<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 13, 1999
REGISTRATION NO. 333- (1)
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
INTERNATIONAL BUSINESS MACHINES CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
NEW YORK 13-0871985
(State or other jurisdiction of incorporation or
organization) (I.R.S. employer identification number)
</TABLE>
ARMONK, NEW YORK 10504
(914) 499-1900
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
LAWRENCE R. RICCIARDI
SENIOR VICE PRESIDENT & GENERAL COUNSEL
INTERNATIONAL BUSINESS MACHINES CORPORATION
ARMONK, NEW YORK 10504
(914) 499-1900
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
------------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED BE REGISTERED(A) PER UNIT(B) OFFERING PRICE(A)(B) REGISTRATION FEE
<S> <C> <C> <C> <C>
Debt Securities...........
Preferred Stock(c)........
Depositary Shares(c)...... $4,000,000,000(1) 100% $4,000,000,000(1) $1,112,000
Capital Stock(c)..........
Warrants..................
</TABLE>
(a) Subject to Rule 462(b) under the Securities Act, in no event will the
aggregate initial offering price of the securities issued under this
Registration Statement (which includes securities issued hereunder pursuant
to Rule 429 under the Securities Act) exceed $5,115,000,000, or if any
securities are issued in any foreign currency units, the U.S. dollar
equivalent of $5,115,000,000. For Debt Securities issued with an original
issue discount, the amount to be registered is calculated as the initial
accreted value of such Debt Securities.
(b) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(o).
(c) In addition to any Preferred Stock, Depositary Shares or Capital Stock that
may be issued directly under this Registration Statement, there are being
registered hereunder an indeterminate number of shares of Preferred Stock,
Depositary Shares or Capital Stock as may be issued upon conversion or
exchange of Debt Securities, Preferred Stock or Depositary Shares, as the
case may be. No separate consideration will be received for any shares of
Preferred Stock, Depositary Shares or Capital Stock so issued upon
conversion or exchange.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
------------------------------
(1) PURSUANT TO RULE 429 OF THE RULES AND REGULATIONS OF THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, THE PROSPECTUS
INCLUDED IN THIS REGISTRATION STATEMENT ALSO RELATES TO $1,115,000,000 OF
SECURITIES PREVIOUSLY REGISTERED UNDER THE REGISTRANT'S REGISTRATION
STATEMENT ON FORM S-3 (FILE NO. 333-40669). THIS REGISTRATION STATEMENT ALSO
CONSTITUTES POST-EFFECTIVE AMENDMENT NO. 1 WITH RESPECT TO THE REGISTRANT'S
REGISTRATION STATEMENT ON FORM S-3 (FILE NO. 333-40669).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION JANUARY 13, 1999
PROSPECTUS
INTERNATIONAL BUSINESS MACHINES CORPORATION
New Orchard Road
Armonk, New York 10504
(914) 499-1900
$5,115,000,000
DEBT SECURITIES
PREFERRED STOCK
DEPOSITARY SHARES
CAPITAL STOCK
WARRANTS
-------------------
WE WILL PROVIDE SPECIFIC TERMS OF THESE SECURITIES IN SUPPLEMENTS TO THIS
PROSPECTUS.
YOU SHOULD READ THIS PROSPECTUS AND ANY SUPPLEMENT CAREFULLY BEFORE YOU INVEST.
-------------------
These securities have not been approved by the Securities and Exchange
Commission or any state securities commission, nor have these organizations
determined that this prospectus is accurate or complete. Any representation to
the contrary is a criminal offense.
The date of this prospectus is , 1999.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
SUMMARY
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the terms
of our securities, you should carefully read this document with the attached
prospectus supplement. Together these documents will give the specific terms of
the securities we are offering. You should also read the documents we have
referred you to in "Where You Can Find More Information" below for information
on our company and our financial statements. Certain capitalized terms used in
this summary are defined elsewhere in this prospectus.
THE SECURITIES WE MAY OFFER
This prospectus is part of a registration statement (No. 333- ) (the
"Registration Statement") that we filed with the SEC utilizing a "shelf"
registration process. Under this shelf process, we may offer from time to time
up to $5,115,000,000 of any of the following securities, either separately or in
units: DEBT, PREFERRED STOCK, DEPOSITARY SHARES, CAPITAL STOCK AND WARRANTS.
