SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported): December 12, 1997
INTERNATIONAL BUSINESS MACHINES CORPORATION
(Exact name of registrant as specified in its charter)
New York 1-2360 13-0871985
(Commission File (I.R.S. Employer
(State of Incorporation) Number) Identification No.)
Armonk, New York 10504
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 914-499-1900
<PAGE>
Item 7. Financial Information, Pro Forma Financial Information and
Exhibits.
This Current Report on Form 8-K is being filed to incorporate by reference
into Registration Statement No. 333-40669 on Form S-3, which registration
statement was declared effective on December 10, 1997, the document included as
Exhibit 1 hereto, relating to the offering of up to $4,300,000,000 aggregate
principal amount of Medium-Term debt securities of the Registrant.
The following exhibit is hereby filed with this report:
Exhibit
Number Description
(1) Agency Agreement dated December 12, 1997, among International Business
Machines Corporation, Credit Suisse First Boston Corporation, Goldman,
Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan
Stanley & Co. Incorporated, and Salomon Brothers Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTERNATIONAL BUSINESS MACHINES CORPORATION
(Registrant)
By: /s/ Janet E. Andersen
Name: Janet E. Andersen
Title: Assistant Treasurer
Date: December 15, 1997.
<PAGE>
Exhibit Index
Exhibit
Number Description
(1) Agency Agreement dated December 12, 1997, among International Business
Machines Corporation, Credit Suisse First Boston Corporation, Goldman,
Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan
Stanley & Co. Incorporated, and Salomon Brothers Inc.
$4,300,000,000
International Business Machines Corporation
U.S. Medium-Term Notes
AGENCY AGREEMENT
December 12, 1997
Credit Suisse First Boston Corporation
11 Madison Avenue
5th Floor
New York, New York 10010
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated
World Financial Center
North Tower
New York, New York 10281-1315
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
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 $4,300,000,000 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
- Page 1 -
<PAGE>
December 15, 1995 (the "Indenture"), between the Issuer and The Chase Manhattan
Bank, as trustee. The Securities will be issued, and the terms thereof
established, 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.333-40669 and
333-21073, 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 December 10, 1997, a
form of which is included in Registration Statement No. 333-40669, 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 material 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
misleading, 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
- Page 2 -
<PAGE>
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. During any such
suspension, the Issuer's obligations under Sections 6(a), 6(b), 6(c) and
6(d) shall be suspended, except with respect to Notes held by an Agent for
resale during the first 180 days after the Agent's purchase thereof and
identified in a notice from the Agent to the Issuer as being held by such
Agent for resale during such period.
Unless otherwise mutually agreed upon between the Issuer and the
Agent soliciting such offer, the Agents 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
- Page 3 -
<PAGE>
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 in Armonk, New York, or counsel
for the Issuer in New York City, 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 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
- Page 4 -
<PAGE>
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 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 promptly
furnish each Agent with copies of all material press releases or
announcements to the general public which are not filed with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act and are not otherwise available on the IBM home page on the Internet,
at "http://www.ibm.com." 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 termination 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.
(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
- Page 5 -
<PAGE>
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.
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
- Page 6 -
<PAGE>
the Issuer on any 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 of the Issuer (or any
Assistant General Counsel, Associate General Counsel, or other
Counsel of the Issuer having knowledge of and responsibility for
securities or financial matters, the "Issuer Counsel"), 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 opining 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 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 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
- Page 7 -
<PAGE>
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 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 for a period
of two years following the effective date of the Registration
Statement (the "Period"), subject to the establishment 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 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 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.
- Page 8 -
<PAGE>
(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 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
agreements 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 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
- Page 9 -
<PAGE>
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) 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
- Page 10 -
<PAGE>
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.
(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 the
end of the Period is also subject to the delivery to the Agents before
that date and thereafter, periodically as appropriate, of an opinion from
either Issuer Counsel or Cravath, Swaine & Moore, to the effect of
subparagraph (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
subparagraph (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:
- Page 11 -
<PAGE>
(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 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, concurrently with such amendment or supplement,
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 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; provided, however, that the Issuer shall deliver such
certificate with respect to a Representation Date arising from the
incorporation by reference into the Prospectus of a current report on Form
8-K or a quarterly report on Form 10-Q only upon the reasonable request of
the Agents.
(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 Issuer
Counsel or Cravath, Swaine &
- Page 12 -
<PAGE>
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 on which the Registration Statement
or the Prospectus shall be amended or supplemented to include additional
financial information as a result of filing of the Issuer's Annual Report
on Form 10-K, and 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 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
- Page 13 -
<PAGE>
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 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 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
- Page 14 -
<PAGE>
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).
