whether voluntary or involuntary, the holders of each Depositary
Share will be entitled to the fraction of the
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liquidation preference accorded each share of the applicable series of Preferred
Stock, as set forth in the Prospectus Supplement.
REDEMPTION
If the series of Preferred Stock represented by the applicable series of
Depositary Shares is redeemable, such Depositary Shares will be redeemed from
the proceeds received by the Depositary resulting from the redemption, in whole
or in part, of Preferred Stock held by the Depositary. Whenever the Company
redeems any Preferred Stock held by the Depositary, the Depositary will redeem
as of the same redemption date the number of Depositary Shares representing the
Preferred Stock so redeemed. The Depositary will mail the notice of redemption
promptly upon receipt of such notice from the Company and not less than 35 nor
more than 60 days prior to the date fixed for redemption of the Preferred Stock
and the Depositary Shares to the record holders of the Depositary Receipts.
VOTING
Promptly upon receipt of notice of any meeting at which the holders of the
series of Preferred Stock represented by the applicable series of Depositary
Shares are entitled to vote, the Depositary will mail the information contained
in such notice of meeting to the record holders of the Depositary Receipts as of
the record date for such meeting. Each such record holder of Depositary Receipts
will be entitled to instruct the Depositary as to the exercise of the voting
rights pertaining to the number of shares of Preferred Stock represented by such
record holder's Depositary Shares. The Depositary will endeavor, insofar as
practicable, to vote such Preferred Stock represented by such Depositary Shares
in accordance with such instructions, and the Company will agree to take all
action which may be deemed necessary by the Depositary in order to enable the
Depositary to do so. The Depositary will abstain from voting any of the
Preferred Stock to the extent that it does not receive specific instructions
from the holders of Depositary Receipts.
WITHDRAWAL OF PREFERRED STOCK
Upon surrender of Depositary Receipts at the principal office of the
Depositary, upon payment of any unpaid amount due the Depositary, and subject to
the terms of the Deposit Agreement, the owner of the Depositary Shares evidenced
thereby is entitled to delivery of the number of whole shares of Preferred Stock
and all money and other property, if any, represented by such Depositary Shares.
Partial shares of Preferred Stock will not be issued. If the Depositary Receipts
delivered by the holder evidence a number of Depositary Shares in excess of the
number of Depositary Shares representing the number of whole shares of Preferred
Stock to be withdrawn, the Depositary will deliver to such holder at the same
time a new Depositary Receipt evidencing such excess number of Depositary
Shares. Holders of Preferred Stock thus withdrawn will not thereafter be
entitled to deposit such shares under the Deposit Agreement or to receive
Depositary Receipts evidencing Depositary Shares therefor.
AMENDMENT AND TERMINATION OF DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time and from time to time be
amended by agreement between the Company and the Depositary. However, any
amendment which materially and adversely alters the rights of the holders (other
than any change in fees) of Depositary Shares will not be effective unless such
amendment has been approved by at least a majority of the Depositary Shares then
outstanding. No such amendment may impair the right, subject to the terms of the
Deposit Agreement, of any owner of any Depositary Shares to surrender the
Depositary Receipt evidencing such Depositary Shares with instructions to the
Depositary to deliver to the holder the Preferred Stock and all money and other
property, if any, represented thereby, except in order to comply with mandatory
provisions of applicable law. The Deposit Agreement may be terminated by the
Company or the Depositary only if (i) all outstanding Depositary Shares have
been
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redeemed or (ii) there has been a final distribution in respect of the Preferred
Stock in connection with any dissolution of the Company and such distribution
has been made to all the holders of Depositary Shares.
CHARGES OF DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay charges of the Depositary in connection with the initial deposit of the
Preferred Stock and the initial issuance of the Depositary Shares, any
redemption of the Preferred Stock and all withdrawals of Preferred Stock by
owners of Depositary Shares. Holders of Depositary Receipts will pay transfer,
income and other taxes and governmental charges and certain other charges as are
provided in the Deposit Agreement to be for their accounts. In certain
circumstances, the Depositary may refuse to transfer Depositary Shares, may
withhold dividends and distributions and sell the Depositary Shares evidenced by
such Depositary Receipt if such charges are not paid.
MISCELLANEOUS
The Depositary will forward to the holders of Depositary Receipts all
reports and communications from the Company which are delivered to the
Depositary and which the Company is required to furnish to the holders of the
Preferred Stock. In addition, the Depositary will make available for inspection
by holders of Depositary Receipts at the principal office of the Depositary, and
at such other places as it may from time to time deem advisable, any reports and
communications received from the Company which are received by the Depositary as
the holder of Preferred Stock.
Neither the Depositary nor the Company assumes any obligation or will be
subject to any liability under the Deposit Agreement to holders of Depositary
Receipts other than for its negligence or willful misconduct. Neither the
Depositary nor the Company will be liable if it is prevented or delayed by law
or any circumstance beyond its control in performing its obligations under the
Deposit Agreement. The obligations of the Company and the Depositary under the
Deposit Agreement will be limited to performance in good faith of their duties
thereunder, and they will not be obligated to prosecute or defend any legal
proceeding in respect of any Depositary Shares or Preferred Stock unless
satisfactory indemnity is furnished. The Company and the Depositary may rely on
written advice of counsel or accountants, on information provided by holders of
Depositary Receipts or other persons believed in good faith to be competent to
give such information and on documents believed to be genuine and to have been
signed or presented by the proper party or parties.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to the Company notice of
its election to do so, and the Company may at any time remove the Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment. Such successor
Depositary must be appointed within 60 days after delivery of the notice for
resignation or removal and must be a bank or trust company having its principal
office in the United States of America and having a combined capital and surplus
of at least $150,000,000.
FEDERAL INCOME TAX CONSEQUENCES
Owners of the Depositary Shares will be treated for Federal income tax
purposes as if they were owners of the Preferred Stock represented by such
Depositary Shares. Accordingly, such owners will be entitled to take into
account for Federal income tax purposes income and deductions to which they
would be entitled if they were holders of such Preferred Stock. In addition, (i)
no gain or loss will be recognized for Federal income tax purposes upon the
withdrawal of Preferred Stock in exchange for Depositary Shares, (ii) the tax
basis of each share of Preferred Stock to an exchanging owner of Depositary
Shares will,
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upon such exchange, be the same as the aggregate tax basis of the Depositary
Shares exchanged therefor, and (iii) the holding period for Preferred Stock in
the hands of an exchanging owner of Depositary Shares will include the period
during which such person owned such Depositary Shares.
DESCRIPTION OF THE CAPITAL STOCK
As of the date of this Prospectus, the Company's Certificate of
Incorporation authorizes the issuance of 1,875,000,000 shares of Capital Stock,
$0.50 par value per share. As of September 30, 1997, 972,170,729 shares of
Capital Stock were outstanding.
Subject to the rights of the holders of any outstanding shares of preferred
stock, holders of Capital Stock are entitled to receive such dividends, in cash,
securities, or property, as may from time to time be declared by the Board of
Directors. Subject to the provisions of the Company's By-laws, as from time to
time amended, with respect to the closing of the transfer books and the fixing
of a record date, holders of shares of Capital Stock are entitled to one vote
per share of Capital Stock held on all matters requiring a vote of the
stockholders. In the event of any liquidation, dissolution, or winding up of the
Company, either voluntary or involuntary, after payment shall have been made to
the holders of preferred stock of the full amount to which they shall be
entitled, the holders of Capital Stock shall be entitled to share ratably,
according to the number of shares held by them, in all remaining assets of the
Company available for distribution. Shares of Capital Stock are not redeemable
and have no subscription, conversion or preemptive rights.
DESCRIPTION OF THE WARRANTS
The Company may issue Warrants for the purchase of Debt Securities,
Preferred Stock or Capital Stock. Warrants may be issued independently or
together with Debt Securities, Preferred Stock or Capital Stock offered by any
Prospectus Supplement and may be attached to or separate from any such
Securities. Each series of Warrants will be issued under a separate warrant
agreement (a "Warrant Agreement") to be entered into between the Company and a
bank or trust company, as warrant agent (the "Warrant Agent"). The Warrant Agent
will act solely as an agent of the Company in connection with the Warrants and
will not assume any obligation or relationship of agency or trust for or with
any holders or beneficial owners of Warrants. The following summary of certain
provisions of the Warrants does not purport to be complete and is subject to,
and qualified in its entirety by reference to, the provisions of the Warrant
Agreement that will be filed with the Commission in connection with the offering
of such Warrants.
DEBT WARRANTS
The Prospectus Supplement relating to a particular issue of Warrants to
issue Debt Securities ("Debt Warrants") will describe the terms of such Debt
Warrants, including the following: (a) the title of such Debt Warrants; (b) the
offering price for such Debt Warrants, if any; (c) the aggregate number of such
Debt Warrants; (d) the designation and terms of the Debt Securities purchasable
upon exercise of such Debt Warrants; (e) if applicable, the designation and
terms of the Debt Securities with which such Debt Warrants are issued and the
number of such Debt Warrants issued with each such Debt Security; (f) if
applicable, the date from and after which such Debt Warrants and any Debt
Securities issued therewith will be separately transferable; (g) the principal
amount of Debt Securities purchasable upon exercise of a Debt Warrant and the
price at which such principal amount of Debt Securities may be purchased upon
exercise (which price may be payable in cash, securities, or other property);
(h) the date on which the right to exercise such Debt Warrants shall commence
and the date on which such right shall expire; (i) if applicable, the minimum or
maximum amount of such Debt Warrants that may be exercised at any one time; (j)
whether the Debt Warrants represented by the Debt Warrant certificates or Debt
Securities that may be issued upon exercise of the Debt Warrants will be issued
in registered or bearer form; (k) information with respect to book-entry
procedures, if any; (l) the currency or currency units in which the offering
price, if any, and the exercise price are payable; (m) if applicable, a
discussion of material United
23
<PAGE>
States federal income tax considerations; (n) the antidilution provisions of
such Debt Warrants, if any; (o) the redemption or call provisions, if any,
applicable to such Debt Warrants; and (p) any additional terms of the Debt
Warrants, including terms, procedures, and limitations relating to the exchange
and exercise of such Debt Warrants.
STOCK WARRANTS
The Prospectus Supplement relating to any particular issue of Warrants to
issue Capital Stock or Preferred Stock will describe the terms of such Warrants,
including the following: (a) the title of such Warrants; (b) the offering price
for such Warrants, if any; (c) the aggregate number of such Warrants; (d) the
designation and terms of the Capital Stock or Preferred Stock purchasable upon
exercise of such Warrants; (e) if applicable, the designation and terms of the
Securities with which such Warrants are issued and the number of such Warrants
issued with each such Security; (f) if applicable, the date from and after which
such Warrants and any Securities issued therewith will be separately
transferable; (g) the number of shares of Capital Stock or Preferred Stock
purchasable upon exercise of a Warrant and the price at which such shares may be
purchased upon exercise; (h) the date on which the right to exercise such
Warrants shall commence and the date on which such right shall expire; (i) if
applicable, the minimum or maximum amount of such Warrants that may be exercised
at any one time; (j) the currency or currency units in which the offering price,
if any, and the exercise price are payable; (k) if applicable, a discussion of
material United States federal income tax considerations; (l) the antidilution
provisions of such Warrants, if any; (m) the redemption or call provisions, if
any, applicable to such Warrants; and (n) any additional terms of the Warrants,
including terms, procedures, and limitations relating to the exchange and
exercise of such Warrants.
PLAN OF DISTRIBUTION
The Company may sell the Securities in any of three ways: (i) through
underwriters; (ii) through agents; or (iii) directly to a limited number of
institutional purchasers or to a single purchaser. The Prospectus Supplement
with respect to each series of Securities will set forth the terms of the
offering of the Securities of such series, including the name or names of any
underwriters, the purchase price and the proceeds to the Company from such sale,
any underwriting discounts and other items constituting underwriters'
compensation, any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers, and any securities exchanges on which
the Securities of such series may be listed.
If underwriters are used in the sale, the Securities will be acquired by the
underwriters for their own account and may be resold from time to time in one or
more transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. The Securities may be
either offered to the public through underwriting syndicates represented by
managing underwriters or by underwriters without a syndicate. Unless otherwise
set forth in the Prospectus Supplement, the obligations of the underwriters to
purchase Securities will be subject to certain conditions precedent and the
underwriters will be obligated to purchase all the Securities of a series if any
are purchased. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time to
time.
Securities may be sold directly by the Company or through agents designated
by the Company from time to time. Any agent involved in the offer or sale of the
Securities in respect of which this Prospectus is delivered will be named, and
any commissions payable by the Company to such agent will be set forth, in the
Prospectus Supplement. Unless otherwise indicated in the Prospectus Supplement,
any such agent will be acting on a best efforts basis for the period of its
appointment.
If so indicated in the Prospectus Supplement, the Company will authorize
agents or underwriters to solicit offers by certain types of institutions to
purchase Securities from the Company at the public offering
24
<PAGE>
price set forth in the Prospectus Supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the future.
Such contracts will be subject only to those conditions set forth in the
Prospectus Supplement, and the Prospectus Supplement will set forth the
commissions payable for solicitation of such contracts.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act of 1933, or to contribution with
respect to payments which the agents or underwriters may be required to make in
respect thereof. Agents and underwriters may be customers of, engage in
transactions with, or perform services for, the Company in the ordinary course
of business.
Each series of Securities will be a new issue of securities with no
established trading market. Any underwriters to whom Securities are sold by the
Company for public offering and sale may make a market in such Securities, but
such underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for any Securities.
LEGAL OPINIONS
Except as may be otherwise specified in the Prospectus Supplement
accompanying this Prospectus, the legality of the securities will be passed upon
for the Company by David S. Hershberg, Vice President and Assistant General
Counsel of the Company. Mr. Hershberg, together with members of his family,
owns, has options to purchase and has other interests in shares of common stock
of the Company.
EXPERTS
The consolidated financial statements of the Company incorporated in this
Prospectus by reference to the Company's Annual Report on Form 10-K for the year
ended December 31, 1996 have been so incorporated in reliance on the report of
Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
25
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following statement sets forth the estimated amounts of expenses, other
than underwriting discounts, to be borne by the Company in connection with the
offering described in this Registration Statement:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee............. $ 909,091
Trustee's Fees.................................................. 50,000
Printing and Engraving Expenses................................. 120,000
Rating Agency Fees.............................................. 150,000
Accounting Fees and Expenses.................................... 50,000
Legal Fees and Expenses......................................... 170,000
Blue Sky Fees and Expenses...................................... 50,000
Listing Fee..................................................... 50,000
Miscellaneous Expenses.......................................... 20,000
---------
Total Expenses........................................... $1,569,091
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The By-Laws of the Company (Article VI, Section 6) provide the following:
"The Corporation shall, to the fullest extent permitted by applicable law as
in effect at any time, indemnify any person made, or threatened to be made, a
party to an action or proceeding whether civil or criminal (including an action
or proceeding by or in the right of the Corporation or any other corporation of
any type or kind, domestic or foreign, or any partnership, joint venture, trust,
employee benefit plan or other enterprise, for which any director or officer of
the Corporation served in any capacity at the request of the Corporation), by
reason of the fact that such person or such person's testator or intestate was a
director or officer of the Corporation, or served such other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise in
any capacity, against judgments, fines, amounts paid in settlement and
reasonable expenses, including attorneys' fees actually and necessarily incurred
as a result of such action or proceeding, or any appeal therein. Such
indemnification shall be a contract right and shall include the right to be paid
advances of any expenses incurred by such person in connection with such action,
suit or proceeding, consistent with the provisions of applicable law in effect
at any time. Indemnification shall be deemed to be 'permitted' within the
meaning of the first sentence hereof if it is not expressly prohibited by
applicable law as in effect at the time."
The Certificate of Incorporation of the Company (Article ELEVEN) provides the
following:
"Pursuant to Section 402(b) of the Business Corporation Law of the State of
New York, the liability of the Corporation's directors to the Corporation or its
stockholders for damages for breach of duty as a director shall be eliminated to
the fullest extent permitted by the Business Corporation Law of the State of New
York, as it exists on the date hereof or as it may hereafter be amended. No
amendment to or repeal of this Article shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal."
With certain limitations, Sections 721 through 726 of the New York Business
Corporation Law permit a corporation to indemnify a director or officer made a
party to an action (i) by a corporation or in its right in order to procure a
judgment in its favor unless he shall have breached his duties, or (ii) other
than an action by or in the right of the corporation in order to procure a
judgment in its favor, if such director or
II-1
<PAGE>
officer acted in good faith and in a manner he reasonably believed to be in or,
in certain cases not opposed to such corporation's interest and additionally, in
criminal actions, had no reasonable cause to believe his conduct was unlawful.
In addition, the Company maintains directors' and officers' liability
insurance policies.
ITEM 16. EXHIBITS.
<TABLE>
<S> <C>
(1)(a) --Proposed Form of Underwriting Agreement.*
(1)(b) --Proposed Form of Agency Agreement.*
(3)(a) --By-laws of the Company********
(4)(a) --Certificate of Incorporation of the Company.***
(4)(b) --Indenture dated as of October 1, 1993, between the Company and The Chase
Manhattan Bank (National Association) as Trustee.**
(4)(c) --First Supplemental Indenture dated as of December 15, 1995, to Indenture
dated as of October 1, 1993, between the Company and The Chase Manhattan
Bank (National Association).******
(4)(d) --Form of Subordinated Indenture.******
(4)(h) --Form of Temporary Global Fixed Rate Bearer Medium-Term Note.**
(4)(i) --Form of Definitive Global Fixed Rate Bearer Medium-Term Note.**
(4)(j) --Form of Definitive Fixed Rate Bearer Medium-Term Note.**
(4)(k) --Form of Fixed Rate Debt Security with Optional Redemption.**
(4)(l) --Form of Fixed Rate Debt Security with Optional Redemption and Sinking
Fund.**
(4)(m) --Form of Extendible Debt Security with Optional Redemption.**
(4)(n) --Form of Zero Coupon Debt Security with Optional Redemption.**
(4)(o) --Form of Original Issue Discount Debt Security with Optional Redemption.**
(4)(p) --Form of Certificate of Amendment.****
(4)(q) --Form of Preferred Stock Certificate.****
(4)(r) --Form of Deposit Agreement.****
(4)(s) --Form of Depositary Receipt (included as Exhibit A to the Form of Deposit
Agreement).****
(4)(t) --Form of Warrant Agreement.*****
(4)(u) --Form of Warrant Certificate.*****
(4)(aa) --Form of Floating Rate Non-Redeemable Medium Term Note*******
(4)(bb) --Form of Floating Rate Redeemable Medium Term Note*******
(4)(cc) --Form of Fixed Rate Redeemable Medium Term Note*******
(4)(dd) --Form of Floating Rate Non-Redeemable Medium Term Note*******
(4)(ee) --Form of Fixed Rate Redeemable Medium Term Note*******
(5) --Opinion of David S. Hershberg, Esq.*
(12) --Computation of Ratios of Earnings to Fixed Charges and Earnings to Combined
Fixed Charges and Preferred Stock Dividends.********
(23)(a) --Consent of Independent Accountants.*
(23)(b) --Consent of Counsel (included in Exhibit 5).*
(24)(a) --Powers of Attorney.*
(24)(b) --Certified copy of a resolution adopted by the Company's Board of Directors
authorizing execution of the registration statement by power of attorney.*
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C>
(25)(a) --Statement of Eligibility and Qualification on Form T-1 of The Chase
Manhattan Bank (National Association) to act as Trustee under the Senior
Indenture dated October 1, 1993.*
(25)(b) --Statement of Eligibility and Qualification on Form T-1 of the Subordinated
Trustee to act as Trustee under the Subordinated Indenture.*****
</TABLE>
- ------------------------
*Filed electronically herewith.
**Incorporated by reference to the Company's Registration Statement on
Form S-3 (Registration No. 33-50537).
***Incorporated by reference to Exhibit 3(i) of the Company's Form 8-K
dated May 7, 1997.
****Incorporated by reference to the Company's Registration Statement on
Form S-3 (Registration No. 33-49475).
*****To be filed as an Exhibit to a report of the Company pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934.
******Incorporated by reference to the Company's Registration Statement on
Form S-3 (Registration No. 33-65119).
*******Incorporated by reference to the Company's Current Report on Form 8-K
dated March 8, 1996.
********Incorporated by reference to the Company's Form 10-Q for the fiscal
quarter ended September 30, 1997.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement (other than as
provided in the proviso and instructions to Item 512(a) of Regulation S-K)
(i) to include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933; (ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the registration statement; and (iii) to
include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material
change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that
is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(5) To file an application for the purpose of determining the
eligibility of the trustee to act under subsection (a) of Section 310 of the
Trust Indenture Act in accordance with the rules and regulations prescribed
by the Commission under Section 305(b)(2) of the Trust Indenture Act.
II-3
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 15 above, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person in the successful defense of any action, suit or proceeding) is asserted
by such officer, director or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether or not such indemnification
by it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that is has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 20 day of November, 1997.
INTERNATIONAL BUSINESS MACHINES
CORPORATION
By: *
....................................
Louis V. Gerstner, Jr.
Chairman of the Board of Directors
and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------------------ ----------------------
<C> <S> <C>
* Chairman of the Board and November 20, 1997
............................................. Chief Executive Officer (Principal
Louis V. Gerstner, Jr. Executive Officer)
* Senior Vice President November 20, 1997
............................................. and Chief Financial Officer
Lawrence R. Ricciardi (Principal Financial Officer)
* Vice President and Controller (Principal November 20, 1997
............................................. Accounting Officer)
John R. Joyce
............................................. Director November 20, 1997
Cathleen Black
* Director November 20, 1997
.............................................
Harold Brown
* Director November 20, 1997
.............................................
Juergen Dormann
* Director November 20, 1997
.............................................
Nannerl O. Keohane
* Director November 20, 1997
.............................................
Charles F. Knight
* Director November 20, 1997
.............................................
Lucio A. Noto
* Director November 20, 1997
.............................................
John B. Slaughter
* Director November 20, 1997
.............................................
Alex Trotman
* Director November 20, 1997
.............................................
Lodewijk C. van Wachem
* Director November 20, 1997
.............................................
Charles M. Vest
</TABLE>
*By: /s/ JOHN E. HICKEY
...........................................................................