This prospectus provides you with a general description of the securities we may
offer. Each time we offer securities, we will provide you with a prospectus
supplement that will describe the specific amounts, prices and terms of the
securities being offered. The prospectus supplement may also add, update or
change information contained in this prospectus.
DEBT SECURITIES
We may offer unsecured general obligations of our company, which may be
senior (the "Senior Debt Securities") or subordinated (the "Subordinated Debt
Securities"). The Senior Debt Securities and the Subordinated Debt Securities
are together referred to in this prospectus as the "Debt Securities". The Senior
Debt Securities will have the same rank as all of our other unsecured,
unsubordinated debt. The Subordinated Debt Securities will be entitled to
payment only after payment on our Senior Indebtedness (as described below). In
addition, the Subordinated Debt Securities will be effectively subordinated to
creditors (including trade creditors) and preferred stockholders of our
subsidiaries.
The Senior Debt Securities will be issued under an indenture between us and
The Chase Manhattan Bank, as the trustee. The Subordinated Debt Securities will
be issued under an indenture between us and the trustee we name in the
prospectus supplement. We have summarized certain general features of the Debt
Securities from the indentures. We encourage you to read the indentures (which
are exhibits to the Registration Statement) and our recent periodic and current
reports that we file with the SEC. Directions on how you can get copies of these
reports are provided under "Where You Can Find More Information" below.
GENERAL INDENTURE PROVISIONS THAT APPLY TO SENIOR AND SUBORDINATED DEBT
SECURITIES
Neither indenture limits the amount of debt that we may issue. In addition,
except for certain restrictions on secured indebtedness and sale and leaseback
transactions in the indenture relating to the Senior Debt Securities, neither
indenture provides holders any protection should there be a highly leveraged
transaction, recapitalization or restructuring involving our company.
The indentures allow us to merge or consolidate with another company, or to
sell all or substantially all of our assets to another company. If these events
occur, the other company will be required to assume our responsibilities
relating to the Debt Securities, and we will be released from all liabilities
and obligations.
The indentures provide that holders of a majority of the total principal
amount of outstanding Debt Securities of any series may vote to change certain
of our obligations or certain of your rights concerning the Debt Securities of
that series. However, to change the amount or timing of principal, interest or
other payments under the Debt Securities, every holder in the series must
consent.
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If we satisfy certain conditions in the indenture relating to the Senior
Debt Securities, we may discharge that indenture at any time by depositing with
the trustee sufficient funds or government obligations to pay the Senior Debt
Securities when due.
EVENTS OF DEFAULT. Each indenture provides that the following are events of
default:
- - If we do not pay interest for 30 days after its due date.
- - If we do not pay principal or premium when due.
- - If we do not make any sinking fund for 30 days after its due date.
- - If we continue to breach a covenant for 90 days after notice.
- - If a certain bankruptcy or insolvency event occurs.
If an Event of Default occurs with respect to any series of Debt Securities,
the trustee or holders of 25% of the outstanding principal amount of that series
may declare the principal amount of the series immediately payable. However,
holders of a majority of the principal amount may rescind this action.
GENERAL INDENTURE PROVISIONS THAT APPLY ONLY TO SENIOR DEBT SECURITIES
The indenture relating to the Senior Debt Securities contains covenants
restricting our ability to incur secured indebtedness and enter into sale and
leaseback transactions under certain specific conditions described below under
"Senior Debt Securities".
GENERAL INDENTURE PROVISIONS THAT APPLY ONLY TO SUBORDINATED DEBT SECURITIES
The Subordinated Debt Securities will be subordinated to all "Senior
Indebtedness", which includes all indebtedness for money borrowed by us, except
indebtedness that is stated to be not superior to, or to have the same rank as,
the Subordinated Debt Securities. In addition, claims of our subsidiaries'
creditors and preferred stockholders generally will have priority with respect
to the subsidiaries' assets and earnings over the claims of our creditors,
including holders of the Subordinated Debt Securities, even though those
obligations may not constitute Senior Indebtedness. The Subordinated Debt
Securities, therefore, will be effectively subordinated to creditors (including
trade creditors) and preferred stockholders of our subsidiaries.