(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
- Page 15 -
<PAGE>
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 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.
- Page 16 -
<PAGE>
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 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:
To the Issuer:
Notices to International Business Machines Corporation shall be directed
to it at New Orchard Road, Armonk, New York 10504, Attention: Treasurer (Fax:
914-499-2883).
To the Agents:
- Page 17 -
<PAGE>
Notices to Credit Suisse First Boston Corporation shall be directed to it
at 11 Madison Avenue, 5th Floor, New York, New York 10010, Attention: Short and
Medium-Term Note Department (Fax: 212-325-8183).
Notices to Goldman, Sachs & Co. shall be directed to it at 85 Broad
Street, New York, New York 10004, Attention: Credit Department, Credit Control
- -- Medium Term Notes (Fax: 212-357-8680).
Notices to Merrill Lynch, Pierce, Fenner & Smith Incorporated shall be
directed to it at North Tower, 10th Floor, World Financial Center, New York, New
York 10281, Attention: MTN Product Management (Fax: 212-449-2234).
Notices to Morgan Stanley & Co. Incorporated shall be directed to it at
1585 Broadway, 2nd Floor, New York, New York 10036, Attention: Manager -
Continuously Offered Products (Fax: 212-761-0780), with a copy directed to it at
1585 Broadway, 34th Floor, New York, New York 10036, Attention: Peter Cooper -
Investment Banking Information Center (Fax: 212-761-0260).
Notices to Salomon Brothers Inc shall be directed to it at Seven World
Trade Center, 32nd Floor, New York, New York 10048, Attention: Medium-Term Note
Department (Fax: 212-783-2274).
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 without giving
effect to the conflicts of laws principles thereof. This Agreement may be
executed in counterparts and the executed counterparts shall together constitute
a single instrument.
15. Entire Agreement. This Agreement incorporates the entire agreement
between the parties hereto with respect to the transactions contemplated herein.
All prior negotiations and agreements between the parties are merged in, and
superseded by, this Agreement and there are no agreements, representations or
warranties between the parties other than those set forth or provided for
herein.
- Page 18 -
<PAGE>
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 /s/ Janet E. Andersen
--------------------------
Title: Assistant Treasurer
CONFIRMED AND ACCEPTED, as of the
date first above written:
CREDIT SUISSE FIRST BOSTON CORPORATION
By /s/ Helena M. Willner
------------------------------------
Title: Vice President
GOLDMAN, SACHS & CO.
By /s/ Goldman, Sachs & Co.
------------------------------------
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By /s/ Richard Doyle
------------------------------------
Title: Authorized Signatory
MORGAN STANLEY & CO. INCORPORATED
By /s/ Harold J. Hendershot III
------------------------------------
Title: Vice President
SALOMON BROTHERS INC
By /s/ Martha D. Bailey
------------------------------------
Title: Vice President
- Page 19 -
<PAGE>
EXHIBIT A
The Issuer agrees to pay the relevant Agent 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 20 -
<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"). Credit Suisse First Boston Corporation,
Goldman, Sachs & Co., Merrill Lynch & Co., Morgan Stanley & Co. Incorporated,
and Salomon Brothers Inc, 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 December 12, 1997
(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 "Book-Entry 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 21 -
<PAGE>
I. CERTIFICATE NOTES AND GENERAL TERMS
Unless otherwise agreed by 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.
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
- Page 22 -
<PAGE>
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 a 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 will 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 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,
- Page 23 -
<PAGE>
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 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
- Page 24 -
<PAGE>
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"):
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
- Page 25 -
<PAGE>
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.
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 documentation and
and Cash Payment: instructions, which may be by telephone to be
confirmed in writing from the
- Page 26 -
<PAGE>
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 delivery of Certificate Notes:
Credit Suisse First Boston Corporation
MTN Department
5 World Trade Center, 7th Floor
New York, NY 10048
Attention: Paul Riley/Bill Ahearn
(tel: 212-322-1606)
Goldman, Sachs & Co.
Medium-Term Notes Desk
85 Broad Street, 26th Floor
New York, NY 10004
Attention: Karen Robertson
(fax: 212-902-0658)
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Money Markets Clearance
55 Water Street
3rd Floor
N.S.C.C. Window
New York, NY 10041
Attention: Al Mitchell
(tel: 212-558-2405)
(fax: 212-558-2457)
The Bank of New York
Dealer Clearance Department
1 Wall Street-3rd Floor-Window 3B
New York, NY 10005
Attention: For the account of Morgan Stanley &
Co. Incorporated
- Page 27 -
<PAGE>
Salomon Brothers Inc, in care of:
The Bank of New York
1 Wall Street-3rd Floor
New York, NY 10005
Attention: Dealer Clearance
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 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.