JOHN E. HICKEY
ATTORNEY-IN-FACT
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
- ---------- ----------------------------------------------------------------------------------------- -----------
<S> <C> <C>
(1)(a) --Proposed Form of Underwriting Agreement.*
(1)(b) --Proposed Form of Agency Agreement.*
(3)(a) --By-laws of the Company********
(4)(a) --Certificate of Incorporation of the Company.***
(4)(b) --Indenture dated as of October 1, 1993, between the Company and The Chase Manhattan Bank
(National Association) as Trustee.**
(4)(c) --First Supplemental Indenture dated as of December 15, 1995, to Indenture dated as of
October 1, 1993, between the Company and The Chase Manhattan Bank (National
Association).******
(4)(d) --Form of Subordinated Indenture.******
(4)(h) --Form of Temporary Global Fixed Rate Bearer Medium-Term Note.**
(4)(i) --Form of Definitive Global Fixed Rate Bearer Medium-Term Note.**
(4)(j) --Form of Definitive Fixed Rate Bearer Medium-Term Note.**
(4)(k) --Form of Fixed Rate Debt Security with Optional Redemption.**
(4)(l) --Form of Fixed Rate Debt Security with Optional Redemption and Sinking Fund.**
(4)(m) --Form of Extendible Debt Security with Optional Redemption.**
(4)(n) --Form of Zero Coupon Debt Security with Optional Redemption.**
(4)(o) --Form of Original Issue Discount Debt Security with Optional Redemption.**
(4)(p) --Form of Certificate of Amendment.****
(4)(q) --Form of Preferred Stock Certificate.****
(4)(r) --Form of Deposit Agreement.****
(4)(s) --Form of Depositary Receipt (included as Exhibit A to the Form of Deposit
Agreement).****
(4)(t) --Form of Warrant Agreement.*****
(4)(u) --Form of Warrant Certificate.*****
(4)(aa) --Form of Floating Rate Non-Redeemable Medium Term Note*******
(4)(bb) --Form of Floating Rate Redeemable Medium Term Note*******
(4)(cc) --Form of Fixed Rate Redeemable Medium Term Note*******
(4)(dd) --Form of Floating Rate Non-Redeemable Medium Term Note*******
(4)(ee) --Form of Fixed Rate Redeemable Medium Term Note*******
(5) --Opinion of David S. Hershberg, Esq.*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
- ---------- ----------------------------------------------------------------------------------------- -----------
<S> <C> <C>
(12) --Computation of Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed
Charges and Preferred Stock Dividends.********
(23)(a) --Consent of Independent Accountants.*
(23)(b) --Consent of Counsel (included in Exhibit 5).*
(24)(a) --Powers of Attorney.*
(24)(b) --Certified copy of a resolution adopted by the Company's Board of Directors authorizing
execution of the registration statement by power of attorney.*
(25)(a) --Statement of Eligibility and Qualification on Form T-1 of The Chase Manhattan Bank
(National Association) to act as Trustee under the Senior Indenture dated October 1,
1993.*
(25)(b) --Statement of Eligibility and Qualification on Form T-1 of the Subordinated Trustee to
act as Trustee under the Subordinated Indenture.*****
</TABLE>
- ------------------------
*Filed electronically herewith.
**Incorporated by reference to the Company's Registration Statement on
Form S-3 (Registration No. 33-50537).
***Incorporated by reference to Exhibit 3(i) of the Company's Form 8-K
dated May 7, 1997.
****Incorporated by reference to the Company's Registration Statement on
Form S-3 (Registration No. 33-49475).
*****To be filed as an Exhibit to a report of the Company pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934.
******Incorporated by reference to the Company's Registration Statement on
Form S-3 (Registration No. 33-65119).
*******Incorporated by reference to the Company's Current Report on Form 8-K
dated March 8, 1996.
********Incorporated by reference to the Company's Form 10-Q for the fiscal
quarter ended September 30, 1997.
<PAGE>
EXHIBIT (1)(a)
INTERNATIONAL BUSINESS MACHINES CORPORATION
Debt Securities
UNDERWRITING AGREEMENT
New York, New York
To the Representatives named in Schedule I hereto
of the Underwriters named in Schedule II hereto
Dear Sirs:
International Business Machines Corporation, a New York corporation (the
"Company"), proposes to sell to the underwriters named in Schedule II hereto
(the "Underwriters"), for whom you are acting as representatives (the
"Representatives"), the principal amount of its Securities identified in
Schedule I hereto (the "Securities"), to be issued under an indenture dated as
of October 1, 1993 (the "Indenture"), between the Company and The Chase
Manhattan Bank, as trustee (the "Trustee"), as supplemented by the First
Supplemental Indenture dated as of December 15, 1995. If the firm or firms
listed in Schedule II hereto include only the firm or firms listed in Schedule I
hereto, then the terms "Underwriters" and "Representatives", as used herein
shall each be deemed to refer to such firm or firms.
1. Representations and Warranties. The Company represents and warrants to,
and agrees with each Underwriter that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933 (the "Act") and has filed with the Securities and
Exchange Commission (the "Commission") a registration statement or
statements (the file number or numbers of which is or are set forth in
Schedule I hereto), including a related preliminary prospectus, on such
Form for the registration under the Act of the offering and sale of the
Securities. The Company may have filed one or more amendments thereto,
including the related preliminary prospectus, and has filed a preliminary
prospectus in accordance with Rules 415 and 424(b)(5), each of which has
previously been furnished to you. The Company will next file with the
Commission one of the following: (i) prior to effectiveness of such
registration statement, a further amendment thereto, including the form of
final prospectus, (ii) a final prospectus in accordance with Rules 430A and
424(b)(1) or (4), or (iii) a final prospectus in accordance with Rules 415
and 424(b)(2) or (5). In the case of clause (ii), the Company has included
in such registration statement or statements, as amended at the Effective
Date, all information (other than Rule 430A Information) required by the
Act and the rules thereunder to be included in the Prospectus with respect
to the Securities and the offering thereof. As filed, such amendment and
form of final prospectus, or such final prospectus, shall include all Rule
430A Information and, except to the extent the Representatives shall agree
in writing to a modification, shall be in all substantive respects in the
form furnished to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus) as the Company has advised you, prior to the
Execution Time, will be included or made therein. If the Registration
Statement contains the undertaking specified by Regulation S-K Item 512(a),
the Registration Statement, at the Execution Time, meets the requirements
set forth in Rule 415(a)(1)(x).
The terms which follow, when used in this Agreement, shall have the
meanings indicated. The term the "Effective Date" shall mean each date that
the Registration Statement and any post-effective amendment or amendments
thereto became or become effective. "Execution Time" shall mean the date
and time that this
<PAGE>
2
Agreement is executed and delivered by the parties hereto. "Preliminary
Prospectus" shall mean any preliminary prospectus referred to in the
preceding paragraph and any preliminary prospectus included in the
Registration Statement at the Effective Date that omits Rule 430A
Information. "Prospectus" shall mean the prospectus relating to the
Securities that is first filed pursuant to Rule 424(b) after the Execution
Time or, if no filing pursuant to Rule 424(b) is required, shall mean the
form of final prospectus included in the Registration Statement at the
Effective Date. "Registration Statement" shall mean the registration
statement or statements referred to in the preceding paragraph, including
incorporated documents as of the filing of the Company's Quarterly Report
on Form 10-Q for the three month period ended __________________, exhibits
and financial statements, in the form in which it or they has or have or
shall become effective and, in the event any post-effective amendment
thereto becomes effective prior to the Closing Date (as hereinafter
defined), shall also mean such registration statement or statements as so
amended. Such term shall include Rule 430A Information deemed to be
included therein at the Effective Date as provided by Rule 430A. "Rule
415", "Rule 424", "Rule 430A" and "Regulation S-K" refer to such rules
under the Act. "Rule 430A Information" means information with respect to
the Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A. Any
reference herein to the Registration Statement, a Preliminary Prospectus or
the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which
were filed under the Securities Exchange Act of 1934 (the "Exchange Act")
on or before the effective date of the Registration Statement or the date
of such Preliminary Prospectus or the Prospectus, as the case may be; and
any reference herein to the terms "amend", "amendment" or "supplement" with
respect to the Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after the effective date of the
Registration Statement, or the date of any Preliminary Prospectus or the
Prospectus, as the case may be, deemed to be incorporated therein by
reference.
(b) On the Effective Date, the Registration Statement did or will, and
when the Prospectus is first filed (if required) in accordance with Rule
424(b) and on the Closing Date, the Prospectus (and any supplements
thereto) will, comply in all material respects with the applicable
requirements of the Act and the Exchange Act and the respective rules
thereunder; on the Effective Date and on the Closing Date the Indenture did
or will comply in all material respects with the requirements of the Trust
Indenture Act of 1939 (the "Trust Indenture Act") and the rules thereunder;
on the Effective Date, the Registration Statement did not or will not
contain any untrue statement of a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, the Prospectus, if not filed
pursuant to Rule 424(b), did not or will not, and on the date of any filing
pursuant to Rule 424(b) and on the Closing Date, the Prospectus (together
with any supplement thereto) will not, include any untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company makes no
representations or warranties as to (i) that part of the Registration
Statement which shall constitute the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of the Trustee or
(ii) the information contained in or omitted from the Registration
Statement or the Prospectus (or any supplement thereto) in reliance upon
and in conformity with information furnished in writing to the Company by
or on behalf of any Underwriter through the Representatives specifically
for use in connection with the preparation of the Registration Statement or
the Prospectus (or any supplement thereto).
2. Purchase and Sale. Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Company agrees to
sell to each Underwriter, and each Underwriter agrees, severally and not
jointly, to purchase from the Company, at the purchase price set forth in
Schedule I hereto, the respective principal amounts of the Securities set forth
opposite each respective Underwriter's name in Schedule II hereto, except that,
if Schedule I hereto provides for the sale of Securities pursuant to delayed
delivery arrangements, the respective principal amounts of Securities to be
purchased by the Underwriters shall be as set forth in Schedule II hereto, less
the respective amounts of Contract Securities determined as provided below.
Securities to be purchased by the Underwriters are herein sometimes called the
"Underwriters' Securities"
<PAGE>
3
and Securities to be purchased pursuant to Delayed Delivery Contracts as
hereinafter provided are herein called "Contract Securities".
If so provided in Schedule I hereto, the Underwriters are authorized to
solicit offers to purchase Securities from the Company pursuant to delayed
delivery contracts ("Delayed Delivery Contracts"), substantially in the form of
Schedule III hereto but with such changes therein as the Company may authorize
or approve. The Underwriters will endeavor to make such arrangements and, as
compensation therefor, the Company will pay to the Representatives, for the
account of underwriters, on the Closing Date, the percentage set forth in
Schedule I hereto of the principal amount of the Securities for which Delayed
Delivery Contracts are made. Delayed Delivery Contracts are to be with
institutional investors, including commercial and savings banks, insurance
companies, pension funds, investment companies and educational and charitable
institutions. The Company will make Delayed Delivery Contracts in all cases
where sales of Contract Securities arranged by the Underwriters have been
approved by the Company but, except as the Company may otherwise agree, each
such Delayed Delivery Contract must be for not less than the minimum principal
amount set forth in Schedule I hereto and the aggregate principal amount of
Contract Securities may not exceed the maximum aggregate principal amount set
forth in Schedule I hereto. The Underwriters will not have any responsibility in
respect of the validity or performance of Delayed Delivery Contracts. The
principal amount of Securities to be purchased by each Underwriter as set forth
in Schedule II hereto shall be reduced by an amount which shall bear the same
proportion to the total principal amount of Contract Securities as the principal
amount of Securities set forth opposite the name of such Underwriter bears to
the aggregate principal amount set forth in Schedule II hereto, except to the
extent that you determine that such reduction shall be otherwise than in such
proportion and so advise the Company in writing; provided, however, that the
total principal amount of Securities to be purchased by all Underwriters shall
be the aggregate principal amount set forth in Schedule II hereto, less the
aggregate principal amount of Contract Securities.
3. Delivery and Payment. Delivery of and payment for the Underwriters'
Securities shall be made at the office, on the date and at the time specified in
Schedule I hereto, which date and time may be postponed by agreement between the
Representatives and the Company or as provided in Section 8 hereof (such date
and time of delivery and payment for the Securities being called the "Closing
Date"). Delivery of the Underwriters' Securities shall be made to the
Representatives for the respective accounts of the several Underwriters against
payment by the several Underwriters through the Representatives of the purchase
price thereof to or upon the order of the Company by certified or official bank
check or checks payable, or wire transfers, in immediately available funds. The
Debentures shall be delivered in definitive global form through the facilities
of The Depository Trust Company.
4. Agreements.
(a) The Company will use its best efforts to cause the Registration
Statement, and any amendment thereof, if not effective at the Execution
Time, to become effective. If the Registration Statement has become or
becomes effective pursuant to Rule 430A, or filing of the Prospectus is
otherwise required under Rule 424(b), the Company will file the Prospectus,
properly completed, pursuant to the applicable paragraph of Rule 424(b)
within the time period prescribed and will provide evidence satisfactory to
the Representatives of such timely filing. The Company will promptly advise
the Representatives (i) when the Registration Statement shall have become
effective, (ii) when any amendment to the Registration Statement relating
to the Securities shall have become effective, (iii) of any request by the
Commission for any amendment of the Registration Statement or amendment of
or supplement to the Prospectus or for any additional information, (iv) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (v) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of the Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose. The Company
will use its best efforts to prevent the issuance of any such stop order
and, if issued, to obtain as soon as possible the withdrawal thereof. The
Company will not file any amendment of
<PAGE>
4
the Registration Statement or supplement to the Prospectus unless the
Company has furnished you a copy for your review prior to filing and will
not file any such proposed amendment or supplement to which you reasonably
object.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then amended or supplemented would include 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, or if it shall be necessary to
amend or supplement the Prospectus to comply with the Act or the Exchange
Act or the respective rules thereunder, the Company will give the
Representatives immediate notice of the occurrence of such event and
promptly will prepare and file with the Commission, subject to the first
sentence of paragraph (a) of this Section 4, an amendment or supplement
which will correct such statement or omission or an amendment which will
effect such compliance.
(c) The Company will make generally available to its security holders
and to the Representatives as soon as practicable, but not later than 45
days after the end of the 12-month period beginning at the end of the
current fiscal quarter of the Company, an earnings statement (which need
not be audited) of the Company and its subsidiaries, covering a period of
at least 12 months beginning after the end of the current fiscal quarter of
the Company, which will satisfy the provisions of Section 11(a) of the Act.
(d) The Company will furnish to the Representatives and counsel for
the Underwriters, without charge, copies of the Registration Statement
(including exhibits thereto) and each amendment thereto which shall become
effective on or prior to the Closing Date and, so long as delivery of a
prospectus by an Underwriter or dealer may be required by the Act, as many
copies of any Preliminary Final Prospectus and the Final Prospectus and any
amendments thereof and supplements thereto as the Representatives may
reasonably request.
(e) The Company will arrange for the qualification of the Securities
for sale under the laws of such jurisdictions as the Representatives may
designate, will maintain such qualifications in effect so long as required
for the distribution of the Securities and will arrange for the
determination of the legality of the Securities for purchase by
institutional investors.
(f) Until the earlier of the day on which the distribution of the
Securities is completed or the business day following the Closing Date, the
Company will not, without the consent of the Representatives, offer or
sell, or announce the offering of, any debt securities covered by the
Registration Statement or any other registration statement filed under the
Act.
5. Conditions to the Obligations of the Underwriters. The obligations of
the Underwriters to purchase the Underwriters' Securities shall be subject to
the accuracy of the representations and warranties on the part of the Company
contained herein as of the Execution Time, as of the date of the effectiveness
of any amendment to the Registration Statement filed prior to the Closing Date
(including the filing of any document incorporated by reference therein) and as
of the Closing Date, to the accuracy of the statements of the Company made in
any certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective prior to
the Execution Time, unless the Representatives agree in writing to a later
time, the Registration Statement shall have become effective not later than
(i) 6:00 P.M. New York City time, on the date of determination of the
public offering price, if such determination occurred at or prior to 3:00
P.M. New York City time on such date or (ii) 12:00 Noon on the business day
following the day on which the public offering price was determined, if
such determination occurred after 3:00 P.M. New York City time on such
date; if filing of the Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b), the Prospectus shall have been filed in the manner
<PAGE>
5
and within the time period required by Rule 424(b); and no stop order
suspending the effectiveness of the Registration Statement, as amended from
time to time, shall have been issued and no proceedings for that purpose
shall have been instituted or threatened.
(b) The Company shall have furnished to the Representatives:
(i) the opinion of the General Counsel, an Assistant General
Counsel or an Associate General Counsel of the Company, dated the
Closing Date, to the effect that:
(A) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of New York, with full corporate power and authority to own
its properties and conduct its business as described in the
Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each
jurisdiction within the United States which requires such
qualifications wherein it owns or leases material properties or
conducts material business;
(B) the Securities conform in all material respects to the
description thereof contained in the Prospectus;
(C) the Indenture has been duly authorized, executed and
delivered, has been duly qualified under the Trust Indenture
Act, and constitutes a legal, valid and binding obligation
enforceable against the Company in accordance with its terms
(subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar laws
affecting creditors' rights generally from time to time in
effect, and subject, as to enforceability, to general
principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at
law); and the Securities have been duly authorized and, when
executed and authenticated in accordance with the provisions
of the Indenture and delivered to and paid for by the
Underwriters pursuant to this Agreement, in the case of the
Underwriters' Securities, or by the purchasers thereof
pursuant to Delayed Delivery Contracts, in the case of any
Contract Securities, will constitute legal, valid and binding
obligations of the Company entitled to the benefits of the
Indenture (subject to applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium, and other
similar laws affecting creditors' rights generally from time
to time in effect);
(D) to the best knowledge of such counsel, there is no
pending or threatened action, suit or proceeding before any court
or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries, of a character
required to be disclosed in the Registration Statement which is
not adequately disclosed in the Prospectus, and there is no
franchise, contract or other document of a character required to
be described in the Registration Statement or Prospectus, or to
be filed as an exhibit, which is not described or filed as
required;
(E) the Registration Statement and any amendments thereto
have become effective under the Act; any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) has
been made in the manner and within the time period required by
Rule 424(b); to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement, as
amended, has been issued, no proceedings for that purpose have
been instituted or are pending or contemplated under the Act;
(F) this Agreement and any Delayed Delivery Contracts have
been duly authorized, executed and delivered by the Company;
<PAGE>
6
(G) no authorization, approval or other action by, and no
notice to, consent of, order of, or filing with, any United
States Federal or New York governmental authority or regulatory
body is required for the consummation of the transactions
contemplated herein or in any Delayed Delivery Contracts, except
such as have been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Securities
and such other approvals (specified in such opinion) as have been
obtained;
(H) such counsel has no reason to believe that (1) the
Registration Statement and the Prospectus (except the financial
statements and the notes thereto and other information of an
accounting or financial nature included therein, and the
Statement of Eligibility (Form T-1) included as an exhibit to the
Registration Statement, as to which such counsel need express no
view) were not appropriately responsive in all material respects
to requirements of the Act and the applicable rules and
regulations of the Commission thereunder and (2) the Registration
Statement or any amendment thereof at the time it became
effective contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein
or necessary to make the statements therein not misleading or
that the Prospectus, as amended or supplemented, contains any
untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (in each
case except for the financial statements and the notes thereto
and other information of an accounting or financial nature
included therein, as to which such counsel need express no view);
and
(I) none of the issue and sale of the Securities, the
consummation of any other of the transactions herein contemplated
or the fulfillment of the terms hereof or of any Delayed Delivery
Contracts will conflict with, result in a breach of, or
constitute a default under, the charter or by-laws of the Company
or the terms of any indenture or other agreement or instrument
known to such counsel and to which the Company or any of its
subsidiaries is a party or bound, or any decree or regulation
known to such counsel to be applicable to the Company or any of
its subsidiaries of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over
the Company or any of its subsidiaries.
The statements described in one or more of paragraphs (B),
(C), (E), (F), (G) and (H)(1) of this subsection 5(b)(i) may be
omitted from the opinion of such counsel; provided, however, that
in such event the Company shall also have furnished to the
Representatives the corresponding opinion or letter of Cravath,
Swaine & Moore, counsel for the Company, described in subsection
5(b)(ii) or 5(b)(iii) immediately following.
(ii) in the event that the statements described in one or more of
paragraphs (B), (C), (E), (F) or (G) of foregoing subsection 5(b)(i)
is omitted from the opinion delivered pursuant to such subsection, the
opinion of Cravath, Swaine & Moore, counsel for the Company, dated the
Closing Date, to the effect of the statements so omitted.
In rendering such opinions, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction
other than the State of New York or the United States, to the
extent they deem proper and specified in such opinion, upon the
opinion of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the
Underwriters; and (B) as to matters of fact, to the extent they
deem proper, on certificates of responsible officers of the
Company and public officials.
(iii) in the event that the statements in paragraph (H)(1) of
subsection 5(b)(i) are omitted from the opinion provided pursuant to
such subsection, a letter of Cravath, Swaine & Moore dated the Closing
Date to the effect that, having participated in conferences with
certain officers of, and with the accountants for, the Company and
having made certain inquiries and investigations in connection with
<PAGE>
7
the preparation of the Registration Statement and the Prospectus, such
counsel has no reason to believe that (i) the Registration Statement
and the Prospectus (except the financial statements and the notes
thereto and other information of an accounting or financial nature
included therein, and the Statement of Eligibility (Form T-1) included
as an exhibit to the Registration Statement, as to which such counsel
need express no view) were not appropriately responsive in all
material respects with requirements of the Act and the applicable
rules and regulations of the Commission thereunder and (ii) the
Registration Statement at the Effective Date contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus on the Closing Date
includes any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading
(in each case except for the financial statements and the notes
thereto and other information of an accounting or financial nature
included therein, as to which such counsel need express no view).
(c) The Representatives shall have received from Davis Polk &
Wardwell, counsel for the Underwriters, such opinion or opinions, dated the
Closing Date, with respect to the issuance and sale of the Securities, the
Indenture, any Delayed Delivery Contracts, the Registration Statement, the
Prospectus and other related matters as the Representatives may reasonably
require, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters.
(d) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the principal financial or accounting
officer (or Vice President and Treasurer) of the Company, dated the Closing
Date, to the effect that the signer of such certificate has carefully
examined the Registration Statement, the Prospectus, any supplement to the
Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and the Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to
the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement, as amended, has been issued and no proceedings
for that purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectus, there has been no material adverse change
in the condition (financial or other), earnings, business or
properties of the Company and its subsidiaries, whether or not arising
from transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectus.
(e) At the Closing Date, Price Waterhouse LLP shall have furnished to
the Representatives a letter or letters (which may refer to a letter
previously delivered to one or more of the Representatives), dated as of
the Closing Date, in form and substance satisfactory to the
Representatives, confirming that they are independent accountants within
the meaning of the Act and the Exchange Act and the respective applicable
published rules and regulations thereunder, that the response, if any, to
Item 10 of the Registration Statement is correct insofar as it relates to
them and stating in effect that:
(i) in their opinion the audited financial statements and
schedules thereto included or incorporated in the Registration
Statement and the Prospectus and reported on by them comply as to form
in all material respects with the applicable accounting requirements
of the Exchange Act and the published rules and regulations thereunder
with respect to financial statements and financial statement schedules
included or incorporated in annual reports on Form 10-K under the
Exchange Act;
<PAGE>
8
(ii) on the basis of a reading of the unaudited financial
statements included or incorporated in the Registration Statement and
the Prospectus and of the latest unaudited financial statements made
available by the Company and its subsidiaries; carrying out certain
specified procedures (but not an examination in accordance with
generally accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments set forth
in such letter; a reading of the minutes of the meetings of the
stockholders, directors and executive committees of the Company and
the Subsidiaries since the date of the latest audited balance sheet,
through a specified date not more than five business days prior to the
date of the letter; and inquiries of certain officials of the Company
who have responsibility for financial and accounting matters of the
Company and its subsidiaries as to transactions and events subsequent
to the date of the most recent financial statements incorporated in
the Registration Statement and the Prospectus, nothing came to their
attention which caused them to believe that:
(1) any unaudited financial statements included or
incorporated in the Registration Statement and the Prospectus do
not comply as to form in all material respects with applicable
accounting requirements and with the published rules and
regulations of the Commission with respect to financial
statements included or incorporated in quarterly reports on Form
10-Q under the Exchange Act; and said unaudited financial
statements are not stated on a basis substantially consistent
with that of the audited financial statements included or
incorporated in the Registration Statement and the Prospectus; or
(2) with respect to the period subsequent to the date of the
most recent financial statements incorporated in the Registration
Statement and the Prospectus, there were, at a specified date not
more than five business days prior to the date of the letter, any
increases in long-term debt of the Company and its subsidiaries
or decreases in the capital stock of the Company or decreases in
the stockholders' equity of the Company and its subsidiaries as
compared with the amounts shown on the most recent consolidated
balance sheet included or incorporated in the Registration
Statement and the Prospectus, except in all instances for
increases or decreases set forth in such letter, in which case
the letter shall be accompanied by an explanation by the Company
as to the significance thereof unless said explanation is not
deemed necessary by the Representatives; and
(iii) they have performed certain other procedures as a result of
which they determined that the information described in a schedule to
be delivered on behalf of the Underwriters of an accounting, financial
or statistical nature (which is limited to accounting, financial or
statistical information derived from the general ledger of the
Company) set forth in the Registration Statement, as amended, the
Prospectus, as amended or supplemented, and in Exhibit 12 to the
Registration Statement (including selected accounting, financial or
statistical information included or incorporated in the Company's
Annual Report on Form 10-K incorporated in the Prospectus or any of
the Company's Quarterly Reports on Form l0-Q incorporated therein),
agrees with the general ledger of the Company and its subsidiaries,
excluding any questions of legal interpretation.