PREFERRED STOCK AND DEPOSITARY SHARES
We may issue our preferred stock, par value $0.01 per share, in one or more
series (the series being offered are referred to as "Preferred Stock"). Our
Board of Directors will determine the dividend, voting, conversion and other
rights of the series being offered and the terms and conditions relating to its
offering and sale at the time of the offer and sale. We may also issue
fractional shares of Preferred Stock that will be represented by Depositary
Shares and Depositary Receipts.
CAPITAL STOCK
We may issue our capital stock, par value $0.50 per share (the "Capital
Stock"). Holders of Capital Stock are entitled to receive dividends when
declared by the Board of Directors (subject to rights of preferred
stockholders). Each holder of Capital Stock is entitled to one vote per share.
The holders of Capital Stock have no preemptive rights or cumulative voting
rights.
WARRANTS
We may issue warrants for the purchase of Debt Securities, Preferred Stock
or Capital Stock. We may issue warrants independently or together with other
securities.
RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
The ratio of earnings to fixed charges and the ratio of earnings to combined
fixed charges
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and preferred stock dividends for each of the periods indicated are as follows:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30,
YEAR ENDED DECEMBER 31,
----------- --------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995 1994 1993
----- ----- ----- ----- ----- ----- -----
Ratio of earnings to
fixed charges....... 4.8 5.1 5.4 5.3 5.0 3.1 (a)
Ratio of earnings to
combined fixed
charges and
preferred stock
dividends........... 4.7 5.0 5.4 5.3 4.9 2.9 (a)
</TABLE>
- ------------------------
(a) No ratios are shown for 1993 as earnings were not sufficient to cover fixed
charges and combined fixed charges and preferred stock dividends. As a
result of the net loss incurred for the year ended December 31, 1993,
earnings were inadequate to cover fixed charges and combined fixed charges
and preferred stock dividends by $8,478 million and $8,525 million,
respectively.
The ratio of earnings to fixed charges is computed by dividing earnings,
which includes income before taxes (excluding the cumulative and transition
effects of accounting changes) and fixed charges, by fixed charges. The ratio of
earnings to combined fixed charges and preferred stock dividends is computed by
dividing earnings by the sum of fixed charges and dividends on preferred stock.
For purposes of calculating this ratio, the preferred stock dividend
requirements were assumed to be equal to the pre-tax earnings that would be
required to cover such dividend requirements based on our effective income tax
rates for the respective periods. "Fixed charges" consist of interest on debt
and a portion of rentals determined to be representative of interest.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
at the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with it, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and later
information that we file with the SEC will automatically update and supersede
this information. We incorporate by reference the documents listed below and any
future filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until our offering is completed:
i. Annual Report on Form 10-K for the year ended December 31, 1997;
ii. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998, June
30, 1998 and September 30, 1998; and
iii. Current Reports on Form 8-K, filed on January 8, 1998, January 22, 1998,
April 22, 1998, July 21, 1998, October 21, 1998 and December 16, 1998.
You may request a copy of these filings at no cost, by writing to or
telephoning our transfer agent at the following address:
First Chicago Trust Company of New York
Mail Suite 4688
P.O. Box 2530
Jersey City, New Jersey 07303-2530
(201) 324-0405
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of the
document.
3
<PAGE>
THE COMPANY
IBM develops, manufactures and sells advanced information processing
products, including computers and microelectronic technology, software,
networking systems and information technology-related services. We offer value
through our North America, Europe/ Middle East/Africa, Latin America,
Asia/Pacific, Global Services and Worldwide Client Server Computing business
units, by providing comprehensive and competitive product choices.
USE OF PROCEEDS
Unless otherwise specified in the applicable prospectus supplement, the net
proceeds we receive from the sale of the securities offered by this prospectus
and the accompanying prospectus supplement will be used for general corporate
purposes. General corporate purposes may include the repayment of debt,
investments in or extensions of credit to our subsidiaries, redemption of
preferred stock, or the financing of possible acquisitions or business
expansion. The net proceeds may be invested temporarily or applied to repay
short-term debt until they are used for their stated purpose.