- Page 28 -
<PAGE>
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 The Issuer and the Agents will discuss from time to
Rate Changes: 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 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 the 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
- Page 29 -
<PAGE>
may resume, subject to the provisions of "Delivery
of Prospectus" below.
Outdated stickers, and copies of the Prospectus to
which they are 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
Amendment or any time and, upon receipt of notice from the
Supplement: Issuer, each 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
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
- Page 30 -
<PAGE>
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 With respect to each purchase resulting from a
Prospectus: 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 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
- Page 31 -
<PAGE>
Supplements:
Credit Suisse First Boston Corporation
Prospectus Department
5 World Trade Center, 7th Floor
New York, NY 10048
Attention: Joan Bryan
(tel: 212-322-5105)
(fax: 212-803-4096)
with a copy to:
Credit Suisse First Boston Corporation
11 Madison Avenue, 5th Floor
New York, NY 10010
Attention: Short and Medium-Term Finance
Department
(tel: 212-325-7198)
(fax: 212-325-8183)
Goldman, Sachs & Co.
Medium-Term Notes Desk
85 Broad Street, 26th Floor
New York, NY 10004
Attention: Karen Robertson
(fax: 212-902-0658)
for Merrill Lynch, Pierce Fenner & Smith
Incorporated, for overnight, express, or
special delivery packages, only:
Tritech Services
44B Colonial Drive
Piscataway, NJ 08854
Attention: Prospectus Operations/Nachman
Kimerling
(tel: 908-885-2768)
(fax: 908-885-2774/2775/2776)
For other types of deliveries, use address:
Tritech Services
#4 Corporate Place
Corporate Park 287
Piscataway, NJ 08854
For all deliveries, with a copy to:
- Page 32 -
<PAGE>
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center, North Tower
10th Floor
New York, NY 10281-1310
Attention: MTN Product Management
(tel: 212-449-7476)
(fax: 212-449-2234)
Morgan Stanley & Co. Incorporated
1585 Broadway, 2nd Floor
New York, NY 10036
Attention: Medium-Term Note Trading Desk,
Carlos Cabrera
(tel: 212-761-4000)
(fax: 212-761-0780
Salomon Brothers Inc
8800 Hidden River Parkway
Tampa FL 33637
Attention: Enrique Castro
(tel: 813-558-7165)
(fax: 813-558-4123)
Authenticity of The Issuer will cause the Trustee to furnish the
Signatures: 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 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.
- Page 33 -
<PAGE>
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 and original issue
discount provisions, in each case, to the extent
applicable (collectively, the "Terms"). Each Global
Security
- Page 34 -
<PAGE>
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 Numbers: The Issuer will arrange with the CUSIP Service
Bureau 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 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
- Page 35 -
<PAGE>
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 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
- Page 36 -
<PAGE>
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 $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
Terms: repayable at the option of the Holder, 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
- Page 37 -
<PAGE>
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 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 On the first Business Day of January, April, July
Payment and Regular and October of each year, the Trustee will deliver
Record Dates: to the Issuer and DTC a written list of Regular
Record Dates and Interest Payment Dates that will
occur with respect 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
- Page 38 -
<PAGE>
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 Principal Payments of Interest Only. Promptly after each
and Interest: Regular Record Date, the Trustee will deliver to the
Issuer and 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.
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
- Page 39 -
<PAGE>
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 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
- Page 40 -
<PAGE>
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 the 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 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 Procedures: Settlement Procedures with regard to each Book-Entry
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.
- Page 41 -
<PAGE>
C. The Trustee will assign a CUSIP number to the
Global Security representing such Note and will
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.
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.
- Page 42 -
<PAGE>
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
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.
- Page 43 -
<PAGE>
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".
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 Procedures For orders of Book-Entry Notes solicited by an Agent
Timetable: and accepted by the Issuer for settlement on the
first 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 44 -
<PAGE>
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 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
- Page 45 -
<PAGE>
its records and send such canceled Global Security
to the Issuer. The cusip 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 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
- Page 46 -
<PAGE>
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 47 -
<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 December 12, 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 representations and warranties
contained in Section 2 of the Agency Agreement (it being understood that such
representations and warranties shall
- Page 48 -
<PAGE>
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 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.]
- Page 49 -
<PAGE>
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 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:_________________________
Title:________________________
- Page 50 -