References to the Prospectus in this paragraph (e) include any supplements
thereto at the date of the letter.
(f) Subsequent to the respective dates of which information is given
in the Registration Statement and the Prospectus, there shall not have been
(i) any change or decrease specified in the letter or letters referred to
in paragraph (e) of this Section 5 or (ii) any change, or any development
involving a prospective change, in or affecting the business or properties
of the Company and its subsidiaries the effect of which, in any case
referred to in clause (i) or (ii) above, is, in the judgment of the
Representatives, so material and adverse as to make it impractical or
inadvisable to proceed with the public offering or the delivery of the
Securities as contemplated by the Registration Statement and the
Prospectus.
<PAGE>
9
(g) Prior to the Closing Date, the Company shall have furnished to the
Representatives such further information, certificates and documents as the
Representatives may reasonably request.
(h) The Company shall have accepted Delayed Delivery Contracts in any
case where sales of Contract Securities arranged by the Underwriters have
been approved by the Company.
(i) Subsequent to the Execution Time, there shall not have been any
decrease in the ratings of any of the Securities by Moody's Investor's
Service, Inc. ("Moody's") or Standard & Poor's Corporation ("S&P") and
neither Moody's nor S&P shall have publicly announced that it has placed
any of the Securities on a credit watch with negative implications.
If any of the conditions specified in this Section 5 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and their counsel, this Agreement and all
obligations of the Underwriters hereunder may be cancelled at, or at any time
prior to, the Closing Date by the Representatives. Notice of such cancellation
shall be given to the Company in writing or by telephone or telegraph confirmed
in writing.
6. Reimbursement of Underwriters' Expenses. If the sale of the Securities
provided for herein is not consummated because any condition to the obligations
of the Underwriters set forth in Section 5 hereof is not satisfied or because of
any refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand for all out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
7. Indemnification and Contribution. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement for the registration of
the Securities as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party for any legal or other expenses reasonably incurred,
as incurred, by them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that (i) the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter through the Representatives
specifically for use in connection with the preparation thereof, and (ii) such
indemnity with respect to any Preliminary Prospectus shall not inure to the
benefit of any Underwriter (or any person controlling such Underwriter) from
whom the person asserting any such loss, claim, damage or liability purchased
the Securities which are the subject thereof if such person did not receive a
copy of the Prospectus (or the Prospectus as supplemented) excluding documents
incorporated therein by reference at or prior to the confirmation of the sale of
such Securities to such person in any case where such delivery is required by
the Act and the untrue statement or omission of a material fact contained in
such Preliminary Prospectus was corrected in the Prospectus (or the Prospectus
as supplemented prior to the confirmation of the sale of such Securities to such
person). This indemnity agreement will be in addition to any liability which the
Company may otherwise have.
<PAGE>
10
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who signs the Registration
Statement, and each person who controls the Company within the meaning of either
the Act or the Exchange Act, to the same extent as the foregoing indemnity from
the Company to each Underwriter, but only with reference to written information
relating to such Underwriter furnished to the Company by or on behalf of such
Underwriter through the Representatives specifically for use in the preparation
of the documents referred to in the foregoing indemnity. This indemnity
agreement will be in addition to any liability which any Underwriter may
otherwise have. The Company acknowledges that the statements set forth in the
last paragraph of the cover page of the Prospectus and under the heading
"Underwriting" or "Plan of Distribution" and, if Schedule I hereto provides for
sales of Securities pursuant to delayed delivery arrangements, in the last
sentence under the heading "Delayed Delivery Arrangements" in any Preliminary
Prospectus and the Prospectus, constitute the only information furnished in
writing by or on behalf of the several Underwriters for inclusion in any
Preliminary Prospectus or the Prospectus, and you, as the Representatives,
confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 7, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 7. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to appoint counsel satisfactory to such
indemnified party to represent the indemnified party in such action; provided,
however, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to appoint counsel to defend such action
and approval by the indemnified party of counsel, the indemnifying party will
not be liable to such indemnified party under this Section 7 for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel (in addition to any local
counsel), approved by the Representatives in the case of paragraph (a) of this
Section 7, representing the indemnified parties under such paragraph (a) who are
parties to such action), (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
action or (iii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party; and except
that, if clause (i) or (iii) is applicable, such liability shall be only in
respect of the counsel referred to in such clause (i) or (iii).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a) of this
Section 7 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company on grounds of policy or otherwise, the
Company and the Underwriters shall contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably incurred
in connection with investigating or defending same) to which the Company and one
or more of the Underwriters may be subject in such proportion so that the
Underwriters are responsible for that portion represented by the percentage that
the underwriting discount bears to the sum of such discount and the purchase
price of the Securities set forth on Schedule I hereto and the Company is
responsible for the balance; provided, however, that (y) in no case shall any
Underwriter (except as may be provided in any agreement among underwriters
relating to the offering of the Securities) be responsible for any amount in
excess of the underwriting discount applicable to the Securities purchased by
such Underwriter hereunder and (z) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to
<PAGE>
11
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person who controls an
Underwriter within the meaning of either the Act or the Exchange Act shall have
the same rights to contribution as such Underwriter, and each person who
controls the Company within the meaning of either the Act or the Exchange Act,
each officer of the Company who shall have signed the Registration Statement and
each director of the Company shall have the same rights to contribution as the
Company, subject in each case to clauses (y) and (z) of this paragraph (d). Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this paragraph (d), notify such party or parties from whom contribution
may be sought, but the omission to so notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any other
obligation it or they may have hereunder or otherwise than under this paragraph
(d).
8. Default by an Underwriter. If any one or more Underwriters shall fail to
purchase and pay for any of the Securities agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule II hereto bears to the aggregate amount
of Securities set forth opposite the names of all the remaining Underwriters)
the Securities which the defaulting Underwriter or Underwriters agreed but
failed to purchase; provided, however, that in the event that the aggregate
amount of Securities which the defaulting Underwriter or Underwriters agreed but
failed to purchase shall exceed 10% of the aggregate amount of Securities set
forth in Schedule II hereto, the remaining Underwriters shall have the right to
purchase all, but shall not be under any obligation to purchase any, of the
Securities, and if such nondefaulting Underwriters do not purchase all the
Securities, this Agreement will terminate without liability to any nondefaulting
Underwriter or the Company. In the event of a default by any Underwriter as set
forth in this Section 8, the Closing Date shall be postponed for such period,
not exceeding seven days, as the Representatives shall determine in order that
the required changes in the Registration Statement and the Final Prospectus or
in any other documents or arrangements may be effected. Nothing contained in
this Agreement shall relieve any defaulting Underwriter of its liability, if
any, to the Company and any nondefaulting Underwriter for damages occasioned by
its default hereunder.
9. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company prior
to delivery of and payment for the Securities, if prior to such time (i) trading
in securities generally on the New York Stock Exchange shall have been suspended
or limited or minimum prices shall have been established on such Exchange, (ii)
a banking moratorium shall have been declared either by Federal or New York
State authorities or (iii) there shall have occurred any outbreak or material
escalation of hostilities or other calamity or crisis the effect of which on the
financial markets of the United States is such as to make it, in the judgment of
the Representatives, impracticable to market the Securities.
10. Representations and Indemnities to Survive. The respective agreement
representations, warranties, indemnities and other statements of the Company or
its officers and of the Underwriters set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of any Underwriter or the Company or any of the officers,
directors or controlling persons referred to in Section 7 hereof, and will
survive delivery of and payment for the Securities. The provisions of Sections 6
and 7 hereof shall survive the termination or cancellation of this Agreement.
11. Notices. All communications hereunder will be in writing and effective
only on receipt, and, if sent to the Representatives, will be mailed, delivered
or telegraphed and confirmed to them, at the address specified in Schedule I
hereto; or, if sent to the Company, will be mailed, delivered or telegraphed and
confirmed to it, at Armonk, New York 10504; attention of the Treasurer.
<PAGE>
12
12. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 7 hereof, and no other
person will have any right or obligation hereunder.
13. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the Company
and the several Underwriters.
Very truly yours,
INTERNATIONAL BUSINESS MACHINES
CORPORATION
By: ____________________________________
The foregoing Agreement is hereby
confirmed and accepted on the
date specified in Schedule I hereto.
By:
By: ____________________________________
For themselves and the other several
Underwriters, if any, named in
Schedule II to the foregoing Agreement.
<PAGE>
13
SCHEDULE I
Debt Securities
Underwriting Agreement dated
Registration Statement No. 333-
Representatives:
Title of Securities:
Principal Amount:
Interest Rate:
Purchase Price:
Offering Price:
Interest Payment Dates:
Subordination Provisions:
Optional Redemption:
Sinking Fund Provisions:
Delayed Delivery:
Closing Date and Time:
Method of Payment of Underwriters' Securities:
Other provisions of or Amendments to
Underwriting Agreement:
Additional Covenants Pursuant to
Section 4:
[Until [ ], the Company will not, without
<PAGE>
14
the consent of the Representatives, offer, sell or contract to sell, or
otherwise dispose of, directly or indirectly, or announce the offering
of, any securities issued or guaranteed by the Company (other than the
Securities).]
Additional Covenants
Pursuant to Section 5:
[At or prior to the Closing Date, the Indenture dated as of the
Closing Date, between the Company and [ ], as Trustee, in
form and substance satisfactory to the Underwriters, shall have been
executed and delivered by the parties thereto and shall be in full force
and effect.]
Units
Title and principal amount of Debt Securities or title and number of shares
of Common Stock, Preferred Stock, Warrants or Depositary Shares in one
Unit:
Purchase Price and currency:
Section 4(g) Listing upon notice of issuance on any national securities
exchange or automated quotation system:
Detachable Date:
Overallotment option:
Other provisions:
Section 5(h) provisions, if any:
<PAGE>
15
Delayed Delivery: [None]
[Underwriters' commission shall be __% of the principal amount of
Designated Securities for which Delayed Delivery Contracts have been
entered into and the check given in payment of such commission shall be
drawn to the order of _____________]
[Maximum aggregate principal amount of Designated Securities to be offered
and sold pursuant to Delayed Delivery Contracts: [$]_______________]
[Minimum principal amount of each Delayed Delivery Contract: [$]______________]
<PAGE>
16
SCHEDULE I
Common Stock
Preferred Stock
Depositary Shares
Warrants
Underwriting Agreement dated
Registration Statement No. 333-
Representative(s):
Designation, Purchase Price and Description:
Designation:
Liquidation preference per share:
Number of shares:
Purchase price per share (include accrued dividends, if any):
Other provisions:
Over-allotment option:
[Subject to the terms and conditions and in reliance upon the
representations and warranties set forth in the Underwriting Agreement, the
Company hereby grants an option to the several Underwriters named in
Schedule II hereto to purchase, severally and not jointly, up to
[ ] additional shares of [ ] (the "[U.S.] Option Securities",
[together with the International Option Securities (as hereinafter
<PAGE>
17
defined]), the "Option Securities") at the same purchase price per share as
the Underwriters shall pay for the Securities. Said option may be exercised
only to cover over-allotments in the sale of the Securities by the
Underwriters. Said option may be exercised in whole or in part at any time
(but not more than once)on or before the th day after the date of the Final
Prospectus, upon written or telegraphic notice by the Representatives to the
Company setting forth the number of shares of [U.S.] Option Securities as to
which the several Underwriters are exercising the option and the Settlement
Date, as defined in the Underwriting Agreement. The number of shares of
[U.S.] Option Securities to be purchased by each Underwriter shall be the
same percentage of the total number of shares of [U.S.] Option Securities to
be purchased by the several Underwriters as such Underwriter is purchasing of
the securities, as set forth in Schedule II hereto, subject to such
adjustments as the Representatives in their absolute discretion shall make to
eliminate any fractional shares.
If the option provided for herein is exercised after the
business day prior to the Closing Date, as defined in the Underwriting
Agreement, the Company will deliver (at the expense of the Company) to the
Representatives, at [ ], New York, New York, on the
date specified by the Representatives (which shall be within three business
days after exercise of said option) (the "Settlement Date"), certificates
for [U.S.] Option Securities in such names and denominations as the
Representatives shall have requested not less than three full business days
in advance of the Settlement Date unless the parties otherwise agree
against payment of the purchase price thereof to or upon the order of the
Company by certified or official bank check or checks payable in, or wire
transfers of, (next day) funds. If settlement for [U.S.] Option Securities
occurs after the Closing Date, the Company will deliver to the
Representatives on the Settlement Date for [U.S.] Option Securities, and
the obligation of the Underwriters to purchase the [U.S.] Option Securities
shall be conditioned upon receipt of, supplemental opinions, certificates
and letters confirming as of such date the opinions, certificates and
letters delivered on the Closing Date pursuant to Section 5 of the
Underwriting Agreement.]
Other provisions of or Amendments to Underwriting Agreement:
[The Company is concurrently entering into an International Underwriting
Agreement dated the date hereof (the "International Underwriting Agreement")
providing for the issue and sale by the Company of [ ] outside
the United States and Canada through arrangements with certain underwriters
outside the United States and Canada (the "International Underwriters"), for
whom [ ] are acting as representatives (the "International
Representatives"), and providing for the grant to the International
Underwriters of an option to purchase from the Company up to [ ]
additional shares of [ ] (the "International Option Securities"). It is
further understood and agreed that the Underwriters and the International
Underwriters have entered into an Agreement dated the date hereof (the
"Agreement between Underwriters and International Underwriters"), pursuant to
which, among other things, the International
<PAGE>
18
Underwriters may purchase from the Underwriters a portion of the Securities
to be sold pursuant to the Underwriting Agreement and the Underwriters may
purchase from the International Underwriters a portion of the Securities to
be sold pursuant to the International Underwriting Agreement.
It is understood that two forms of Preliminary Final Prospectuses
and two forms of Final Prospectuses are to be used in connection with the
offering and sale of the Securities pursuant to the Underwriting Agreement
and International Underwriting Agreement: one form of Preliminary Final
Prospectus and one form of Final Prospectus relating to the Securities,
which are to be offered and sold to United States and Canadian Persons, and
one form of Preliminary Final Prospectus and one form of Final Prospectus
relating to the Securities, which are to be offered and sold to persons
other than United States and Canadian Persons. The two forms of
Preliminary Final Prospectuses and the two forms of Final Prospectuses are
identical except for the outside front cover page, the discussion under the
heading "Underwriting" and the outside back cover page. The form of
Preliminary Final Prospectus, the form of Final Prospectus and the form of
any Rule 434 term sheet relating to the Securities which are to be offered
to U.S. and Canadian Persons, as first filed pursuant to Rule 424(b) or
Rule 434 or, if no filing pursuant to Rule 424(b) is made, such form of
Preliminary Final Prospectus, Final Prospectus and any Rule 434 term sheet
included in the Registration Statement at the Effective Date, is
hereinafter called the "U.S. Prospectus"; such form of Preliminary Final
Prospectus, such form of Final Prospectus and such form of any Rule 434
term sheet relating to the Securities which are to be offered to Persons
other than United States and Canadian Persons, as first filed pursuant to
Rule 424(b) or Rule 434 or, if no filing pursuant to Rule 424(b) is made,
such form of Preliminary Final Prospectus, such form of Final Prospectus
and such form of any Rule 434 terms sheet included in the Registration
Statement at the Effective Date, is hereinafter called the "International
Prospectus"; and the U.S. Prospectus and the International Prospectus are
hereinafter collectively called the "Prospectuses."
Each Underwriter agrees that (i) it is not purchasing any of the
Securities or Option Securities for the account of anyone other than a
United States or Canadian Person, (ii) it has not offered or sold, and will
not offer or sell, directly or indirectly, any of the Securities or Option
Securities or distribute any U.S. Prospectus to any person outside the
United States or Canada, or to anyone other than a United States or
Canadian Person, and (iii) any dealer to whom it may sell any of the
Securities will represent that it is not purchasing for the account of
anyone other than a United States or Canadian Person and agree that it will not
offer or resell, directly or indirectly, any of the Securities or Option
Securities outside the United States or Canada, or to anyone other than a United
States or Canadian Person or to any other dealer who does not so represent
and agree; provided, however, that the foregoing shall not restrict
(a) purchases and sales between the Underwriters on the one hand and the
International Underwriters on the other hand pursuant to the Agreement
between Underwriters and International Underwriters, (b) stabilization
transactions contemplated under the Agreement between Underwriters and
International Underwriters, conducted through [ ] as part of
<PAGE>
19
the distribution of the Securities or Option Securities, and (c) sales to
or through (or distributions of U.S. Prospectuses or U.S. Preliminary
Prospectuses to) United States or Canadian Persons who are investment
advisors, or who otherwise exercise investment discretion, and who are
purchasing for the account of anyone other than a United States or Canadian
Person.
The agreements of the Underwriters and International Underwriters
set forth above shall terminate upon the earlier of the following events:
(i) a mutual agreement of the Representatives and the
International Representatives to terminate the selling
restrictions set forth above and in Schedule I of the
International Underwriting Agreement; or
(ii) the expiration of a period of 30 days after the Closing
Date, unless (A) the Representatives shall have given notice
to the Company and the International Representatives that
the distribution of the Securities by the Underwriters has
not yet been completed or (B) the International
Representatives shall have given notice to the Company and
the Underwriters that the distribution of the International
Securities by the International Underwriters has not yet
been completed. If such notice by the Representatives or
the International Representatives is given, the agreements
set forth above shall survive until the earlier of (1) the
event referred to in clause (i) above or (2) the expiration
of an additional period of 30 days from the date of any such
notice].
Additional Covenants Pursuant to Section 4:
[Until the [ ], the Company will
not, without the consent of the Representatives, offer, sell or
contract to sell, or otherwise dispose of, directly or indirectly, or
announce the offering of, any securities issued or guaranteed by the
Company (other than the Securities).]
[The Company will arrange for the listing of the Equity
Securities upon notice of issuance on [designate any national
securities exchange or automated quotation system].]
Additional Covenants Pursuant to Section 5:
Supplemental matters to be covered by the opinion of Cravath, Swaine &
Moore and/or the General Counsel, an Assistant General Counsel or an Associate
General Counsel of the Company, to be delivered pursuant to Section 5(b):
Modification of items to be covered by the letter from Price Waterhouse LLP
delivered pursuant to Section 5(e) at the Execution Time:
<PAGE>
20
Section 5(h) provisions, if any:
Deposit Agreement: Terms and Conditions
Warrant Agreement: Terms and Conditions
Purchased Securities Closing Date and Time:
Method of Payment of Underwriters' Securities:
Delayed Delivery Arrangements:
Fee:
Minimum principal amount of each contract:
Maximum aggregate principal amount of all contracts:
Convertibility:
Exchangeability into Debt Securities:
Closing Date and Time:
<PAGE>
21
SCHEDULE II
Amount
Underwriter To Be Purchased
- ----------- ----------------
<PAGE>
22
SCHEDULE III
Delayed Delivery Contract
[Date]
[Insert name and address
of lead Representative]
Ladies and Gentlemen:
The undersigned hereby agrees to purchase from International
Business Machines Corporation (the "Company"), and the Company agrees to
sell to the undersigned, on , 19 , (the "Delivery Date"),
principal amount of the Company's (the
"Securities") offered by the Company's Prospectus dated , 199 ,
and related Prospectus Supplement dated , 199 , receipt of a copy
of which is hereby acknowledged, at a [purchase price of % of the]
[principal amount] [thereof, plus] [accrued interest] [amortization of
original issue discount], if any, thereon from , 199 , to the
date of payment and delivery, and on the further terms and conditions set
forth in this contract.
Payment for the Securities to be purchased by the undersigned
shall be made on or before 11:00 AM, New York City time, on the Delivery
Date to or upon the order of the Company in New York Clearing House (next
day) funds, at your office or at such other place as shall be agreed
between the Company and the undersigned, upon delivery to the undersigned
of the Securities in definitive fully registered form and in such
authorized denominations and registered in such names as the undersigned
may request by written or telegraphic communication addressed to the
Company not less than five full business days prior to the Delivery Date.
If no request is received, the Securities will be registered in the name of
the undersigned and issued in a denomination equal to the aggregate
principal amount or number of Securities to be purchased by the undersigned
on the Delivery Date.
The obligation of the undersigned to take delivery of and make
payment for Securities on the Delivery Date, and the obligation of the
Company to sell and deliver Securities on the Delivery Date, shall be
subject to the conditions (and neither party shall incur any liability by reason
of the failure thereof) that (1) the purchase of Securities to be made by the
undersigned, which purchase the undersigned represents is not prohibited on the
date hereof, shall not on the Delivery Date be prohibited under the laws of the
jurisdiction to which the undersigned is subject, and (2) the Company, on
<PAGE>
23
or before the Delivery Date, shall have sold to certain underwriters (the
"Underwriters") such principal amount or number of Securities as is to be
sold to them pursuant to the Underwriting Agreement referred to in the
Prospectus and Prospectus Supplement mentioned above. Promptly after
completion of such sale to the Underwriters, the Company will mail or
deliver to the undersigned at its address set forth below notice to such
effect, accompanied by a copy of the opinion of counsel for the Company
delivered to the Underwriters in connection therewith. The obligation of
the undersigned to take delivery of and make payment for the Securities,
and the obligation of the Company to cause the Securities to be sold and
delivered, shall not be affected by the failure of any purchaser to take
delivery of and make payment for the Securities pursuant to other contracts
similar to this contract.
This contract will inure to the benefit of and be binding upon
the parties hereto and their respective successors, but will not be
assignable by either party hereto without the written consent of the other.
It is understood that acceptance of this contract and other
similar contracts is in the Company's sole discretion and, without limiting
the foregoing, need not be on a first come, first served basis. If this
contract is acceptable to the Company, it is required that the Company sign
the form of acceptance below and mail or deliver one of the counterparts
hereof to the undersigned at its address set forth below. This will become
a binding contract between the Company and the undersigned, as of the date
first above written, when such counterpart is so mailed or delivered.
This agreement shall be governed by and construed in accordance
with the laws of the State of New York without reference to choice of law
principles.
Very truly yours,
___________________
(Name of Purchaser)
By:________________
(Signature and Title of Officer)
________________________
(Address)
Accepted:
International Business Machines Corporation
By:_____________________
Title:____________________
<PAGE>
EXHIBIT (1)(b)
$[___________________]
International Business Machines Corporation
U.S. Medium-Term Notes
AGENCY AGREEMENT
__________, 199_
[Agent Addresses]
Dear Sirs:
1. Introduction. International Business Machines Corporation, a New York
corporation (the "Issuer"), confirms its agreement with each of you
(individually an "Agent" and collectively the "Agents") with respect to the
issue and sale from time to time by the Issuer on or after the date hereof of up
to $[_________] in aggregate initial offering price of its Medium-Term
Securities (or for Medium-Term Securities denominated in currencies or currency
units other than U.S. dollars, the equivalent thereof based on the prevailing
exchange rates at the respective times such Medium-Term Securities are first
offered) (the "Securities") issued under Article Three of the Indenture, dated
as of October 1, 1993 (the "Trustee"), as supplemented by the First Supplemental
Indenture thereto dated as of December 15, 1995 (the "Indenture"), between the
Issuer and The Chase Manhattan Bank (National Association), as trustee. The
Securities will be issued, and the terms thereof estab-
<PAGE>
2
lished, from time to time by the Issuer in accordance with the Indenture and the
Procedures (as defined in Section 3(d) hereof).
2. Representations and Warranties of the Issuer. The Issuer
represents and warrants to, and agrees with, each Agent as follows:
(a) Registration statements of the Issuer (Nos. 333- and
333- ), relating to securities of the Issuer (collectively the
"Registered Securities"), including the Securities, have been filed with
the Securities and Exchange Commission (the "Commission") and have become
effective (such registration statements, as amended as of the Closing Date
(as defined in Section 3(e) hereof), including all material incorporated
by reference therein, being hereinafter collectively referred to as the
"Registration Statement", and the prospectus dated _______________, 199_,
a form of which is included in Registration Statement No. 333-______, as
supplemented as of the Closing Date, including all material incorporated
by reference therein, being hereinafter referred to as the "Prospectus").
Any reference in this Agreement to amending or supplementing the
Prospectus shall be deemed to include the filing of materials incorporated
by reference in the Prospectus after the Closing Date and any reference in
this Agreement to any amendment or supplement to the Prospectus shall be
deemed to include any such materials incorporated by reference in the
Prospectus after the Closing Date.
(b) On the effective date of each registration statement included in
the definition of Registration Statement, such registration statement
conformed, and on the Closing Date the Prospectus as then amended or
supplemented will conform, in all respects to the requirements of the
Securities Act of 1933 (the "Act"), the Securities Exchange Act of 1934
(the "Exchange Act"), the Trust Indenture Act of 1939 (the "Trust
Indenture Act") and the rules and regulations of the Commission thereunder
(the "Rules and Regulations"), and on its effective date each registration
statement did not, and such Prospectus will not, include 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
mislead-
<PAGE>
3
ing, except that the foregoing does not apply to statements in or
omissions from any of such documents based upon written information
furnished to the Issuer by any Agent specifically for use therein.
3. Appointment as Agent; Solicitations as Agent. (a) Subject to the
terms and conditions stated herein, the Issuer hereby appoints each of the
Agents an agent of the Issuer for the purpose of soliciting or receiving offers
to purchase the Securities from the Issuer by others. Nothing contained in this
Agreement shall be construed to prevent the Issuer from selling at any time to
any person any Registered Securities, including the Securities, directly on its
own behalf or in a firm commitment underwriting pursuant to an underwriting
agreement that does not provide for a continuous offering of such Securities.
Each Agent agrees to use its reasonable efforts to solicit purchases of the
Securities on the terms and subject to the conditions set forth herein and in
the Procedures (as defined below).
(b) On the basis of the representations and warranties contained
herein, but subject to the terms and conditions herein set forth, each
Agent agrees, as agent of the Issuer, to solicit offers to purchase the
Securities upon the terms and conditions set forth in the Prospectus, as
from time to time amended or supplemented.
Upon receipt of notice from the Issuer as contemplated by Section
4(b) hereof, the Agents shall suspend solicitation of offers to purchase
the Securities until such time as the Issuer shall have furnished them
with an amendment or supplement to the Registration Statement or the
Prospectus, as the case may be, contemplated by Section 4(b) and shall
have advised the Agents that such solicitation may be resumed.
The Issuer reserves the right, in its sole discretion, to suspend
solicitation of offers to purchase the Securities commencing at any time
for any period of time or permanently. Upon receipt of notice from the
Issuer, the Agents will forthwith suspend solicitation of offers to
purchase the Securities from the Issuer until such time as the Issuer has
advised the Agents that such solicitation may be resumed.
Unless otherwise mutually agreed upon between the Issuer and the
Agent soliciting such offer, the Agents
<PAGE>
4
are authorized to solicit offers to purchase Securities only in fully
registered form in denominations of $1,000 or any multiple thereof. The
authorized denominations of Securities not denominated in U.S. dollars
will be determined by the Issuer at the time of sale. Each Agent shall
communicate to the Issuer, orally or in writing, each reasonable offer to
purchase the Securities received by it as Agent. The Issuer shall have the
sole right to accept offers to purchase the Securities and may reject any
such offer, in whole or in part. Each Agent shall have the right, in its
discretion reasonably exercised, without notice to the Issuer, to reject
any offer to purchase the Securities received by it, in whole or in part,
and any such rejection shall not be deemed a breach of its agreement
contained herein.
No Security which the Issuer has agreed to sell pursuant to this
Agreement shall be deemed to have been purchased and paid for, or sold, by
the Issuer until such Security shall have been delivered to the purchaser
thereof against payment by such purchaser.
(c) At the time of delivery of, and payment for, any Securities sold
by the Issuer as a result of a solicitation made by, or offer to purchase
received by, an Agent, the Issuer agrees to pay such Agent a commission in
accordance with the schedule set forth in Exhibit A hereto, unless
otherwise agreed.
(d) Administrative procedures respecting the sale of Securities (the
"Procedures") shall be agreed upon from time to time by the Agents and the
Issuer. The initial Procedures, which are set forth in Exhibit B hereto,
shall remain in effect until changed by agreement among the Issuer and the
Agents. Each Agent and the Issuer agree to perform the respective duties
and obligations specifically provided to be performed by each of them
herein and in the Procedures. The Issuer will furnish to the Trustee a
copy of the Procedures as from time to time in effect.
(e) The documents required to be delivered by Section 5 hereof
shall be delivered at the offices of the Issuer or [Attorneys of the
Issuer], not later than 10:00 A.M., New York City time, on the date of
this Agreement or at such other place, and at such later time and date
as may be
<PAGE>
5
mutually agreed by the Issuer and the Agents, such time and date being
herein called the "Closing Date".
4. Certain Agreements of the Issuer. The Issuer agrees with the
Agents that, in connection with each offering of Securities,
(a) The Issuer will advise each Agent promptly of any proposal to
amend or supplement the Registration Statement or the Prospectus (other
than an amendment or supplement (i) providing solely for a change in the
terms of the Securities, (ii) by means of the filing of materials
incorporated by reference in the Prospectus, (iii) relating to an offering
by the Issuer of Registered Securities other than the Securities or (iv)
that is a pricing amendment or supplement relating to Securities the
purchase of which was not solicited by any Agent) and will afford the
Agents a reasonable opportunity to comment on any such proposed amendment
or supplement; and the Issuer will also advise each Agent of the filing of
any such amendment or supplement and of the institution by the Commission
of any stop order proceedings in respect of the Registration Statement or
of any part thereof and will use its best efforts to prevent the issuance
of any such stop order and to obtain as soon as possible its lifting, if
issued.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
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 when such Prospectus is
delivered, not misleading, or if it is necessary at any time to amend the
Registration Statement or the Prospectus to comply with the Act, the
Exchange Act or the Rules and Regulations (other than as contemplated in
the parenthetical clause of Section 4(a) hereof), the Issuer will promptly
notify each Agent to suspend solicitation of offers to purchase the
Securities; and if the Issuer shall decide so to amend or supplement the
Registration Statement or the Prospectus, it will promptly advise each
Agent by telephone (with confirmation in writing) and will promptly
prepare and file with the Commission an amendment or supplement which will
correct such
<PAGE>
6
statement or omission or an amendment which will effect such compliance.
Notwithstanding the foregoing, if, at the time of any notification to
suspend solicitations, any Agent shall own any of the Securities with the
intention of reselling them as contemplated by Section 11 hereof, or the
Issuer has accepted an offer to purchase Securities but the related
settlement has not occurred, the Issuer, subject to the provisions of
subsection (a) of this Section, will promptly prepare and file with the
Commission an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance.
(c) The Issuer, during the period when a prospectus relating to the
Securities is required to be delivered under the Act, will file promptly
all documents required to be filed with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act. The Issuer will also
immediately notify each Agent of any downgrading in the rating of the
Securities or any other debt securities of the Issuer, or any proposal to
downgrade the rating of the Securities or any other debt securities of the
Issuer, by any "nationally recognized statistical rating organization"
(as defined for purposes of Rule 436(g) under the Act), as soon as the
Issuer learns of such downgrading or proposal to downgrade.
(d) The Issuer will furnish to each Agent copies of the Prospectus
and all amendments and supplements thereto, and all amendments to the
Registration Statement after the date hereof (other than an amendment or
supplement (i) relating to an offering by the Issuer of Registered
Securities other than the Securities or (ii) that solely specifies the
terms of the Securities the purchase of which was not solicited by any
Agent), in each case as soon as available and in such quantities as are
reasonably requested.
(e) The Issuer will arrange for the qualification of the Securities
for sale and the determination of their eligibility for investment under
the laws of such jurisdictions as the Agents designate and will continue
such qualifications in effect so long as required for the distribution of
the Securities.
<PAGE>
7
(f) So long as any Securities are outstanding, if so requested by
the Agents, the Issuer will furnish to the Agents, (i) as soon as
practicable after the end of each fiscal year, a copy of its annual
report to stockholders for such year, (ii) as soon as available, a copy
of each report or definitive proxy statement of the Issuer, if any,
filed with the Commission under the Exchange Act or mailed to
stockholders, and (iii) from time to time, such other information
concerning the Issuer as the Agents may reasonably request.
(g) The Issuer will pay all expenses incident to the performance of
its obligations under this Agreement and will reimburse each Agent for any
expenses (including fees and disbursements of counsel) incurred by it in
connection with qualification of the Securities for sale and determination
of their eligibility for investment under the laws of such jurisdictions
as such Agent may designate and the printing of memoranda relating
thereto, for any fees charged by investment rating agencies for the rating
of the Securities, for expenses incurred in distributing the Prospectus
and all supplements thereto, any preliminary prospectuses and any
preliminary prospectus supplements to each Agent and for the reasonable
fees and disbursements of counsel to the Agents.
(h) The Issuer confirms as of the date hereof, and each acceptance
by the Issuer of an offer to purchase Securities will be deemed an
affirmation, that the Issuer is in compliance with all provisions of
Section 1 of the Laws of Florida, Chapter 92-198, An Act Relating to
Disclosure of Doing Business with Cuba, and the Issuer further agrees that
if it commences engaging in business with the government of Cuba or with
any person or affiliate located in Cuba after the date the Registration
Statement becomes effective with the Commission or with the Florida
Department of Banking and Finance (the "Department"), whichever date is
later, or if the information reported in the Prospectus, if any,
concerning the Issuer's business with Cuba or with any person or affiliate
located in Cuba changes in any material way, the Issuer will provide the
Department notice of such business or change, as appropriate, in a form
acceptable to the Department.
<PAGE>
8
5. Conditions of Obligations. The obligation of each Agent, as agent
of the Issuer, under this Agreement at any time to solicit offers to purchase
the Securities is subject to the accuracy, on the date hereof, on the Closing
Date, on the date of each such solicitation, and at each of the times of
acceptance and of delivery referred to in Section 6(a) hereof and at each
Representation Date (as defined in Section 6(b)), of the representations and
warranties of the Issuer herein, to the accuracy, on each such date, of the
statements of the Issuer's officers in any certificates made pursuant to the
provisions hereof, to the performance, on or prior to each such date, by the
Issuer of its obligations hereunder, and to each of the following additional
conditions precedent:
(a) No stop order suspending the effectiveness of the Registration
Statement or of any part thereof shall have been issued and no proceedings
for that purpose shall have been instituted or, to the knowledge of the
Issuer or any Agent, shall be contemplated by the Commission.
(b) The Prospectus, as amended or supplemented as of the Closing
Date, the date of such solicitation or any Representation Date, shall not
contain any untrue statement of fact which, in the opinion of any Agent,
is material or omits to state a fact which, in the opinion of any Agent,
is material and is required to be stated therein or is necessary to make
the statements therein not misleading.
(c) There shall not have occurred between each trade and settlement
date (i) any change, or any development involving a prospective change, in
or affecting particularly the business or properties of the Issuer or its
subsidiaries which, in the judgment of such Agent, materially impairs the
investment quality of the Securities; (ii) any downgrading in the rating
of the Issuer's debt securities or public announcement that such debt
securities are under surveillance or review, with possible negative
implications, by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act);
(iii) any suspension or limitation of trading in securities generally on
the New York Stock Exchange, or any setting of minimum prices for trading
on such exchange, or any suspension of trading of any securities of the
Issuer on any
<PAGE>
9
exchange or in the over-the-counter market; (iv) any banking moratorium
declared by Federal or New York authorities; or (v) any outbreak or
escalation of major hostilities in which the United States is involved,
any declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the judgment of such Agent, the
effect of any such outbreak, escalation, declaration, calamity or
emergency makes it impractical or inadvisable to proceed with
solicitations of purchases of, or sales of, Securities.
(d) At the Closing Date, the Agents shall have received:
(i) the opinion of the General Counsel, Assistant General
Counsel or Associate General Counsel of the Issuer, or the
opinion of Cravath, Swaine & Moore, Counsel for the Issuer,
dated the Closing Date, to the effect that:
(A) the Issuer (x) has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of New York, with full corporate power and
authority to own its properties and conduct its business as
described in the Prospectus and (y) is duly qualified to do
business as a foreign corporation and is in good standing
under the laws of each jurisdiction within the United States
which requires such qualification wherein it owns or leases
material properties or conducts material business where such
failure so to qualify may have a material adverse effect on
the financial condition, earnings, business or properties of
the Issuer;
(B) to the knowledge of such counsel, there is no
pending or threatened action, suit or proceeding before any
court or governmental agency, authority or body or any
arbitrator involving the Issuer or any of its subsidiaries, of
a character required to be disclosed in the Registration
Statement which is not adequately disclosed in the Prospectus,
and there is no franchise, contract or other document of a
character required to be described in the Registration
<PAGE>
10
Statement or Prospectus, or to be filed as an exhibit, which
is not described or filed as required; and the statements in
the Prospectus describing the terms of the Securities and the
provisions of the Indenture fairly summarize the matters
therein described; and
(C) none of the issue and sale of the Securities, the
consummation of any other of the transactions contemplated
herein or the fulfillment of the terms hereof will conflict
with, result in a breach or violation of, or constitute a
default under, (x) the charter or by-laws of the Issuer; (y)
the terms of any indenture or other agreement or instrument
known to such counsel and to which the Issuer or any of its
subsidiaries is a party or bound, or (z) any order or
regulation known to such counsel to be applicable to the
Issuer or any of its subsidiaries of any court, regulatory
body, administrative agency, governmental body or arbitrator
having jurisdiction over the Issuer or any of its
subsidiaries.
(D) the authorized Securities conform in all material
respects to the description thereof contained in the
Prospectus;
(E) the Indenture has been duly authorized, executed and
delivered by the Issuer, has been duly qualified under the
Trust Indenture Act, and constitutes a valid and binding
instrument enforceable against the Issuer in accordance with
its terms (subject to applicable bankruptcy, reorganization,
insolvency, fraudulent transfer, moratorium
<PAGE>
11
or other similar laws affecting creditors' rights generally
from time to time in effect and to general principles of
equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law); and the
Securities have been duly authorized by resolutions of the
Board of Directors of the Issuer for issuance during 199_,
subject to the establish-ment of certain terms of the
Securities by officers of the Issuer authorized by such
resolutions to establish such terms, and, when the terms of
any such Security have been established as provided in such
resolutions and in the Indenture and such Security has been
executed and authenticated during such period in accordance
with the provisions of the Indenture and delivered to and paid
for by the purchaser thereof in accordance with the terms of
this Agreement, each such Security, assuming it does not
violate any applicable law then binding on the Issuer, will
constitute a valid and binding obligation of the Issuer
entitled to the benefits of the Indenture;
(F) the Registration Statement and any amendments
thereto have become effective under the Act, and, to the
knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement, as amended, has
been issued, and no
<PAGE>
12
proceedings for that purpose have been instituted or
threatened;
(G) this Agreement has been duly authorized, executed
and delivered by the Issuer; and
(H) no consent, approval, authorization or order of any
United States Federal or New York governmental agency or
regulatory body is required for the consummation of the
transactions contemplated herein, except such as have been
obtained under the Act and such as may be required under the
blue sky laws of any jurisdiction in connection with the issue
and sale of the Securities and such other approvals (specified
in such opinion) as have been obtained.
(ii) such counsel shall also furnish a letter, dated the
Closing Date, that shall state that such counsel has no reason to
believe that: (A) the Registration Statement or any amendment
thereof at the time it became effective contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus, as amended or
supplemented, includes an untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading (in each case, except for the
financial statements and other information of an accounting
<PAGE>
13
or financial nature included therein, and the Statement of
Eligibility (Form T-1), included as an exhibit to the Registration
Statement, as to which such counsel need express no view); and (B)
the Registration Statement and the Prospectus as amended or
supplemented (except the financial statements and other information
of an accounting or financial nature included therein, and the
Statement of Eligibility (Form T-1), included as an exhibit to the
Registration Statement, as to which such counsel need express no
view), were not appropriately responsive in all material respects to
the requirements of the Act and the Trust Indenture Act and the
applicable rules and regulations thereunder.
(e) At the Closing Date, the Agents shall have received a
certificate, dated the Closing Date, of the Chief Executive Officer or any
Vice President and the Treasurer, any Assistant Treasurer, or any
principal financial or accounting officer of the Issuer in which such
officers, to the best of their knowledge after reasonable investigation,
shall state that (i) the representations and warranties of the Issuer in
this Agreement are true and correct, (ii) the Issuer has complied with all
agree-ments and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date, (iii) no stop order
suspending the effectiveness of the Registration Statement or of any part
thereof has been issued and no proceedings for that purpose have been
instituted or are threatened by the Commission, and (iv) subsequent to the
date of the most recent financial statements in the Prospectus, there has
been no material adverse change in the financial position or results of
operations of the Issuer and its subsidiaries, except as set forth in or
contemplated by the Prospectus or as described in such certificate.
(f) At the Closing Date, the Agents shall have received a letter,
dated such date, of Price Waterhouse LLP ("Price Waterhouse"),
confirming that they are independent public accountants within the
meaning of the Act and the Exchange Act and the respective applicable
published Rules and Regulations thereunder, that the response, if any,
to Item 10 of the Registration
<PAGE>
14
Statement is correct insofar as it relates to them and stating in effect
that:
(i) in their opinion, the audited financial statements and
schedules thereto included or incorporated in the Registration
Statement and Prospectus and reported on by them comply as to form
in all material respects with the applicable accounting requirements
of the Exchange Act and the related published Rules and Regulations
thereunder with respect to financial statements and financial
statement schedules included or incorporated in annual reports on
Form 10-K under the Exchange Act;
(ii) on the basis of a reading of the unaudited financial
statements included or incorporated in the Registration Statement
and Prospectus and of the latest unaudited financial statements made
available by the Issuer and its subsidiaries; carrying out certain
specified procedures (but not an examination in accordance with
generally accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments set
forth in such letter; a reading of the minutes of the Board of
Directors of the Issuer and the Pricing Committee appointed by the
Board of Directors of the Issuer, if any; and inquiries of certain
officials of the Issuer who have responsibility for financial and
accounting matters as to transactions and events subsequent to the
date of the most recent financial statements included or
incorporated in the Registration Statement and the Prospectus,
nothing came to their attention that caused them to believe that:
(A) any unaudited financial statements included or
incorporated in the Registration Statement and Prospectus do
not comply as to form in all material respects with applicable
accounting requirements and with the published rules and
regulations of the Commission with respect to financial
statements included or incorporated in quarterly reports on
Form 10-Q under the Exchange Act; or said unaudited financial
statements are not fairly presented (except as permitted by
Form 10-Q)
<PAGE>
15
in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the
audited financial statements included or incorporated in the
Registration Statement and Prospectus; or
(B) any unaudited capsule information included or
incorporated in the Registration Statement and Prospectus does
not agree with the amounts set forth in the unaudited
consolidated financial statements from which it was derived or
was not determined on a basis substantially consistent with
that of the audited financial statements included or
incorporated in the Registration Statement and Prospectus; and
(iii) they have performed certain other procedures as a result
of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general
accounting records of the Issuer) set forth in the Registration
Statement and the Prospectus, including the information included or
incorporated in Items 1 and 7 of the Issuer's Annual Report on Form
10-K incorporated therein or in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included
or incorporated in any of the Issuer's Quarterly Reports on Form
10-Q incorporated therein, agrees with the accounting records of the
Issuer and its subsidiaries, excluding any questions of legal
interpretation.
References to the Registration Statement and the Prospectus in this
subsection (f) are to such documents as amended and supplemented at the
date of the letter.
(g) The Agents shall have received from Davis Polk & Wardwell,
counsel for the Agents, such opinion or opinions, dated the Closing Date,
with respect to the validity of the Securities, the Registration
Statement, the Prospectus and other related matters as they may require,
and the Issuer shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
<PAGE>
16
(h) With respect to any Security denominated in a currency other
than the U.S. dollar, more than one currency or a composite currency or
any Security the principal or interest of which is indexed to such
currency, currencies or composite currency, there shall not have occurred
a suspension or material limitation in foreign exchange trading in such
currency, currencies or composite currency by a major international bank,
a general moratorium on commercial banking activities in the country or
countries issuing such currency, currencies or composite currency, the
outbreak or escalation of hostilities involving, the occurrence of any
material adverse change in the existing financial, political or economic
conditions of, or the declaration of war or a national emergency by, the
country or countries issuing such currency, currencies or composite
currency or the imposition or proposal of exchange controls by any
governmental authority in the country or countries issuing such currency,
currencies or composite currency.
The obligation of each Agent, as agent of the Issuer, under this
Agreement to solicit offers to purchase Securities at any time after November
30, 1997, is also subject to the delivery to the Agents before that date and
thereafter, periodically as appropriate, of an opinion of inside counsel for
the Issuer or Cravath, Swaine & Moore to the effect of sub-paragraph
(d)(i)(E) above with respect to the Securities to be issued during the
period set forth therein (which shall include the period of contemplated
solicitation) and such other documents and certificates (including an opinion
of Davis Polk & Wardwell to the effect of sub-paragraph (g) above) as the
Agents may reasonably request before that date and the Issuer shall have
furnished to Davis Polk & Wardwell such documents as they may reasonably
request before that date for the purpose of enabling them to render such
opinion.
The Issuer will furnish the Agents with such conformed copies of
such opinions, certificates, letters and documents as they reasonably request.
6. Additional Covenants of the Issuer. The Issuer agrees that:
(a) Each acceptance by the Issuer of an offer for the purchase of
Securities solicited by any Agent pursuant hereto shall be deemed to be an
affirmation that its representations and warranties contained in
<PAGE>
17
this Agreement are true and correct at the time of such acceptance and a
covenant that such representations and warranties will be true and correct
at the time of delivery to the purchaser of the Securities relating to
such acceptance as though made at and as of each such time, it being
understood that such representations and warranties shall relate to the
Prospectus as amended or supplemented at each such time. Each such
acceptance by the Issuer of an offer for the purchase of Securities shall
be deemed to constitute an additional representation, warranty and
agreement by the Issuer that, as of the settlement date for the sale of
such Securities, after giving effect to the issuance of such Securities,
of any other Securities to be issued on or prior to such settlement date
and of any other Registered Securities to be issued and sold by the Issuer
on or prior to such settlement date, the aggregate amount of Registered
Securities (including any Securities) which have been issued and sold by
the Issuer will not exceed the amount of Registered Securities registered
pursuant to the Registration Statement.
(b) Each time that the Registration Statement or the Prospectus
shall be amended or supplemented (other than by an amendment or supplement
(i) that relates to an offering by the Issuer of Registered Securities
other than the Securities or (ii) that solely specifies the terms of the
Securities) (each such time being herein referred to as a "Representation
Date"), the Issuer shall, if reasonably requested by the Agents, furnish
the Agents with a certificate, dated the date of delivery thereof,
of the Chief Executive Officer or any Vice President and the Treasurer,
any Assistant Treasurer, or any principal financial or accounting officer
of the Issuer, in form satisfactory to the Agents, to the effect that the
statements contained in the certificate covering the matters set forth in
Section 5(e) hereof which was last furnished to the Agents are true and
correct at the time of such amendment or supplement as though made at and
as of such time (except that such statements shall be deemed to relate to
the Registration Statement and the Prospectus as amended or supplemented
at such time and except that the statements contained in the certificate
covering the matters set forth in clause (ii) of Section 5(e) shall be
deemed to relate to the time of delivery of such certificate) or, in lieu
of such certificate, a certificate of the same
<PAGE>
18
tenor as the certificate referred to in Section 5(e), modified as
necessary to relate to the Registration Statement and the Prospectus as
amended or supplemented at the time of delivery of such certificate and,
in the case of the matters set forth in clause (ii) of Section 5(e), to
the time of delivery of such certificate.
(c) At each Representation Date, the Issuer shall, if reasonably
requested by the Agents, concurrently furnish the Agents with a written
opinion or opinions, dated the date of such Representation Date, of
inside counsel for the Issuer or Cravath, Swaine & Moore, in form
satisfactory to the Agents, to the effect set forth in Section 5(d)
hereof, but modified, as necessary, to relate to the Registration
Statement and the Prospectus as amended or supplemented at such
Representation Date; provided, however, that in lieu of such opinion or
opinions, counsel may furnish the Agents with a letter or letters to the
effect that the Agents may rely on a prior opinion delivered under Section
5(d) or this Section 6(c) to the same extent as if it were dated the date
of such letter (except that statements in such prior opinion shall be
deemed to relate to the Registration Statement and the Prospectus as
amended or supplemented at such Representation Date).
(d) At each Representation Date, upon the reasonable request of
the Agents, the Issuer shall cause Price Waterhouse concurrently
to furnish the Agents with a letter, addressed jointly to the Issuer and
the Agents and dated the date of such Representation Date, in form and
substance satisfactory to the Agents, to the effect set forth in Section
5(f) hereof but modified to relate to the Registration
<PAGE>
19
Statement and the Prospectus as amended or supplemented at such
Representation Date, with such changes as may be necessary to reflect
changes in the financial statements and other information derived from the
accounting records of the Issuer; provided, however, that if the
Registration Statement or the Prospectus is amended or supplemented solely
to include financial information as of and for a fiscal quarter, Price
Waterhouse may limit the scope of such letter to the audited financial
statements included in such amendment or supplement unless there is
contained therein any other accounting, financial or statistical
information that, in the reasonable judgment of the Agents, should be
covered by such letter, in which event such letter shall also cover such
other information and procedures as shall be agreed upon by the Agents.
(e) The Issuer agrees that any obligation of a person who has agreed
to purchase Securities as the result of solicitation by any Agent pursuant
hereto to make payment for and take delivery of such Securities shall be
subject to (i) the accuracy, on the related settlement date fixed pursuant
to the Procedures, of the Issuer's representation and warranty deemed to
be made to the Agents pursuant to the last sentence of subsection (a) of
this Section 6, and (ii) the satisfaction, on such settlement date, of
each of the conditions set forth in Sections 5(a), (b) and (c), it being
understood that under no circumstance shall any Agent have any duty or
obligation to exercise the judgment permitted under Section 5(b) or (c) on
behalf of any such person.
7. Indemnification and Contribution. (a) The Issuer agrees to
indemnify and hold harmless each Agent and each person who controls such Agent
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject, under the Act, the Exchange Act or other Federal or
State statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement relating to the Registered
Securities as originally filed or in any amendment thereto, or in any
preliminary prospectus or the Prospectus, or arise out of or are based upon the
omission
<PAGE>
20
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and agrees
to reimburse each Agent for any legal or other expenses reasonably incurred by
such Agent in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that (i) the Issuer will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any of such documents in
reliance upon and in conformity with written information furnished to the Issuer
by any Agent specifically for use in connection with the preparation thereof and
(ii) such indemnity with respect to any preliminary prospectus or the Prospectus
shall not inure to the benefit of any Agent (or any person controlling such
Agent) through which the person asserting any such loss, claim, damage or
liability purchased the Securities which are the subject thereof if such person
did not receive a copy of the Prospectus (or the Prospectus as so amended or
supplemented), excluding documents incorporated therein by reference, at or
prior to the earlier of the confirmation of the sale of such Securities or the
delivery of the Securities to such person in any case where such delivery is
required by the Act and the untrue statement or omission of a material fact
contained in any preliminary prospectus or the Prospectus was corrected in the
Prospectus (or the Prospectus as amended or supplemented prior to the
confirmation of the sale of such Securities to such person). This indemnity
agreement will be in addition to any liability which the Issuer may otherwise
have.
(b) Each Agent agrees to indemnify and hold harmless the Issuer,
each of its directors, each of its officers who signed the Registration
Statement or any amendment thereto, and each person who controls the Issuer
within the meaning of either the Act or the Exchange Act, to the same extent as
the foregoing indemnity from the Issuer to such Agent, but only with reference
to written information relating to such Agent furnished to the Issuer by such
Agent specifically for use in the preparation of the documents referred to in
the foregoing indemnity. This indemnity agreement will be in addition to any
liability which such Agent may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified party
will, if a claim in
<PAGE>
21
respect thereof is to be made against the indemnifying party under this Section
7, notify the indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 7. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein, and to the extent that it may
elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel satisfactory to such indemnified party; provided,
however, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by the Agents in the case of subparagraph (a),
representing the indemnified parties under subparagraph (a) who are parties to
such action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party; and except that, if clause (i)
or (iii) is applicable, such liability shall be only in respect of the counsel
referred to in such clause (i) or (iii).
<PAGE>
22
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a) of this
Section 7 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Issuer on grounds of policy or otherwise, the
Issuer and each Agent shall contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) to which the Issuer and such
Agents may be subject in such proportion so that each Agent is responsible for
that portion represented by the percentage that the sum of aggregate commissions
received by such Agent pursuant to Section 3(c) hereof in connection with the
sale of the Securities to which such loss, claim, damage or liability relates to
the aggregate principal amount of such Securities and the Issuer is responsible
for the balance; provided, however, that (y) in no case shall any Agent be
responsible for any amount in excess of the commissions received by it for such
Securities to which such loss, claim, damage or liability relates, and (z) no
person found liable for fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
was found not liable for such fraudulent misrepresentation. For purposes of this
Section 7, each person who controls any Agent within the meaning of either the
Act or the Exchange Act shall have the same rights to contribution as such
Agent, and each person who controls the Issuer within the meaning of either the
Act or the Exchange Act, each officer of the Issuer who shall have signed the
Registration Statement or any amendment thereto, and each director of the Issuer
shall have the same rights to contribution as the Issuer, subject in each case
to clause (y) of this paragraph (d). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this paragraph (d), notify such
party or parties from whom contribution may be sought, but the omission to
notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have hereunder or
otherwise than under this paragraph (d).
8. Status of each Agent. In soliciting offers to purchase the
Securities from the Issuer pursuant to this Agreement and in assuming its other
obligations hereunder (other than offers to purchase pursuant to Section 11
<PAGE>
23
hereof), each Agent is acting solely as agent for the Issuer and not as
principal. Each Agent will make reasonable efforts to assist the Issuer in
obtaining performance by each purchaser whose offer to purchase Securities from
the Issuer has been solicited by such Agent and accepted by the Issuer, but such
Agent shall have no liability to the Issuer in the event any such purchase is
not consummated for any reason. If the Issuer shall default on its obligations
to deliver Securities to a purchaser who has agreed to purchase Securities as a
result of solicitation by any Agent pursuant hereto, and whose offer the Issuer
has accepted, the Issuer (i) shall hold the Agents harmless against any loss,
claim or damages arising from or as a result of such default by the Issuer, and
(ii) in particular, shall pay to the Agents any commission to which they would
be entitled in connection with such sale.
9. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Issuer or its officers and of the Agents set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Agent, the Issuer or any of their respective representatives, officers or
directors or any controlling person and will survive delivery of and payment for
the Securities. If this Agreement is terminated pursuant to Section 10 or for
any other reason, the Issuer shall remain responsible for the expenses to be
paid or reimbursed by it pursuant to Section 4(g) and the obligations of the
Issuer under Section 4(f) and the respective obligations of the Issuer and the
Agents pursuant to Section 7 shall remain in effect. In addition, if any such
termination shall occur either (i) at a time when any Agent shall own any of the
Securities with the intention of reselling them as contemplated by Section 11
hereof or (ii) after the Issuer has accepted an offer to purchase Securities
solicited by any Agent pursuant hereto and prior to the related settlement, the
obligations of the Issuer under the last sentence of Section 4(b), under
Sections 4(a), 4(c), 4(d), 4(e), 6(a), and 6(e) and, in the case of a
termination occurring as described in (ii) above, under Section 3(c) and under
the last sentence of Section 8, shall also remain in effect.
10. Termination. This Agreement may be terminated for any reason at
any time by the Issuer as to any Agent or, in the case of any Agent, by such
Agent insofar as this Agreement
<PAGE>
24
relates to such Agent, upon the giving of one day's written notice of such
termination to the other parties hereto. Any settlement with respect to
Securities placed by an Agent occurring after termination of this Agreement
shall be made in accordance with the Procedures and each Agent agrees, if
requested by the Issuer, to take the steps therein provided to be taken by such
Agent in connection with such settlement.
11. Purchases as Principal. From time to time, any Agent may agree
with the Issuer to purchase Securities from the Issuer as principal. In such
case the purchasing Agent and the Issuer may set forth the terms of such
purchase in a separate agreement (a "Purchase Agreement") to be entered into
between such Agent and the Issuer in the form attached hereto as Exhibit C. Upon
acceptance by the Issuer of an offer to purchase Securities, unless the Issuer
and the purchasing Agent otherwise agree in writing, any such Purchase Agreement
or other written confirmation or communication transmitted by the purchasing
Agent to the Issuer or, in the absence of a Purchase Agreement or other written
confirmation or communication from the purchasing Agent, the oral agreement with
respect to the terms of the Securities and of their offer and sale evidenced by
the offer communicated by the purchasing Agent and accepted by the Issuer, in
each case together with the provisions of this Agreement, shall constitute an
agreement between the purchasing Agent and the Issuer for the sale and purchase
of such Securities (whether or not any Purchase Agreement or other written
confirmation or communication shall have been executed by the Issuer or the
purchasing Agent). In connection with any resale of Securities so purchased,
such Securities may be resold by such Agent at varying prices from time to time
or at a fixed public offering price or that such Agent may use a selling or
dealer group. Such Agent may reallow to any broker or dealer any portion of the
discount or commission payable pursuant hereto. A Purchase Agreement, to the
extent set forth therein, may incorporate by reference specified provisions of
this Agreement.
12. Notices. Except as otherwise provided herein, all notices and
other communications hereunder shall be in writing and shall be deemed to have
been duly given if mailed or transmitted by any standard form of
telecommunication. Except as otherwise provided in the Procedures:
Notices to ___________________ shall be directed to it at
______________________, Attention: __________ (Fax:_________).
<PAGE>
25
In the case of any party hereto, alternatively notice may be
directed to such other address or person as such party shall specify to each
other party by a notice given in accordance given in accordance with the
provisions of this Section 12. Any such notice shall take effect at the time of
receipt.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto, their respective successors, the officers and
directors and controlling persons referred to in Section 7 and, to the extent
provided in Section 6(e), any person who has agreed to purchase Securities from
the Issuer as the result of solicitation by any Agent pursuant hereto, and no
other person will have any right or obligation hereunder.
14. Governing Law; Counterparts. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York. This
Agreement may be executed in counterparts and the executed counterparts shall
together constitute a single instrument.
If the foregoing correctly sets forth our agreement, please indicate
your acceptance hereof in the space provided for that purpose below.
Very truly yours,
INTERNATIONAL BUSINESS
MACHINES CORPORATION
By _________________________
Title:
CONFIRMED AND ACCEPTED, as of the
date first above written:
By__________________________
Title:
<PAGE>
26
By__________________________
Title:
By__________________________
Title:
____________________________
[Name of Lead Agent]
By__________________________
Title:
<PAGE>
EXHIBIT A
The Issuer agrees to pay the relevant Agent, in each instance, a
commission which will be no more than the following percentage of the
principal amount of Securities sold to purchasers solicited by such Agent:
Commission Rate
(as a percentage
Term of principal amount)
---- --------------------
12 months to less than 18 months .15
18 months to less than 24 months .20
24 months to less than 30 months .25
30 months to less than 3 years .30
3 years to less than 4 years .35
4 years to less than 5 years .45
5 years to less than 7 years .50
7 years to less than 10 years .55
10 years to less than 15 years .625
15 years to less than 20 years .700
20 years to 30 years .750
More than 30 years as negotiated
between the Company
and the relevant
Agent at the time of
sale
<PAGE>
EXHIBIT B
ADMINISTRATIVE PROCEDURES
-------------------------
The Medium-Term Notes due one year or more from their issue date (the
"Notes") are to be offered on a continuing basis by International Business
Machines Corporation (the "Issuer").
, as agents (each individually an
"Agent" and collectively the "Agents"), have agreed to use reasonable efforts to
solicit purchases of the Notes pursuant to an Agency Agreement dated __________,
199_ (the "Agency Agreement"), among the Issuer and the Agents. No Agent will
be obligated to purchase Notes for its own account. The Notes will be issued
pursuant to an Indenture, dated as of October 1, 1993 (the "Indenture"), between
the Issuer and The Chase Manhattan Bank (National Association), as trustee (the
"Trustee"), as supplemented by the First Supplemental Indenture thereto dated as
of December 15, 1995. The Notes will rank equally with all other unsecured and
unsubordinated indebtedness of the Issuer and have been registered with the
Securities and Exchange Commission (the "Commission").
Each Note will be represented initially by either a global security
registered in the name of a nominee of The Depository Trust Company, as
Depositary ("DTC") (a "BookEntry Note") or a certificate issued in definitive
form (a "Certificate Note"). It is currently contemplated that both Fixed Rate
Notes (as defined below) and Floating Rate Notes (as defined below) may be
issued as Book-Entry Notes.
Administrative procedures and specific terms of the Notes and the
offering, to the extent Notes are offered and sold through the Agents, are
explained below. Administrative and record-keeping responsibilities will be
handled for the Issuer by its Treasury Department. The Issuer will advise each
Agent in writing of those persons handling administrative responsibilities with
whom each Agent is to communicate regarding offers to purchase Notes and the
details of their delivery. To the extent that the following procedures conflict
with the provisions of the Notes, the Indenture or the Letter (as defined
below), the relevant provisions of the Note, the Indenture or the Letter shall
control.
<PAGE>
2
I. CERTIFICATE NOTES AND GENERAL TERMS
Unless otherwise agreed between the Issuer and the relevant Agent,
the following administrative procedures and specific terms are applicable to
Certificate Notes and, except to the extent otherwise specified under II
below, Book-Entry Notes.
ORIGINAL ISSUE DATE: Each Note will be dated the date of its
authentication. Each Note will also bear an original
issue date which,with respect to any Note (or portion
thereof), shall mean the date of its original
issuance and shall be specified therein. The
original issue date shall remain the same for all
Notes subsequently issued upon transfer, exchange or
substitution of a Note, regardless of their dates of
authentication.
MATURITIES: Each Note will mature on a date, selected by the
purchaser and agreed to by the Issuer, which will be
at least one year after the date of issue; PROVIDED,
HOWEVER, that each Floating Rate Note (as defined
below) will mature on an Interest Payment Date (as
defined below) for such Note.
REDEMPTION: The Floating Rate Notes will not be redeemable prior
to maturity, unless otherwise specified in the
applicable pricing supplement. The Fixed Rate Notes
(as defined below) either (i) will not be redeemable
prior to maturity, or (ii) will be redeemable at the
option of the Issuer on or after a specified date prior
to maturity at par or at prices which will decline
annually by a fixed percentage from a specified initial
premium to par. Unless otherwise specified in the
applicable pricing supplement, Redemption Dates for
redeemable Fixed Rate Notes will correspond with the
Interest Payment Dates for such Notes.
<PAGE>
3
PRICE TO PUBLIC: Each Note will be issued at 100% of principal amount,
unless otherwise agreed between the Issuer and the
relevant Agent.
DENOMINATIONS: Unless otherwise agreed between the Issuer and the
relevant Agent, the denominations of the Notes will
be $1,000 or any multiple thereof. The denominations
of Notes denominated in currencies or currency units
other than U.S. dollars will be as agreed between the
Issuer and the relevant Agent.
REGISTRATION: Notes will be issued only in fully registered form.
INTEREST PAYMENT: Unless otherwise specified in an applicable pricing
supplement, each Note will bear interest from and
including its original issue date or, in the case of
Notes issued upon replacement, transfer or exchange,
from the most recent Interest Payment Date to which
interest has been paid or provided for, to but excluding
the maturity date of such Note; PROVIDED, HOWEVER, that
a Floating Rate Note which has a rate of interest that
is reset weekly will bear interest from and including
its original issue date or the day following the most
recent Record Date (as defined below) for the most
recent Interest Payment Date to which interest on
such Note has been paid or provided for. Each Note
wil bear interest (i) in the case of Notes bearing
interest at a Fixed Rate (the "Fixed Rate Notes"), at
the annual rate stated on the face thereof, payable
semiannually in arrears on April 1 and October 1
(each an "Interest Payment Date" with respect to such
Fixed Rate Note) and at maturity and (ii) in the case
of Notes bearing interest at a rate or rates
determined by reference to an
<PAGE>
4
interest rate formula (the "Floating Rate Notes"), at
a rate determined pursuant to the formula stated on
the face thereof, payable in arrears on such dates as
are specified therein and in the related Pricing
Supplement (each an "Interest Payment Date" with
respect to such Floating Rate Note). Interest
payable on a Fixed Rate Note (including payments for
partial periods) will be calculated and paid on the
basis of a 360-day year of 12 30-day months.
Interest payable on a Floating Rate Note will be
calculated and paid on the basis of the actual number
of days elapsed in the interest period and a year of
360 days; PROVIDED, HOWEVER, that interest payable on
a Floating Rate Note which has a rate of interest
determined in accordance with the Treasury Rate will
be calculated on the basis of the actual number of
days in the year. Interest will be payable on each
Interest Payment Date to the person in whose name the
Note is registered at the close of business 15
calendar days prior to such Interest Payment Date
whether or not such day is a Business Day (as defined
in the Indenture) (the "Record Date") except that (a)
on any Note originally issued after a Record Date and
prior to the next succeeding Interest Payment Date,
the first payment of interest on such Note will be
made on the Interest Payment Date following the next
succeeding Regular Record Date to the registered
owner on such next Regular Record Date and (b)
interest payable at maturity (or, in the case of a
Fixed Rate Note, upon redemption) will be payable to
the person to whom principal shall be payable. With
respect to Fixed Rate Notes, each payment of interest
<PAGE>
5
shall include interest accrued to but excluding the
date of such payment. All interest payments
(excluding interest payments made at maturity)
will be made by check mailed to the person
entitled thereto as provided above.
ACCEPTANCE OF OFFERS: Each Agent will promptly advise the Issuer of each
reasonable offer to purchase Notes received by it,
other than those rejected by such Agent. Each Agent
may, in its discretion reasonably exercised, without
notice to the Issuer, reject any offer received by it,
in whole or in part. The Issuer will have the sole
right to accept offers to purchase Notes and may reject
any such offer, in whole or in part. If the Issuer
rejects an offer solicited by an Agent, the Issuer will
promptly notify the Agent involved.
SETTLEMENT: All offers accepted by the Issuer will be settled on
the third Business Day next succeeding the date of
acceptance unless otherwise agreed by any purchaser and
the Issuer. Prior to 3:00 p.m., New York City time, on
the Business Day next preceding the settlement date,
the Issuer will instruct the Trustee to authenticate
and deliver the Notes no later than 2:15 p.m., New York
City time, on the settlement date.
DETAILS FOR SETTLEMENT: For each offer solicited by an Agent that is accepted
by the Issuer, the Agent who presented the offer (the
"Presenting Agent") shall communicate to the Issuer's
Treasury Department by telephone, facsimile
transmission or other acceptable means the following
information (the "Purchase Information"):
<PAGE>
6
1. Exact name in which the Note or Notes are to be
registered ("registered owner").
2. Exact address of registered owner.
3. Taxpayer identification number of registered
owner.
4. Principal amount of each Note to be delivered to
the registered owner.
5. Issue price, interest rate if fixed or initial
interest rate if floating, interest rate basis, spread
or spread multiplier, maximum or minimum interest
rates, index maturity, Interest Determination Dates,
Interest Reset Dates (as such terms are defined in the
applicable Prospectus Supplement) interest reset
period, interest payment period and Interest Payment
Dates of Notes, in each case, to the extent applicable.
6. The currency, currencies, currency unit or
currency units in which the Note or Notes are to be
denominated and (if not the same) payable.
7. Maturity date of Notes.
8. Initial redemption date of Notes, if any.
9. Optional redemption price (including the fixed
percentage by which the premium, if any, annually
declines) of Notes, if any.
10. Original issue date of Notes.
11. Settlement date for Notes.
<PAGE>
7
12. Presenting Agent's commission (to be paid in the
form of a discount from the proceeds remitted to the
Issuer upon settlement).
The original issue date of, and the settlement date
for, Notes will be the same. Before accepting any
offer to purchase Notes to be settled in less than
three days, the Issuer shall verify that the Trustee
will have adequate time to prepare and authenticate the
Notes. After receiving the details for each offer from
the Presenting Agent, the Issuer will, after recording
the details and any necessary calculations, communicate
the Purchase Information by telephone, facsimile
transmission or other acceptable means, to the Trustee.
Prior to preparing the Notes for delivery, the Trustee
will confirm the Purchase Information by telephone with
the Presenting Agent. The Trustee will assign to and
enter on each Note a transaction number.
Special provisions relating to Certificate Notes
denominated or payable in a currency, currencies, a
currency unit or currency units other than U.S. dollars
may be agreed by the Issuer and the Agents at a later
time.
CONFIRMATION: For each accepted offer solicited by an Agent, the
Presenting Agent will issue a confirmation to the
purchaser, with a copy to the Issuer's Treasury
Department and the Trustee, setting forth the Purchase
Information and delivery and payment instructions.
Note Deliveries Upon the receipt of appropriate
AND CASH PAYMENT: documentation and instructions, which may be by
telephone to be
<PAGE>
8
confirmed in writing from the Issuer, and verification
thereof, the Trustee will cause the Notes to be
prepared and authenticated and hold the Notes for
delivery against payment.
The Trustee will deliver the Notes, in accordance with
instructions from the Issuer, to the Presenting Agent,
as the Issuer's agent, for the benefit of the purchaser
only against delivery of a receipt therefor.
Agents' addresses for a delivery of Certificate Notes:
The Presenting Agent, as the Issuer's agent, will
deliver the Notes (with the written confirmation
provided for above) to the purchaser thereof against
payment by such purchaser in immediately available
funds and will give instructions for payment to be made
to the Issuer of an amount equal to the face amount of
the Notes less the Presenting Agent's commission.
Delivery of any confirmation or Note will be made in
compliance with "Delivery of Prospectus" below.
FAILS: In the event that a purchaser shall fail to accept
delivery of and make payment for a Note on the
settlement date, the Presenting Agent will notify the
Trustee and the Issuer by
<PAGE>
9
telephone, confirmed in writing. If the Note has been
delivered to the Presenting Agent, as the Issuer's
agent, the Presenting Agent shall return such Note to
the Trustee. If funds have been advanced by the
Presenting Agent for the purchase of such Note, the
Issuer will, immediately upon receipt of such notice,
refund the payment previously made to it by the
Presenting Agent in immediately available funds. Such
payments will be made on the settlement date, if
possible, and in any event not later than the Business
Day following the settlement date. If such failure
shall have occurred for any reason other than the
failure of the Presenting Agent to provide the Purchase
Information to the Issuer or to provide a confirmation
to the purchaser, the Issuer will reimburse the
Presenting Agent on an equitable basis for its loss of
the use of funds during the period when they were
credited to the account of the Issuer.
Immediately upon receipt of the Note in respect of
which the failure occurred, the Trustee will cause the
Security Registrar to make appropriate entries to
reflect the fact that the Note was never issued and
will destroy the Note.
Procedure for
RATE CHANGES: The Issuer and the Agents will discuss from time to
time the rates to be borne by the Notes that may be
sold as a result of the solicitation of offers by the
Agents. Once any Agent has recorded any indication of
interest in Notes upon certain terms, and communicated
with the Issuer, if the Issuer plans to accept an offer
to purchase Notes upon such terms, it will prepare a
<PAGE>
10
pricing sticker reflecting the terms of such Notes and,
after approval from the Agents, will arrange to have
the required number of copies of the sticker filed with
the Commission within two Business Days following such
acceptance and will supply at least five copies of such
sticker to the Presenting Agent. No settlements with
respect to Notes upon such terms may occur prior to
such filing and the Agents will not, prior to such
filing, mail confirmations to customers who have
offered to purchase Notes upon such terms. After such
filing, sales, mailing of confirmations and settlements
may occur with respect to Notes upon such terms,
subject to tte provisions of "Delivery of Prospectus"
below.
If the Issuer decides to "post" fixed interest rates
and a decision has been reached to change interest
rates, the Issuer will promptly notify each Agent.
Each Agent will forthwith suspend solicitation of
purchases. At that time, the Agents will recommend and
the Issuer will establish fixed interest rates to be so
posted. Following establishment of posted fixed
interest rates and prior to the filing of the pricing
sticker described in the preceding paragraph, the
Agents may only record indications of interest in
purchasing Fixed Rate Notes at the posted fixed
interest rates. After such filing, sales, mailing of
confirmations and settlements at the posted rates may
resume, subject to the provisions of "Delivery of
Prospectus" below.
Outdated stickers, and copies of the Prospectus to
which they are
<PAGE>
11
attached (other than those retained for files), will be
destroyed.
Suspension of As provided in the Agency Agreement, the Issuer may
Solicitation suspend Amendment or solicitation of purchases at any
Amendment or time and, upon receipt of notice from the Issuer, each
SUPPLEMENT: Agent will forthwith suspend solicitation until such
time as the Issuer has advised them that solicitation
of purchases may be resumed.
If the Agents receive the notice from the Issuer
contemplated by Section 4(b) of the Agency Agreement,
they will promptly suspend solicitation and will only
resume solicitation as provided in the Agency
Agreement. If the Issuer decides to amend or
supplement the Registration Statement or the Prospectus
relating to the Notes (other than by an amendment or
supplement that (i) only specifies the terms of the
Securities or (ii) relates to an offering by the Issuer
of Registered Securities other than the Securities), it
will promptly advise each Agent and will furnish each
Agent with the proposed amendment or supplement in
accordance with the terms of the Agency Agreement. The
Issuer will promptly file or mail to the Commission for
filing such amendment or supplement, provide the Agents
with copies of any such amendment or supplement,
confirm to the Agents that such amendment or supplement
has been filed with the Commission and advise the
Agents that solicitation may be resumed.
Any such suspension shall not affect the Issuer's
obligations under the Agency Agreement; and in the
event that at the time the Issuer suspends
<PAGE>
12
solicitation of offers to purchase Notes there shall be
any offers already accepted by the Issuer outstanding
for settlement, the Issuer will have the sole
responsibility for fulfilling such obligations. The
Issuer will in addition promptly advise the Agents and
the Trustee if such offers are not to be settled and if
copies of the Prospectus as in effect at the time of
the suspension may not be delivered in connection with
the settlement of such offers.
Delivery of
PROSPECTUS: With respect to each purchase resulting from a
solicitation by any Agent, a copy of the Prospectus, as
most recently amended or supplemented on the date of
delivery thereof (except as provided below), but
excluding materials incorporated by reference therein,
must be delivered to a purchaser prior to or together
with the earlier of delivery of (i) the written
confirmation provided for above, and (ii) any Note
purchased by such purchaser as a result of such
solicitation. The Issuer shall ensure that the
Presenting Agent receives the required number of copies
of the Prospectus and each amendment or supplement
thereto (including appropriate pricing stickers), but
excluding materials incorporated by reference therein,
by telecopy or overnight express (for delivery not
later than 11:00 a.m. on the Business Day next
following the trade date) to enable the Presenting
Agent to deliver such confirmation or Note to such
purchaser as contemplated by these procedures and in
compliance with the preceding sentence. If, since the
date of acceptance of such purchaser's offer, the
Prospectus shall
<PAGE>
13
have been supplemented solely to reflect any sale of
Notes on terms different from those agreed to between
the Issuer and such purchaser or a change in posted
rates not applicable to such purchaser, such purchaser
shall not receive the Prospectus as supplemented by
such new supplement, but shall receive the Prospectus
as supplemented to reflect the terms of the Notes being
purchased by such purchaser and otherwise as most
recently amended or supplemented on the date of
delivery of the Prospectus.
Agents' addresses for delivery of Pricing Supplements:
Authenticity of
SIGNATURES: The Issuer will cause the Trustee to furnish the Agents
from time to time with the specimen signatures of each
of the Trustee's officers, employees or agents who have
been authorized by the Trustee to authenticate Notes,
but the Agents will have no obligation or liability to
the Issuer or the Trustee in respect of the
authenticity of the signature of any officer, employee
or agent of
<PAGE>
14
the Issuer or the Trustee on any Note.
ADVERTISING COST: The Issuer will determine with the Agents the amount of
advertising that may be appropriate in offering the
Notes. Advertising expenses will be paid by the
Issuer.
II. BOOK-ENTRY NOTES
The following procedures supplement and, to the extent inconsistent
therewith, replace the procedures set forth above with respect to the offering
of Book-Entry Notes. In connection with the qualification of the Book-Entry
Notes for eligibility in the book-entry system maintained by DTC, the Trustee
will perform the custodial, document control and administrative functions
described below, in accordance with its respective obligations under a Letter of
Representation (the "Letter") from the Issuer and the Trustee to be entered into
with DTC and a Medium-Term Note Certificate Agreement between the Trustee and
DTC dated as of March 10, 1989, and its obligations as a participant in DTC,
including DTC's Same-Day Funds Settlement System ("SDFS"). Both Fixed and
Floating Rate Notes may be issued in book-entry form.
ISSUANCE: On any date of settlement (as defined under
"Settlement" below) for one or more Book-Entry Notes,
the Issuer will issue a single global security in fully
registered form without coupons (a "Global Security")
representing up to $200,000,000 principal amount of all
such Notes that have the same maturity date, redemption
provisions, if any, repayment provisions, if any,
Interest Payment Dates, interest rate basis, spread or
spread multiplier, maximum or minimum interest rates,
index maturity, Interest Determination Dates, Interest
Reset Dates (as such terms are defined in the
applicable Prospectus Supplement), interest reset
period, original issue date
<PAGE>
15
and original issue discount provisions, in each case,
to the extent applicable (collectively, the "Terms").
Each Global Security will be dated and issued as of the
date of its authentication by the Trustee. Each Global
Security will bear an "Issue Date", which will be
(i) with respect to an original Global Security (or any
portion thereof), its original issue date, and
(ii) following a consolidation of Global Securities,
the most recent Interest Payment Date to which interest
has been paid or duly provided for on the predecessor
Global Securities, regardless of the date of
authentication of such subsequently issued Global
Security. No Global Security will represent any
Certificated Note.
Identification The Issuer will arrange with the CUSIP Service Bureau
NUMBERS: of Standard & Poor's Corporation (the "CUSIP Service
Bureau") for the reservation of a series of CUSIP
numbers, consisting of approximately 900 CUSIP numbers
relating to Global Securities representing Book-Entry
Notes. The Issuer will obtain from the CUSIP Service
Bureau a written list of such series of reserved CUSIP
numbers and will deliver to the Trustee and DTC a
written list of CUSIP numbers of such series. The
Trustee will assign CUSIP numbers to Global Securities
as described below under Settlement Procedure "C". DTC
will notify the CUSIP Service Bureau periodically of
the CUSIP numbers that the Trustee has assigned to
Global Securities. The Trustee will notify the Issuer
at any time when fewer than 100 of the reserved CUSIP
numbers remain unassigned to Global Securities, and if
it deems necessary, the Issuer
<PAGE>
16
will reserve additional CUSIP numbers for assignment to
Global Securities representing Book-Entry Notes. Upon
obtaining such additional CUSIP numbers, the Issuer
shall deliver a list of such additional CUSIP numbers
to the Trustee and DTC.
REGISTRATION: Each Global Security will be registered in the name of
Cede & Co., as nominee for DTC, on the Securities
Register maintained under the Indenture. The
beneficial owner of a Book-Entry Note (or one or more
indirect participants in DTC designated by such owner)
will designate one or more participants in DTC (with
respect to such Note, the "Participants") to act as
agent or agents for such owner in connection with the
book-entry system maintained by DTC, and DTC will
record in book-entry form, in accordance with
instructions provided by such Participants, a credit
balance with respect to such Note in the account of
such Participants. The ownership interest of such
beneficial owner in such Note will be recorded through
the records of such Participants or through the
separate records of such Participants and one or more
indirect participants in DTC.
TRANSFERS: Transfers of a Book-Entry Note will be accomplished by
book entries made by DTC and, in turn, by Participants
(and, in certain cases, one or more indirect
participants in DTC) acting on behalf of beneficial
transferors and transferees of such Note.
EXCHANGES: The Trustee may deliver to DTC and the CUSIP Service
Bureau at any time a written notice of consolidation (a
copy of which shall be attached to
<PAGE>
17
the Global Security resulting from such consolidation)
specifying (i) the CUSIP numbers of two or more
Outstanding Global Securities that represent Book-Entry
Notes having the same Terms (other than original issue
date) and for which interest has been paid to the same
date, (ii) a date, occurring at least 30 days after
such written notice is delivered and at least 30 days
before the next Interest Payment Date for such
Book-Entry Notes, on which such Global Securities shall
be exchanged for a single replacement Global Security
and (iii) a new CUSIP number to be assigned to such
replacement Global Security. Upon receipt of such a
notice, DTC will send to its Participants (including
the Trustee) a written reorganization notice to the
effect that such exchange will occur on such date.
Prior to the specified exchange date, the Trustee will
deliver to the CUSIP Service Bureau a written notice
setting forth such exchange date and the new CUSIP
number and stating that, as of such exchange date, the
CUSIP numbers of the Global Securities to be exchanged
will no longer be valid. On the specified exchange
date, the Trustee will exchange such Global Securities
for a single Global Security bearing the new CUSIP
number and a new original issue date and the CUSIP
numbers of the exchanged Global Securities will, in
accordance with CUSIP Service Bureau procedures, be
canceled and not immediately reassigned.
Notwithstanding the foregoing, if the Global Securities
to be exchanged exceed $200,000,000 in aggregate
principal amount, one Global Security will be
authenticated and issued to represent each
<PAGE>
18
$200,000,000 of principal amount of the exchanged
Global Securities and an additional Global Security
will be authenticated and issued to represent any
remaining principal amount of such Global Securities
(see "Denominations" below).
Notice of Repayment: With respect to each Book-Entry Note that is repayable
TERMS: at the option of the Holder, unless otherwise specified
in a Pricing Supplement, the Trustee will furnish
DTC on or not more than 60 days prior to the settlement
date pertaining to such Book-Entry Note a notice
setting forth the terms of such repayment option. Such
terms shall include the start date and end dates of the
first exercise period, the purchase date following such
first exercise period, the frequency that such exercise
periods occur (I.E., quarterly, semiannually, annually,
etc.) and, if the repayment option expires before
maturity, the same information (except frequency)
concerning the last exercise period. It is understood
that the exercise period shall be at least 15 calendar
days long and that the purchase date shall be at least
7 calendar days,after the last day of the exercise
period.
Redemption and The Trustee will comply with the terms of the Letter
REPAYMENT: with regard to redemptions and repayments of the Notes.
If a Global Security is to be redeemed or repaid in
part, the Trustee will exchange such Global Security
for two Global Securities, one of which shall represent
the portion of the Global Security being redeemed or
repaid and shall be canceled immediately after issuance
and the other of which shall represent the remaining
portion of such Global Security and shall bear
<PAGE>
19
the CUSIP number of the surrendered Global Security.
DENOMINATIONS: Unless otherwise agreed between the Issuer and the
relevant Agent, Book-Entry Notes will be issued in
principal amounts of $1,000 or any multiple thereof.
Global Securities will be denominated in principal
amounts not in excess of $200,000,000. If one or more
Book-Entry Notes having an aggregate principal amount
in excess of $200,000,000 would, but for the preceding
sentence, be represented by a single Global Security,
then one Global Security will be issued to represent
each $200,000,000 principal amount of such Book-Entry
Note or Notes and an additional Global Security will be
issued to represent any remaining principal amount of
such Book-Entry Note or Notes. In such a case, each of
the Global Securities representing such Book-Entry Note
or Notes shall be assigned the same CUSIP number.
INTEREST: PUBLICATION. Standard & Poor's Corporation will use
the information received in the pending deposit message
described under the Settlement Procedure "C" below in
order to include the amount of any interest payable and
certain other information regarding the related Global
Security in the appropriate weekly bond report
published by Standard & Poor's Corporation.
NOTICE OF INTEREST PAYMENT AND REGULAR RECORD DATES.
On the first Business Day of January, April, July and
October of each year, the Trustee will deliver to the
Issuer and DTC a written list of Regular Record Dates
and Interest Payment Dates that will occur with respect
<PAGE>
20
to Book-Entry Notes during the six-month period
beginning on such first Business Day. Promptly after
each Interest Determination Date or Calculation Date,
as applicable (as defined in the applicable Note) for
Floating Rate Notes, the Company, upon receiving notice
thereof, will notify Standard & Poor's Corporation of
the interest rate determined on such Interest
Determination Date or Calculation Date, as applicable.
Payments of PAYMENTS OF INTEREST ONLY. Promptly after each Regular
Principal and Record Date, the Trustee will deliver to the Issuer and
INTEREST: DTC a written notice specifying by CUSIP number the
amount of interest to be paid on each Global Security
on the following Interest Payment Date (other than an
Interest Payment Date coinciding with maturity) and the
total of such amounts. The Issuer will confirm with
the Trustee the amount payable on each Global Security
on such Interest Payment Date. DTC will confirm the
amount payable on each Global Security on such Interest
Payment Date by reference to the daily or weekly bond
reports published by Standard & Poor's Corporation.
The Issuer will pay to the Trustee the total amount of
interest due on such Interest Payment Date (other than
at maturity), and the Trustee will pay such amount to
DTC at the times and in the manner set forth below
under "Manner of Payment". If any Interest Payment
Date for a Book-Entry Note is not a Business Day, the
payment due on such day shall be made on the next
succeeding Business Day and no interest shall accrue on
such payment for the period from and after such
Interest Payment Date.
<PAGE>
21
PAYMENTS AT MATURITY. On or about the first Business
Day of each month, the Trustee will deliver to the
Issuer and DTC a written list of principal and interest
to be paid on each Global Security maturing either at
stated maturity or on a redemption or repayment date in
the following month. The Issuer, the Trustee and DTC
will confirm the amounts of such principal and interest
payments with respect to each such Global Security on
or about the fifth Business Day preceding the maturity
of such Global Security. The Issuer will pay to the
Trustee, as the paying agent, the principal amount of
such Global Security, together with interest due at
such maturity. The Trustee will pay such amounts to
DTC at the times and in the manner set forth below
under "Manner of Payment". If any maturity of a Global
Security representing Book-Entry Notes is not a
Business Day, the payment due on such day shall be made
on the next succeeding Business Day and no interest
shall accrue on such payment for the period from and
after such maturity. Promptly after payment to DTC of
the principal and interest due at the maturity of such
Global Security, the Trustee will cancel and destroy
such Global Security in accordance with the terms of
the Indenture and deliver a certificate of destruction
to the Issuer.
MANNER OF PAYMENT. The total amount of any principal
and interest due on Global Securities on any Interest
Payment Date or at Maturity shall be paid by the Issuer
to the Trustee in funds available for use by the
Trustee as of 9:30 a.m. (New York City time), or as
soon as
<PAGE>
22
practicable thereafter on such date. The Issuer will
make such payment on such Global Securities by wire
transfer to the Trustee. The Issuer will confirm
instructions regarding payment in writing to the
Trustee. Prior to 10:00 a.m. (New York City time) on
each maturity date or as soon as possible thereafter,
following receipt of such funds from the Issuer, the
Trustee will pay by separate wire transfer (using
Fedwire message entry instructions in a form previously
specified by DTC) to an account at the Federal Reserve
Bank of New York previously specified by DTC, in funds
available for immediate use by DTC, each payment of
principal (together with interest thereon) due on
Global Securities on any maturity date. On each
Interest Payment Date, interest payment shall be made
to DTC in same-day funds in accordance with existing
arrangements between the Trustee and DTC. Thereafter,
on each such date, DTC will pay, in accordance with its
SDFS operating procedures then in effect, such amounts
in funds available for immediate use to the respective
Participants in whose names the Book-Entry Notes
represented by such Global Securities are recorded in
the book-entry system maintained by DTC. Neither of
the Issuer or tne Trustee shall have any direct
responsibility or liability for the payment by DTC to
such Participants of the principal of and interest on
the Book-Entry Notes.
WITHHOLDING TAXES. The amount of any taxes required
under applicable law to be withheld from any interest
payment on a Book-Entry Note will be determined and
withheld by the Participant, indirect participant in
<PAGE>
23
DTC or other Person responsible for forwarding payments
and materials directly to the beneficial owner of such
Note.
SETTLEMENT: The receipt by the Issuer of immediately available
funds in payment for a Book-Entry Note and the
authentication and issuance of the Global Security or
Global Securities representing such Note shall
constitute "settlement" with respect to such Note. All
orders accepted by the Issuer will be settled on the
fifth Business Day from the date of the sale pursuant
to the timetable for settlement set forth below unless
the Issuer and the purchaser agree to settlement on
another day.
SETTLEMENT Settlement Procedures with regard to each Book-Entry
PROCEDURES: Note sold by the Issuer through a Presenting Agent as
agent shall be as follows:
A. The Presenting Agent shall communicate to the
Issuer's Treasury Department by telephone,
facsimile transmission or other acceptable means
the Purchase Information.
B. After receiving the details for each offer from
the Presenting Agent, the Issuer will, after
recording the details and any necessary
calculations, communicate the Purchase Information
by telephone, facsimile transmission or other
acceptable means, to the Trustee.
C. The Trustee will assign a CUSIP number to the
Global Security representing such Note and will
<PAGE>
24
telephone the Issuer and advise the Issuer of such
CUSIP number. The Trustee will enter a pending
deposit message through DTC's Participant Terminal
System, providing the following settlement
information to DTC (which shall route such
information to Standard & Poor's Corporation and
Interactive Data Services) and the Presenting
Agent:
1. The applicable information set forth in
Settlement Procedure "A".
2. Identification as a Fixed Rate Book-Entry
Note or a Floating Rate Book-Entry Note.
3. Interest payment period.
4. Initial Interest Payment Date for such Note,
number of days by which such date succeeds
the related DTC record date (which, in the
case of Floating Rate Notes which reset
weekly shall be the date five calendar days
immediately preceding the applicable Interest
Payment Date and in the case of all other
Notes shall be the Regular Record Date as
defined in the Note) and amount of interest
payable on such Interest Payment Date per
$1,000 principal amount of Notes.
5. Participants' account numbers maintained by
DTC on behalf of the Trustee and the
Presenting Agent.
<PAGE>
25
6. CUSIP number of the Global Security
representing such Note.
7. Whether such Global Security will represent
any other Book-Entry Note (to the extent
known at such time).
D. The Issuer will deliver to the Trustee a Global
Security representing such Note.
E. The Trustee will complete and authenticate the
Global Security representing such Note. Prior to
preparing the Global Security for delivery, the
Trustee will confirm the Purchase Information by
telephone with the Presenting Agent.
F. DTC will credit such Note to the Trustee's
participant account at DTC.
G. The Trustee will enter an SDFS deliver order
through DTC's Participant Terminal System
instructing DTC to (i) debit such Note to the
Trustee's participant account and credit such Note
to the Presenting Agent's participant account and
(ii) debit the Presenting Agent's settlement
account and credit the Trustee's settlement
account for an amount equal to the price of such
Note less the Presenting Agent's commission. The
entry of such a delivery order shall constitute a
representation and warranty by the Trustee to DTC
that (i) the Global Security representing such
Book-Entry Note has been
<PAGE>
26
executed, delivered and authenticated and (ii) the
Trustee is holding such Global Security pursuant
to the Medium-Term Note Certificate Agreement
between the Trustee and DTC.
H. The Presenting Agent will enter an SDFS deliver
order through DTC's Participant Terminal System
instructing DTC (i) to debit such Note to the
Presenting Agent's participant account and credit
such Note to the participant accounts of the
Participants with respect to such Note and (ii) to
debit the settlement accounts of such Participants
and credit the settlement account of The
Presenting Agent for an amount equal to the price
of such Note.
I. Transfers of funds in accordance with SDFS deliver
orders described in Settlement Procedures "G" and
"H" will be settled in accordance with SDFS
operating procedures in effect on the settlement
date.
J. The Trustee, upon confirming receipt of such
funds, will wire transfer to the account of the
Issuer maintained at Chase Manhattan Bank,
New York N.Y., Account of International Business
Machines Corporation, Cash Concentration, ABA
Number 021000021, Account Number 323 213 499, in
funds available for immediate use in the amount
transferred to the Trustee in accordance with
Settlement Procedure "G".
<PAGE>
27
K. The Presenting Agent will confirm the purchase of
such Note to the purchaser either by transmitting
to the Participants with respect to such Note a
confirmation order or orders through DTC's
institutional delivery system or by mailing a
written confirmation to such purchaser.
Settlement For orders of Book-Entry Notes solicited by an Agent
Procedures and accepted by the Issuer for settlement on the first
TIMETABLE: Business Day after the sale date, Settlement Procedures
"A" through "K" set forth above shall be completed as
soon as possible but not later than the respective
times (New York City time) set forth below:
Settlement
PROCEDURE TIME
---------- ----
A 11:00 a.m. on the sale date
B 12:00 noon on the sale date
C 2:00 p.m. on the sale date
D 3:00 p.m. on the sale date
E 9:00 a.m. on settlement date
F 10:00 a.m. on settlement date
G-H 2:00 p.m. on settlement date
I 4:45 p.m. on settlement date
J-K 5:00 p.m. on settlement date
If a sale is to be settled two Business Days after the
sale date, Settlement Procedures "A", "B" and "C" shall
be completed as soon as practicable but no later than
11:00 a.m., 12:00 noon and 2:00 p.m., as the case may
be, on the first Business Day after the sale date.
<PAGE>
28
If a sale is to be settled more than two Business Days
after the sale date, Settlement Procedure "A" shall be
completed as soon as practicable but no later than
11:00 a.m. on the first Business Day after the sale
date and Settlement Procedures "B" and "C" shall be
completed as soon as practicable but no later than
12:00 noon and 2:00 p.m., as the case may be, on the
second Business Day after the sale date. If the
initial interest rate for a Floating Rate Book-Entry
Note has not been determined at the time that
Settlement Procedure "A" is completed, Settlement
Procedures "B" and "C" shall be completed as soon as
such rate has been determined but no later than 12:00
noon and 2:00 p.m., respectively, on the Business Day
before the settlement date. Settlement Procedure "I"
is subject to extension in accordance with any
extension of Fedwire closing deadlines and in the other
events specified in the SDFS operating procedures in
effect on the settlement date.
If settlement of a Book-Entry Note is rescheduled or
canceled, the Trustee, upon receipt of notice, will
deliver to DTC, through DTC's Participant Terminal
System, a cancellation message to such effect by no
later than 2:00 p.m. on the Business Day immediately
preceding the scheduled settlement date.
FAILURE TO SETTLE: If the Trustee fails to enter an SDFS deliver order
with respect to a Book-Entry Note pursuant to
Settlement Procedure "G", the Trustee may deliver to
DTC, through DTC's Participant Terminal System, as soon
as practicable, a withdrawal message instructing DTC to
debit such Note to
<PAGE>
29
the Trustee's participant account. DTC will process
the withdrawal message, provided that the Trustee's
participant account contains a principal amount of the
Global Security representing such Note that is at least
equal to the principal amount to be debited. If a
withdrawal message is processed with respect to all the
Book-Entry Notes represented by a Global Security, the
Trustee will mark such Global Security "canceled", make
appropriate entries in its records and send such
canceled Global Security to the Issuer. The cusir
number assigned to such Global Security shall, in
accordance with CUSIP Service Bureau procedures, be
canceled and not immediately reassigned. If a
withdrawal message is processed with respect to one or
more, but not all, the Book-Entry Notes represented by
a Global Security, the Trustee will exchange such
Global Security for two Global Securities, one of which
shall represent such Book-Entry Note or Notes and shall
be canceled immediately after issuance and the other of
which shall represent the remaining Book-Entry Notes
previously represented by the surrendered Global
Security and shall bear the CUSIP number of the
surrendered Global Security.
If the purchase price for any Book-Entry Note is not
timely paid to the Participants with respect to such
Note by the beneficial purchaser thereof (or a Person,
including an indirect participant in DTC, acting on
behalf of such purchaser), such Participants and, in
turn, the Presenting Agent may enter SDFS deliver
orders through DTC's Participant Terminal System
reversing the orders entered pursuant to
<PAGE>
30
Settlement Procedures "H" and "G", respectively.
Thereafter, the Trustee will deliver the withdrawal
message and take the applicable related actions
described in the preceding paragraph. If such failure
shall have occurred for any reason other than the
failure of the Presenting Agent to provide the Purchase
Information to the Issuer or to provide a confirmation
to the purchaser, the Issuer will reimburse the
Presenting Agent on an equitable basis for its loss of
the use of funds during the period when they were
credited to the account of the Issuer.
Notwithstanding the foregoing, upon any failure to
settle with respect to a Book-Entry Note, DTC may take
any actions in accordance with its SDFS operating
procedures then in effect. In the event of a failure
to settle with respect to one or more, but not all, the
Book-Entry Notes to have been represented by a Global
Security, the Trustee will provide, in accordance with
Settlement Procedure "E", for the authentication and
issuance of a Global Security representing the other
Book-Entry Notes to have been represented by such
Global Security and will make appropriate entries in
its records.
<PAGE>
EXHIBIT C
PURCHASE AGREEMENT
, 19
International Business Machines Corporation
Armonk, NY 10504
Attention: Treasurer
The undersigned agrees to purchase the following principal amount of
the Securities described in the Agency Agreement dated __________, 1997 (the
"Agency Agreement"):
Principal Amount $______________________
Interest Rate ______________________
Maturity Date _______________, 19___
Discount ________% of Principal Amount
Price to be paid
to Issuer
(in immediately
available funds) $______________________
Settlement Date ______________________
Except as otherwise expressly provided herein, all terms used herein
which are defined in the Agency Agreement shall have the same meanings as
in the Agency Agreement. The terms Agent or Agents, as used in the Agency
Agreement, shall be deemed to refer to the undersigned for purposes of
this Agreement.
This Agreement incorporates by reference Sections 3(c), 4, 6, 7, 12
and 13 of the Agency Agreement, the first and last sentences of Section 9
thereof and, to the extent applicable, the Procedures. You and we agree
to perform, to the extent applicable, our respective duties and
obligations specifically provided to be performed by each of us in the
Procedures.
Our obligation to purchase Securities hereunder is subject to the
accuracy on the above Settlement Date of your
<PAGE>
2
representations and warranties contained in Section 2 of the Agency
Agreement (it being understood that such representations and warranties
shall relate to the Registration Statement and the Prospectus as amended
at such Settlement Date) and to your performance and observance of all
covenants and agreements contained in Sections 4 and 6 thereof. Our
obligation hereunder is also subject to the following conditions:
(a) the satisfaction, at such Settlement Date, of each of the
conditions set forth in subsections (a) and (b) and (d) through (g) of
Section 5 of the Agency Agreement (it being understood that each document
so required to be delivered shall be dated such Settlement Date and that
each such condition and the statements contained in each such document
that relate to the Registration Statement or the Prospectus shall be
deemed to relate to the Registration Statement or the Prospectus, as the
case may be, as amended or supplemented at the time of settlement on such
Settlement Date and except that the opinion described in Section 5(d) of
the Agency Agreement shall be modified so as to state that the Securities
being sold on such Settlement Date, when delivered against payment
therefor as provided in the Indenture and this Agreement, will have been
duly executed, authenticated, issued and delivered and will constitute
valid and legally binding obligations of the Issuer enforceable in
accordance with their terms, subject only to the exceptions as to
enforcement set forth in clause (ii) of Section 5(d) of the Agency
Agreement, and will conform to the description thereof contained in the
Prospectus as amended or supplemented at such Settlement Date); and
(b) there shall not have occurred (i) any change, or any
development involving a prospective change, in or affecting particularly the
business or properties of the Issuer or its subsidiaries which, in our
judgment, materially impairs the investment quality of the Securities; (ii)
any downgrading in the rating of the Issuer's debt securities or public
announcement that such debt securities are under surveillance or review, with
possible negative implications, by any "nationally recognized statistical
rating organization" (as defined for purposes of Rule 436(g) under the Act);
(iii) any suspension or limitation of trading in securities generally on the
New York Stock Exchange, or any setting of minimum prices for trading on such
exchange, or any suspension of trading of any securities of the Issuer on any
exchange or in the over-the-counter market; (iv) any banking moratorium
declared by
<PAGE>
3
Federal or New York authorities; or (v) any outbreak or escalation of major
hostilities in which the United States is involved, any declaration of war
by Congress or any other substantial national or international calamity or
emergency if, in our judgment, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable to
proceed with completion of the sale of and payment for the Securities.
[In further consideration of our agreement hereunder, you agree that
between the date hereof and the above Settlement Date, you will not offer
or sell, or enter into any agreement to sell, any debt securities of the
Issuer in the United States, other than sales of Securities, borrowings
under your revolving credit agreements and lines of credit, the private
placement of securities and issuances of your commercial paper.]
If for any reason our purchase of the above Securities is not
consummated, you shall remain responsible for the expenses to be paid or
reimbursed by you pursuant to Section 4 of the Agency Agreement and the
respective obligations of you and the undersigned pursuant to Section 7
shall remain in effect. If for any reason our purchase of the above
Securities is not consummated other than because of our default or a
failure to satisfy a condition set forth in clause (iii), (iv) or (v) of
paragraph (b) above, you shall reimburse us, severally, for all
out-of-pocket expenses reasonably incurred by us in connection with the
offering of the above Securities and not otherwise required to be
reimbursed pursuant to Section 4 of the Agency Agreement.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York. This
<PAGE>
4
Agreement may be executed in counterparts and the executed counterparts
shall together constitute a single instrument.
[Insert Name of Purchaser]
By_________________________
CONFIRMED AND ACCEPTED, as of
the date first above written:
International Business Machines Corporation
By
--------------------------
<PAGE>
Exhibit (5)
November 20, 1997
International Business Machines Corporation
Ladies & Gentlemen:
As Vice President and Assistant General Counsel of International
Business Machines Corporation (the "Company") and an attorney duly admitted to
practice in the State of New York, I am giving this opinion in connection with
the proposed issuance and sale from time to time pursuant to Rule 415 under the
Securities Act of 1993 (the "Securities Act") of up to $4,300,000,000 of senior
or subordinated debt securities of the Company, to be issued under an Indenture
dated as of October 1, 1993, as supplemented by the First Supplemental Indenture
thereto dated as of December 15, 1995 (the "Senior Indenture"), between the
Company and The Chase Manhattan Bank (the "Senior Trustee") or an Indenture (the
"Subordinated Indenture") to be entered into between the Company and a Trustee
(the "Subordinated Trustee"), preferred stock (the "Preferred Stock") of the
Company, depositary shares (the "Depositary Shares") of the Company representing
a fractional interest in a share of Preferred Stock, capital stock (the "Capital
Stock") of the Company and/or warrants to purchase Debt Securities, Preferred
Stock or Capital Stock (the "Warrants") of the Company (the Debt Securities,
Preferred Stock, Depositary Shares, Capital Stock and Warrants are collectively
referred to herein as the "Securities").
I, together with competent members of my legal staff acting under my direct
supervision and control, have examined the Certificate of Incorporation of the
Company, as amended; the By-laws of the Company, the Senior Indenture; and the
forms of Subordinated Indenture and Deposit Agreement (the "Deposit Agreement")
filed as Exhibits to the Registration Statement. In addition, I am familiar
with the proceedings by which such instruments and the transactions contemplated
thereby were authorized by the Company.
Based upon and subject to the foregoing and assuming that (i) the
Registration Statement and any amendments thereto (including post-effective
amendments) will have become effective and comply with all applicable laws; (ii)
the Registration Statement will be effective and will comply with all applicable
laws at the time the Securities are offered or issued as contemplated by the
<PAGE>
Registration Statement; (iii) a Prospectus Supplement, Pricing Supplement or
term sheet will have been prepared and filed with the Securities and Exchange
Commission describing the Securities offered thereby and will comply with all
applicable laws; (iv) all Securities will be issued and sold in compliance with
applicable federal and state securities laws and in the manner stated in the
Registration Statement and the appropriate Prospectus Supplement; (v) a
definitive purchase, underwriting or similar agreement with respect to any
Securities offered or issued will have been duly authorized and validly executed
and delivered by the Company and the other parties thereto; and (vi) any
Securities issuable upon conversion, exchange or exercise of any Security being
offered or issued will be duly authorized, created and, if appropriate, reserved
for issuance upon such conversion, exchange or exercise, I
am of the opinion that:
(1) the Company has been duly incorporated and is a validly
existing corporation under the laws of the State of New York.
(2) with respect to Debt Securities to be issued under either
the Senior Indenture or Subordinated Indenture, when (A) the Senior
Trustee or Subordinated Trustee, as applicable, is qualified to act as
Senior Trustee or Subordinated Trustee, as applicable, under the Senior
Indenture or Subordinated Indenture, as applicable, (B) the Senior
Trustee or Subordinated Trustee, as applicable, has duly executed and
delivered the Subordinated Indenture or Senior Indenture, as applicable,
(C) the Senior Indenture or Subordinated Indenture, as applicable, has
been duly authorized and validly executed and delivered by the Company
to the Senior Trustee or Subordinated Trustee, as applicable, (D) the
Senior Indenture or Subordinated Indenture, as applicable, has been duly
qualified under the Trust Indenture Act of 1939, as amended, (E) the
Board of Directors of the Company or a duly constituted and acting
committee thereof (such Board of Directors or committee being
hereinafter referred to as the "Board") has taken all necessary
corporate action to approve the issuance and terms of such Debt
Securities, the terms of the offering thereof and related matters, and
(F) such Debt Securities have been duly executed, authenticated, issued
and delivered in accordance with the provisions of the Senior Indenture
or Subordinated Indenture, as applicable, and the applicable definitive
purchase, underwriting or similar agreement approved by the Board upon
payment of the consideration therefor provided for therein, such Debt
Securities will be validly issued and will constitute valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms (subject to applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws in effect and subject to general principles of equity,
regardless of whether such enforceability is considered in a proceeding
in equity or at law);
<PAGE>
(3) with respect to shares of Preferred Stock, when both (A) the
Board has taken all necessary corporate action to approve the issuance
and terms of the shares of Preferred Stock, the terms of the offering
thereof, and related matters, including the adoption of a Certificate of
Amendment relating to such Preferred Stock (a "Certificate") and the
filing of the Certificate with the Secretary of State of the State of
New York, and (B) certificates representing the shares of Preferred
Stock have been duly executed, countersigned, registered and delivered
either (i) in accordance with the applicable definitive purchase,
underwriting or similar agreement approved by the Board upon payment of
the consideration therefor (not less than the par value of the Preferred
Stock) provided for therein or (ii) upon conversion or exercise of such
Security or the instrument governing such Security providing for such
conversion or exercise as approved by the Board, for the consideration
approved by the Board (not less than the par value of the Preferred
Stock), then the shares of Preferred Stock will be validly issued, fully
paid and nonassessable;
(4) with respect to Depositary Shares, when (A) the Board has
taken all necessary corporate action to approve the issuance and terms
of the Depositary Shares, the terms of the offering thereof, and related
matters, including the adoption of a Certificate relating to the
Preferred Stock underlying such Depositary Shares and the filing of the
Certificate with the Secretary of State of the State of New York, (B)
the Deposit Agreement or Agreements relating to the Depositary Shares
and the related Depositary Receipts have been duly authorized and
validly executed and delivered by the Company and the Depositary
appointed by the Company, (C) the shares of Preferred Stock underlying
such Depositary Shares have been deposited with a bank or trust company
(which meets the requirements for the Depositary set forth in the
Registration Statement) under the applicable Deposit Agreement, and (D)
the Depositary Receipts representing the Depositary Shares have been
duly executed, countersigned, registered and delivered in accordance
with the appropriate Deposit Agreement and the applicable definitive
purchase, underwriting or similar agreement approved by the Board upon
payment of the consideration therefor provided for therein, the
Depositary Shares will be validly issued;
(5) with respect to shares of Capital Stock, when both (A) the
Board has taken all necessary corporate action to approve the issuance
of and the terms of the offering of the shares of Capital Stock and
related matters and (B) certificates representing the shares of Capital
Stock have been duly executed, countersigned, registered and delivered
either (i) in accordance with the applicable definitive purchase,
underwriting or similar agreement approved by the Board upon payment of
<PAGE>
the consideration therefor (not less than the par value of the Capital
Stock) provided for therein or (ii) upon conversion or exercise of any
other Security, in accordance with the terms of such Security or the
instrument governing such Security providing for such conversion or
exercise as approved by the Board, for the consideration approved by the
Board (not less than the par value of the Capital Stock), then the
shares of Capital Stock will be validly issued, fully paid and
nonassessable; and
(6) with respect to the Warrants, when (A) the Board has taken
all necessary corporate action to approve the creation of and the
issuance and terms of the Warrants, the terms of the offering thereof,
and related matters, (B) the Warrant Agreement or Agreements relating to
the Warrants have been duly authorized and validly executed and
delivered by the Company and the Warrant Agent appointed by the Company,
and (C) the Warrants or certificates representing the Warrants have been
duly executed, countersigned, registered and delivered in accordance
with the appropriate Warrant Agreement or Agreements and the applicable
definitive purchase, underwriting or similar agreement approved by the
Board upon payment of the consideration therefor provided for therein,
the Warrants will be validly issued.
I understand that I may be referred to, as counsel who has passed
upon the validity of the Debt Securities or the issuance of the Preferred Stock,
Depositary Shares, Capital Stock or Warrants on behalf of the Company, in a
supplement to the Prospectus forming a part of the Registration Statement on
Form S-3 relating to the Securities filed with the Securities and Exchange
Commission pursuant to the Securities Act, and I hereby consent to such use of
my name in said Registration Statement and to the use of this opinion for filing
with said Registration Statement as Exhibit (5) thereto.
Very truly yours,
/s/ David S. Hershberg
David S. Hershberg
DSH:ssm
<PAGE>
EXHIBIT (23)(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
January 20, 1997, which appears on page 43 of the 1996 Annual Report to
Stockholders of International Business Machines Corporation, which is
incorporated by reference in International Business Machines Corporation's
Annual Report on Form 10-K for the year ended December 31, 1996. We also consent
to the incorporation by reference of our report on the Financial Statement
Schedule, which appears on page 8 of such Annual Report on Form 10-K. We also
consent to the reference to us under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, NY 10036
November 20, 1997
<PAGE>
Exhibit (24)(a)
POWER OF ATTORNEY OF LOUIS V. GERSTNER, JR.
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Chairman of the
Board of Directors and Chief Executive Officer of International Business
Machines Corporation, a New York corporation (the "Corporation"), which may file
with the Securities and Exchange Commission (the "SEC"), Washington, D.C., under
the provisions of the Securities Act of 1933, a shelf registration statement
pursuant to Rule 415 under the Securities Act of 1933 of up to an aggregate of
$4,300,000,000 (including $1,300,000,000 issuable pursuant to Registration
Statement No. 333-21073), of Indebtedness, Preferred Stock, Depositary Shares,
Capital Stock and Warrants (collectively the "Securities") of the Corporation,
hereby constitute and appoint Lawrence R. Ricciardi, Jeffrey D. Serkes, John R.
Joyce and John E. Hickey, and each of them, my true and lawful attorneys-in-fact
and agents, with full power to act, together or each without the others, for me
and in my name, place and stead, in any and all capacities, to sign, or cause to
be signed electronically, such registration statement and any and all amendments
to the aforementioned registration statement, and to file said registration
statement and amendments thereto so signed with all exhibits thereto, and any
and all other documents in connection therewith, with the SEC, hereby granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform any and all acts and things requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as I
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them may lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 28th day of October, 1997.
/s/ Louis V. Gerstner, Jr.
--------------------------
Louis V. Gerstner, Jr.
Chairman of the Board of Directors
and Chief Executive Officer
<PAGE>
POWER OF ATTORNEY OF LAWRENCE R. RICCIARDI
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Senior Vice
President and Chief Financial Officer of International Business Machines
Corporation, a New York corporation (the "Corporation"), which may file with the
Securities and Exchange Commission (the "SEC"), Washington, D.C., under the
provisions of the Securities Act of 1933, a shelf registration statement
pursuant to Rule 415 under the Securities Act of 1933 of up to an aggregate of
$4,300,000,000 (including $1,300,000,000 issuable pursuant to Registration
Statement No. 333-21073), of Indebtedness, Preferred Stock, Depositary Shares,
Capital Stock and Warrants (collectively the "Securities") of the Corporation,
hereby constitute and appoint Louis V. Gerstner, Jr., Jeffrey D. Serkes, John R.
Joyce and John E. Hickey, and each of them, my true and lawful attorneys-in-fact
and agents, with full power to act, together or each without the others, for me
and in my name, place and stead, in any and all capacities, to sign, or cause to
be signed electronically, such registration statement and any and all amendments
to the aforementioned registration statement, and to file said registration
statement and amendments thereto so signed with all exhibits thereto, and any
and all other documents in connection therewith, with the SEC, hereby granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform any and all acts and things requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as I
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them may lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 28th day of October, 1997.
/s/ Lawrence R. Ricciardi
-------------------------
Lawrence R. Ricciardi
Senior Vice President and
Chief Financial Officer
<PAGE>
POWER OF ATTORNEY OF JOHN R. JOYCE
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Vice President
and Controller of International Business Machines Corporation, a New York
corporation (the "Corporation"), which may file with the Securities and Exchange
Commission (the "SEC"), Washington, D.C., under the provisions of the Securities
Act of 1933, a shelf registration statement pursuant to Rule 415 under the
Securities Act of 1933 of up to an aggregate of $4,300,000,000 (including
$1,300,000,000 issuable pursuant to Registration Statement No. 333-21073), of
Indebtedness, Preferred Stock, Depositary Shares, Capital Stock and Warrants
(collectively the "Securities") of the Corporation, hereby constitute and
appoint Louis V. Gerstner, Jr., Lawrence R. Ricciardi, Jeffrey D. Serkes and
John E. Hickey, and each of them, my true and lawful attorneys-in-fact and
agents, with full power to act, together or each without the others, for me and
in my name, place and stead, in any and all capacities, to sign, or cause to be
signed electronically, such registration statement and any and all amendments to
the aforementioned registration statement, and to file said registration
statement and amendments thereto so signed with all exhibits thereto, and any
and all other documents in connection therewith, with the SEC, hereby granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform any and all acts and things requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as I
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them may lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 28th day of October, 1997.
/s/ John R. Joyce
-----------------
John R. Joyce
Vice President and Controller
<PAGE>
POWER OF ATTORNEY OF IBM DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which may file with the Securities and Exchange Commission (the
"SEC"), Washington, D.C., under the provisions of the Securities Act of 1933, a
shelf registration statement pursuant to Rule 415 under the Securities Act of
1933 of up to an aggregate of $4,300,000,000 (including $1,300,000,000 issuable
pursuant to Registration Statement No. 333-21073), of Indebtedness, Preferred
Stock, Depositary Shares, Capital Stock and Warrants (collectively the
"Securities") of the Corporation, hereby constitute and appoint Louis V.
Gerstner, Jr., Lawrence R. Ricciardi, Jeffrey D. Serkes, John R. Joyce and John
E. Hickey, and each of them, my true and lawful attorneys-in-fact and agents,
with full power to act, together or each without the others, for me and in my
name, place and stead, in any and all capacities, to sign, or cause to be signed
electronically, such registration statement and any and all amendments to the
aforementioned registration statement, and to file said registration statement
and amendments thereto so signed with all exhibits thereto, and any and all
other documents in connection therewith, with the SEC, hereby granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as I might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 28th day of October, 1997.
/s/ Cathleen Black
------------------
Director
<PAGE>
POWER OF ATTORNEY OF IBM DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which may file with the Securities and Exchange Commission (the
"SEC"), Washington, D.C., under the provisions of the Securities Act of 1933, a
shelf registration statement pursuant to Rule 415 under the Securities Act of
1933 of up to an aggregate of $4,300,000,000 (including $1,300,000,000 issuable
pursuant to Registration Statement No. 333-21073), of Indebtedness, Preferred
Stock, Depositary Shares, Capital Stock and Warrants (collectively the
"Securities") of the Corporation, hereby constitute and appoint Louis V.
Gerstner, Jr., Lawrence R. Ricciardi, Jeffrey D. Serkes, John R. Joyce and John
E. Hickey, and each of them, my true and lawful attorneys-in-fact and agents,
with full power to act, together or each without the others, for me and in my
name, place and stead, in any and all capacities, to sign, or cause to be signed
electronically, such registration statement and any and all amendments to the
aforementioned registration statement, and to file said registration statement
and amendments thereto so signed with all exhibits thereto, and any and all
other documents in connection therewith, with the SEC, hereby granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as I might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 28th day of October, 1997.
/s/ Harold Brown
----------------
Director
<PAGE>
POWER OF ATTORNEY OF IBM DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which may file with the Securities and Exchange Commission (the
"SEC"), Washington, D.C., under the provisions of the Securities Act of 1933, a
shelf registration statement pursuant to Rule 415 under the Securities Act of
1933 of up to an aggregate of $4,300,000,000 (including $1,300,000,000 issuable
pursuant to Registration Statement No. 333-21073), of Indebtedness, Preferred
Stock, Depositary Shares, Capital Stock and Warrants (collectively the
"Securities") of the Corporation, hereby constitute and appoint Louis V.
Gerstner, Jr., Lawrence R. Ricciardi, Jeffrey D. Serkes, John R. Joyce and John
E. Hickey, and each of them, my true and lawful attorneys-in-fact and agents,
with full power to act, together or each without the others, for me and in my
name, place and stead, in any and all capacities, to sign, or cause to be signed
electronically, such registration statement and any and all amendments to the
aforementioned registration statement, and to file said registration statement
and amendments thereto so signed with all exhibits thereto, and any and all
other documents in connection therewith, with the SEC, hereby granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as I might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 28th day of October, 1997.
/s/ Juergen Dormann
-------------------
Director
<PAGE>
POWER OF ATTORNEY OF IBM DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which may file with the Securities and Exchange Commission (the
"SEC"), Washington, D.C., under the provisions of the Securities Act of 1933, a
shelf registration statement pursuant to Rule 415 under the Securities Act of
1933 of up to an aggregate of $4,300,000,000 (including $1,300,000,000 issuable
pursuant to Registration Statement No. 333-21073), of Indebtedness, Preferred
Stock, Depositary Shares, Capital Stock and Warrants (collectively the
"Securities") of the Corporation, hereby constitute and appoint Louis V.
Gerstner, Jr., Lawrence R. Ricciardi, Jeffrey D. Serkes, John R. Joyce and John
E. Hickey, and each of them, my true and lawful attorneys-in-fact and agents,
with full power to act, together or each without the others, for me and in my
name, place and stead, in any and all capacities, to sign, or cause to be signed
electronically, such registration statement and any and all amendments to the
aforementioned registration statement, and to file said registration statement
and amendments thereto so signed with all exhibits thereto, and any and all
other documents in connection therewith, with the SEC, hereby granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as I might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 28th day of October, 1997.
/s/ Nannerl O. Keohane
-----------------------
Director
<PAGE>
POWER OF ATTORNEY OF IBM DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which may file with the Securities and Exchange Commission (the
"SEC"), Washington, D.C., under the provisions of the Securities Act of 1933, a
shelf registration statement pursuant to Rule 415 under the Securities Act of
1933 of up to an aggregate of $4,300,000,000 (including $1,300,000,000 issuable
pursuant to Registration Statement No. 333-21073), of Indebtedness, Preferred
Stock, Depositary Shares, Capital Stock and Warrants (collectively the
"Securities") of the Corporation, hereby constitute and appoint Louis V.
Gerstner, Jr., Lawrence R. Ricciardi, Jeffrey D. Serkes, John R. Joyce and John
E. Hickey, and each of them, my true and lawful attorneys-in-fact and agents,
with full power to act, together or each without the others, for me and in my
name, place and stead, in any and all capacities, to sign, or cause to be signed
electronically, such registration statement and any and all amendments to the
aforementioned registration statement, and to file said registration statement
and amendments thereto so signed with all exhibits thereto, and any and all
other documents in connection therewith, with the SEC, hereby granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as I might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 28th day of October, 1997.
/s/ Charles F. Knight
---------------------
Director
<PAGE>
POWER OF ATTORNEY OF IBM DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which may file with the Securities and Exchange Commission (the
"SEC"), Washington, D.C., under the provisions of the Securities Act of 1933, a
shelf registration statement pursuant to Rule 415 under the Securities Act of
1933 of up to an aggregate of $4,300,000,000 (including $1,300,000,000 issuable
pursuant to Registration Statement No. 333-21073), of Indebtedness, Preferred
Stock, Depositary Shares, Capital Stock and Warrants (collectively the
"Securities") of the Corporation, hereby constitute and appoint Louis V.
Gerstner, Jr., Lawrence R. Ricciardi, Jeffrey D. Serkes, John R. Joyce and John
E. Hickey, and each of them, my true and lawful attorneys-in-fact and agents,
with full power to act, together or each without the others, for me and in my
name, place and stead, in any and all capacities, to sign, or cause to be signed
electronically, such registration statement and any and all amendments to the
aforementioned registration statement, and to file said registration statement
and amendments thereto so signed with all exhibits thereto, and any and all
other documents in connection therewith, with the SEC, hereby granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as I might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 28th day of October, 1997.
/s/ Lucio A. Noto
------------------
Director
<PAGE>
POWER OF ATTORNEY OF IBM DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which may file with the Securities and Exchange Commission (the
"SEC"), Washington, D.C., under the provisions of the Securities Act of 1933, a
shelf registration statement pursuant to Rule 415 under the Securities Act of
1933 of up to an aggregate of $4,300,000,000 (including $1,300,000,000 issuable
pursuant to Registration Statement No. 333-21073), of Indebtedness, Preferred
Stock, Depositary Shares, Capital Stock and Warrants (collectively the
"Securities") of the Corporation, hereby constitute and appoint Louis V.
Gerstner, Jr., Lawrence R. Ricciardi, Jeffrey D. Serkes, John R. Joyce and John
E. Hickey, and each of them, my true and lawful attorneys-in-fact and agents,
with full power to act, together or each without the others, for me and in my
name, place and stead, in any and all capacities, to sign, or cause to be signed
electronically, such registration statement and any and all amendments to the
aforementioned registration statement, and to file said registration statement
and amendments thereto so signed with all exhibits thereto, and any and all
other documents in connection therewith, with the SEC, hereby granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as I might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 28th day of October, 1997.
/s/ John B. Slaughter
----------------------
Director
<PAGE>
POWER OF ATTORNEY OF IBM DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which may file with the Securities and Exchange Commission (the
"SEC"), Washington, D.C., under the provisions of the Securities Act of 1933, a
shelf registration statement pursuant to Rule 415 under the Securities Act of
1933 of up to an aggregate of $4,300,000,000 (including $1,300,000,000 issuable
pursuant to Registration Statement No. 333-21073), of Indebtedness, Preferred
Stock, Depositary Shares, Capital Stock and Warrants (collectively the
"Securities") of the Corporation, hereby constitute and appoint Louis V.
Gerstner, Jr., Lawrence R. Ricciardi, Jeffrey D. Serkes, John R. Joyce and John
E. Hickey, and each of them, my true and lawful attorneys-in-fact and agents,
with full power to act, together or each without the others, for me and in my
name, place and stead, in any and all capacities, to sign, or cause to be signed
electronically, such registration statement and any and all amendments to the
aforementioned registration statement, and to file said registration statement
and amendments thereto so signed with all exhibits thereto, and any and all
other documents in connection therewith, with the SEC, hereby granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as I might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 28th day of October, 1997.
/s/ Alex Trotman
----------------
Director
<PAGE>
POWER OF ATTORNEY OF IBM DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which may file with the Securities and Exchange Commission (the
"SEC"), Washington, D.C., under the provisions of the Securities Act of 1933, a
shelf registration statement pursuant to Rule 415 under the Securities Act of
1933 of up to an aggregate of $4,300,000,000 (including $1,300,000,000 issuable
pursuant to Registration Statement No. 333-21073), of Indebtedness, Preferred
Stock, Depositary Shares, Capital Stock and Warrants (collectively the
"Securities") of the Corporation, hereby constitute and appoint Louis V.
Gerstner, Jr., Lawrence R. Ricciardi, Jeffrey D. Serkes, John R. Joyce and John
E. Hickey, and each of them, my true and lawful attorneys-in-fact and agents,
with full power to act, together or each without the others, for me and in my
name, place and stead, in any and all capacities, to sign, or cause to be signed
electronically, such registration statement and any and all amendments to the
aforementioned registration statement, and to file said registration statement
and amendments thereto so signed with all exhibits thereto, and any and all
other documents in connection therewith, with the SEC, hereby granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as I might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 28th day of October, 1997.
/s/ Lodewijk van Wachem
------------------------
Director
<PAGE>
POWER OF ATTORNEY OF IBM DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which may file with the Securities and Exchange Commission (the
"SEC"), Washington, D.C., under the provisions of the Securities Act of 1933, a
shelf registration statement pursuant to Rule 415 under the Securities Act of
1933 of up to an aggregate of $4,300,000,000 (including $1,300,000,000 issuable
pursuant to Registration Statement No. 333-21073), of Indebtedness, Preferred
Stock, Depositary Shares, Capital Stock and Warrants (collectively the
"Securities") of the Corporation, hereby constitute and appoint Louis V.
Gerstner, Jr., Lawrence R. Ricciardi, Jeffrey D. Serkes, John R. Joyce and John
E. Hickey, and each of them, my true and lawful attorneys-in-fact and agents,
with full power to act, together or each without the others, for me and in my
name, place and stead, in any and all capacities, to sign, or cause to be signed
electronically, such registration statement and any and all amendments to the
aforementioned registration statement, and to file said registration statement
and amendments thereto so signed with all exhibits thereto, and any and all
other documents in connection therewith, with the SEC, hereby granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as I might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 28th day of October, 1997.
/s/ Charles M. Vest
-------------------
Director
<PAGE>
EXHIBIT (24)(b)
INTERNATIONAL BUSINESS MACHINES CORPORATION
Certificate of the Secretary
The undersigned, John E. Hickey, Vice President and
Secretary of International Business Machines Corporation (the
"Corporation") does hereby certify that attached hereto as
Exhibit A is a true, correct and complete copy of a resolution
adopted by the Corporation's Board of Directors authorizing the
officers of the Corporation to execute the Registration
Statement, to which this certificate is attached as an exhibit,
by power of attorney.
IN WITNESS WHEREOF, the undersigned has executed this
certificate as of this 20 day of November, 1997.
INTERNATIONAL BUSINESS
MACHINES CORPORATION
by /s/ John E. Hickey
------------------
Name: John E. Hickey
Title: Vice President
and Secretary
<PAGE>
Exhibit A
RESOLUTIONS REGARDING SEC REGISTRATION
RESOLVED, that the Board of Directors of the Corporation hereby authorizes
(in addition to the authority previously granted by resolutions of the Board of
Directors, all of which other resolutions remain in full force and effect) the
issuance and sale by the Corporation during the period from the date hereof
through and including the date which is two years from the date the registration
statement authorized to be filed with the Securities and Exchange Commission
pursuant to these resolutions becomes effective (the "Period") of up to an
aggregate of $4,300,000,000 (which aggregate amount shall be deemed to include
$1,300,000,000 otherwise available pursuant to authority previously granted by
the Board of Directors) of: (a) notes, debentures or other debt instruments (the
"Indebtedness"); (b) shares of preferred stock, $.01 par value, of the
Corporation (the "Preferred Stock") or depositary shares representing ownership
of and entitlement to all rights and preferences of a fraction of a share of
Preferred Stock (the "Depositary Shares"); (c) shares of Capital Stock, $0.50
par value, of the Corporation (the "Capital Stock"); and (d) warrants or other
rights to acquire Capital Stock, Preferred Stock or Indebtedness of the
Corporation or securities of any other corporation (the "Warrants"). The
Indebtedness, Preferred Stock, Depositary Shares, Capital Stock and Warrants
shall sometimes hereinafter be referred to collectively as the "Securities." The
issuance of any Securities hereunder shall require the prior approval of the
Senior Vice President and General Counsel or such other person as may be
designated by the General Counsel from time to time; and be it further
RESOLVED, that the Indebtedness, for purposes of these resolutions, shall
exclude all debt having a maturity of less than one year at the time of
issuance, and all notes issued to banks pursuant to lines of credit. The
Indebtedness shall include, without limitation, debt denominated in U.S. dollars
or in a foreign currency computed at a conversion rate prevailing on dates
determined by either the Chief Executive Officer, the Senior Vice President and
Chief Financial Officer or the Vice President and Treasurer to be relevant to
the issuance of such Indebtedness, with such Indebtedness to be registered under
the Securities Act of 1933 or sold pursuant to an exemption therefrom or outside
the scope thereof; and be it further
RESOLVED, that the Chief Executive Officer, the Senior Vice President and
Chief Financial Officer, and the Vice President and Treasurer, or any of them
acting individually, be, and they hereby are, delegated full power and authority
to authorize and approve during the Period the issuance of Indebtedness of the
Corporation pursuant to the foregoing resolutions and, in connection therewith,
to determine the terms and provisions of such Indebtedness and of the issuance
and sale thereof, including, without limitation, the following: (i) the
principal amount of such Indebtedness, (ii) the final maturity date of such
Indebtedness and any sinking fund or other repayment provisions, (iii) the
effective rate of interest of such Indebtedness, (iv) the price at which such
Indebtedness shall be sold by the Corporation, (v) the provisions, if any, for
the redemption of such Indebtedness and the premiums, if any, to be paid upon
any such redemption, (vi) the right to convert such Indebtedness into or
exchange such Indebtedness for shares or other securities of the Corporation or
any other corporation or to issue warrants or other rights to acquire shares or
other securities of the Corporation or any other corporation in conjunction with
such Indebtedness, and all terms of such conversion or exchange
<PAGE>
provisions or warrants or other rights, including the conversion, exchange or
exercise prices and any antidilution provisions, and the authorization of the
issuance of any shares and the delivery of such shares or other securities of
the Corporation or any other corporation upon the conversion or exchange of such
Indebtedness or the exercise of such warrants or other rights, (vii) the form,
terms and provisions of any indentures, fiscal agency agreements or other
instruments under which such Indebtedness may be issued and the banks or trust
companies to act as trustees, fiscal agents and paying agents thereunder, (viii)
the preparation and filing of all documents necessary or appropriate in
connection with the registration of the Indebtedness under the Securities Act of
1933, the qualification of an indenture under the Trust Indenture Act of 1939
and the qualification under any other applicable Federal, foreign, state, local
or other governmental requirements, (ix) the preparation of any offering
memorandum or other descriptive material relating to the issuance of such
Indebtedness, (x) the listing of the Indebtedness on any United States or
non-United States stock exchange, and (xi) underwriting arrangements; and be it
further
RESOLVED, that the Executive Committee of the Board of Directors, is
delegated, without further action of the Board of Directors, full power and
authority to authorize the issuance and sale by the Corporation during the
Period of Capital Stock, Preferred Stock and Depositary Shares. In connection
therewith, the Executive Committee be, and it hereby is, delegated full power
and authority to determine the terms and provisions of the Preferred Stock and
of the issuance and sale thereof, including, without limitation, with respect
to: (i) whether the holders thereof shall be entitled to cumulative,
noncumulative or partially cumulative dividends and, with respect to shares
entitled to dividends, the dividend rate or rates, including, without limitation
the methods and procedures for determining such rate or rates, and any other
terms and conditions relating to such dividends, (ii) whether, and if so to what
extent and upon what terms and conditions, the holders thereof shall be entitled
to rights upon the liquidation of, or upon any distribution of the assets of,
the Company, (iii) whether, and if so upon what terms and conditions, such
shares shall be convertible into, or exchangeable for, shares or other
securities of the Corporation or any other corporation, (iv) whether, and if so
upon what terms and conditions, such shares shall be redeemable, (v) whether the
shares shall be redeemable and subject to any sinking fund provided for the
purchase or redemption of such shares and, if so, the terms of such fund, (vi)
whether the holders thereof shall be entitled to voting rights and, if so, the
terms and conditions for the exercise thereof, subject to the provisions of
Section 2(f) of Article Four of the Certificate of Incorporation, and (vii)
whether the holders thereof shall be entitled to any other preferences or rights
and, if so, the qualifications, limitations, or restrictions of such preferences
or rights; and be it further
RESOLVED, that the Executive Committee of the Board of Directors, is
delegated, without further action of the Board of Directors, full power and
authority to authorize the issuance and sale by the Corporation during the
Period of Warrants, and the Executive Committee be, and it hereby is, delegated
power and authority to determine the terms and provisions of the Warrants and of
the issuance and sale thereof, including, without limitation, with respect to:
(i) whether such warrants will be for Indebtedness, Preferred Stock, Depositary
Shares or Capital Stock, and (ii) the form, terms and provisions of any warrant
agreements; and be it further
RESOLVED, that the proper officers of the Corporation be, and hereby are,
authorized, and directed to prepare for filing with the Securities and Exchange
<PAGE>
Commission (the "SEC"), Washington, D.C., under the provisions of the Securities
Act of 1933, a shelf registration statement pursuant to Rule 415 under the
Securities Act of 1933, of up to an aggregate of $4,300,000,000 (including
$1,300,000,000 issuable pursuant to Registration Statement No. 333-21073), of
Indebtedness, Preferred Stock, Depositary Shares, Capital Stock and Warrants
(collectively the "Securities") of the Corporation that may be issued in the
future pursuant to these resolutions, and that each of Louis V. Gerstner, Jr.,
Lawrence R. Ricciardi, Jeffrey D. Serkes, John R. Joyce and John E. Hickey, be,
and each of them is hereby vested with full power to act, together or each
without the others, in any and all capacities, in the name and on behalf of the
Corporation to sign, or cause to be signed electronically, such registration
statement (which may constitute a post-effective amendment to a registration
statement previously filed with the SEC) and any and all amendments to the
aforementioned registration statement, and to file said registration statement
and amendments thereto so signed with all exhibits thereto, and any and all
other documents in connection therewith, with the SEC, and all actions in
connection with the preparation, execution and filing of said registration
statement with the SEC on behalf of and as attorneys for the Corporation are
hereby ratified, approved and adopted in all respects; and be it further
RESOLVED, that the proper officers of the Corporation be, and they hereby
are, authorized in the name and on behalf of the Corporation, to take any and
all action which they may deem necessary or advisable in order to effect the
registration or qualification (or exemption therefrom) of the Securities for
issue, offer, sale or trade under the Blue Sky or securities laws of any of the
States of the United States of America as well as in any foreign jurisdiction
and political subdivisions thereof, and in connection therewith to execute,
acknowledge, verify, deliver, file or cause to be published any applications,
reports, consents to service of process, appointments of attorneys to receive
service of process and other papers and instruments which may be required under
such laws, and to take any and all further action which they may deem necessary
or advisable in order to maintain any such registration, qualification or
exemption for as long as they deem necessary or as required by law, and that the
execution by such officers of any such paper or document, or the doing by them
of any act in connection with the foregoing matters shall conclusively establish
their authority therefor from the Corporation and the ratification by the
Corporation of the papers and documents so executed and the actions so taken;
and be it further
RESOLVED, that the Corporation is hereby authorized to list the Securities
on any public exchanges, and that the proper officers of the Corporation are
hereby authorized on behalf of the Corporation to execute all listing
applications, fee agreements and other documents in connection with the
foregoing; and be it further
RESOLVED, that the proper officers of the Corporation be, and they hereby
are, authorized to take all such further action and to execute all such further
instruments and documents in the name and on behalf of the Corporation and under
its corporate seal or otherwise, and to pay all expenses and taxes as in their
judgment shall be necessary, proper or advisable in order fully to carry out the
intent and accomplish the purposes of the foregoing Resolutions; and be it
further
RESOLVED, that the proper officers of the Corporation shall have the
authority to further delegate, in whole or in part, the authority provided in
these Resolutions to any other officer or employee of the Corporation.
<PAGE>
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
--------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
--------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
--------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
-------------------------------------------
INTERNATIONAL BUSINESS MACHINES CORPORATION
(Exact name of obligor as specified in its charter)
New York 13-0871985
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
Armonk, New York 10504
(Address of principal executive offices) (Zip Code)
--------------------------
Debt Securities
(Title of the indenture securities)
--------------------------
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System,
Washington, D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
2
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of
Amendment dated February 17, 1969, August 31, 1977, December 31, 1980,
September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see
Exhibit 1 to Form T-1 filed in connection with Registration Statement No.
333-06249, which is incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 18th day of November, 1997.
THE CHASE MANHATTAN BANK
By /s/ James D. Heaney
---------------------------------
James D. Heaney, Vice President
3
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1997, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Millions
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin ....... $ 13,892
Interest-bearing balances ................................ 4,282
Securities:
Held to maturity securities................................... 2,857
Available for sale securities................................. 34,091
Federal funds sold and securities purchased under
agreements to resell ..................................... 29,970
Loans and lease financing receivables:
Loans and leases, net of unearned income...... $124,827
Less: Allowance for loan and lease losses..... 2,753
Less: Allocated transfer risk reserve ........ 13
-------
Loans and leases, net of unearned income,
allowance, and reserve .................................. 122,061
Trading Assets................................................ 56,042
Premises and fixed assets (including capitalized leases)...... 2,904
Other real estate owned ...................................... 306
Investments in unconsolidated subsidiaries and
associated companies...................................... 232
Customers' liability to this bank on acceptances
outstanding............................................... 2,092
Intangible assets............................................. 1,532
Other assets.................................................. 10,448
-------
TOTAL ASSETS.................................................. $280,709
=========
4
<PAGE>
LIABILITIES
Deposits
In domestic offices ...................................... $91,249
Noninterest-bearing .......................... $38,157
Interest-bearing ............................. 53,092
In foreign offices, Edge and Agreement subsidiaries,
and IBF's................................................. 70,192
Noninterest-bearing .......................... $ 3,712
Interest-bearing ............................. 66,480
Federal funds purchased and securities sold under agree-
ments to repurchase........................................... 35,185
Demand notes issued to the U.S. Treasury ..................... 1,000
Trading liabilities........................................... 42,307
Other borrowed money (includes mortgage indebtedness
and obligations under calitalized leases):
With a remaining maturity of one year or less ............ 4,593
With a remaining maturity of more than one year
through three years....................................... 260
With a remaining maturity of more than three years........ 146
Bank's liability on acceptances executed and outstanding...... 2,092
Subordinated notes and debentures ............................ 5,715
Other liabilities ............................................ 11,373
TOTAL LIABILITIES ............................................ 264,112
-------
EQUITY CAPITAL
Perpetual preferred stock and related surplus................. 0
Common stock ................................................. 1,211
Surplus (exclude all surplus related to preferred stock)..... 10,283
Undivided profits and capital reserves ....................... 5,280
Net unrealized holding gains (losses)
on available-for-sale securities ............................. (193)
Cumulative foreign currency translation adjustments .......... 16
TOTAL EQUITY CAPITAL ......................................... 16,597
------
TOTAL LIABILITIES AND EQUITY CAPITAL ......................... $280,709
==========
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named
bank, do hereby declare that this Report of Condition has
been prepared in conformance with the instructions issued
by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
5