DESCRIPTION OF THE DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms that may apply to the Debt Securities. The particular
terms of any Debt Securities will be described in the prospectus supplement
relating to those Debt Securities.
The Debt Securities will be either our senior debt securities (the "Senior
Debt Securities") or our subordinated debt securities (the "Subordinated Debt
Securities"). The Senior Debt Securities will be issued under an Indenture dated
as of October 1, 1993, as supplemented on December 15, 1995 (the "Senior
Indenture"), between us and The Chase Manhattan Bank, as Trustee. The
Subordinated Debt Securities will be issued under an Indenture (the
"Subordinated Indenture") to be entered into between us and the Trustee named in
a prospectus supplement. The Senior Indenture and the Subordinated Indenture are
together called the "Indentures".
The following summary of certain provisions of the Indentures is not
complete. You should refer to the Indentures, copies of which are exhibits to
the registration statement of which this prospectus is a part (Registration
Statement File No. 333- ; the "Registration Statement"). Section references
below are to the section in the applicable Indenture. Capitalized terms have the
meanings assigned to them in the applicable Indenture. The referenced sections
of the Indentures and the definitions of capitalized terms are incorporated by
reference.
GENERAL
Neither Indenture limits the amount of Debt Securities that we may issue.
Each Indenture provides that Debt Securities may be issued up to the principal
amount authorized by us from time to time. The Senior Debt Securities will be
unsecured and will have the same rank as all of our other unsecured and
unsubordinated debt. The Subordinated Debt Securities will be unsecured and will
be subordinated and junior to all Senior Indebtedness (as defined below under
"Subordinated Debt Securities--Subordination").
The Debt Securities may be issued in one or more separate series of Senior
Debt Securities and/or Subordinated Debt Securities. The prospectus supplement
relating to the particular series of Debt Securities being offered will specify
the particular amounts, prices and terms of those Debt Securities. These terms
may include:
i. the title of the Debt Securities;
ii. any limit upon the aggregate principal amount of the Debt Securities;
iii. the date or dates, or the method of determining the dates, on which the
Debt Securities will mature;
iv. the interest rate or rates of the Debt Securities, or the method of
determining those rates, the interest payment dates and, for Registered
Debt Securities, the Regular Record Dates;
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<PAGE>
v. the places where payments may be made on the Debt Securities;
vi. any mandatory or optional redemption provisions applicable to the Debt
Securities;
vii. any sinking fund or analogous provisions applicable to the Debt
Securities;
viii. any conversion or exchange provisions applicable to the Debt
Securities;
ix. any terms for the attachment to the Debt Securities of warrants,
options or other rights to purchase or sell our securities;
x. the portion of principal amount of the Debt Security payable upon
acceleration of maturity if other than the principal amount of such Debt
Securities;
xi. any deletions of, or changes or additions to, the Events of Default or
covenants applicable to the Debt Securities;
xii. if other than U.S. dollars, the currency or currencies, including
European Currency Units, the euro and other composite currencies, in
which payments on the Debt Securities will be payable (which currencies
may be different for principal, premium and interest payments) and
whether the holder may elect payment to be made in a different
currency;
xiii. the method of determining the amount of any payments on the Debt
Securities which are linked to an index;
xiv. whether the Debt Securities will be issued in fully registered form
without coupons ("Registered Debt Securities") or in bearer form, with
or without coupons ("Bearer Debt Securities"), or any combination of
these, and whether they will be issued in the form of one or more
global securities (each a "Global Debt Security") in temporary or
definitive form;
xv. any terms relating to the delivery of the Debt Securities if they are to
be issued upon the exercise of warrants;
xvi. whether and on what terms we will pay additional amounts to holders of
the Debt Securities that are not U.S. persons in respect of any tax,
assessment or governmental charge withheld or deducted and, if so,
whether and on what terms we will have the option to redeem the Debt
Securities rather than pay the additional amounts; and
xvii. any other specific terms of the Debt Securities.
(Sections 202 and 301)
Unless otherwise specified in the applicable prospectus supplement, (x) the
Debt Securities will be Registered Debt Securities and (y) Debt Securities
denominated in U.S. dollars will be issued, in the case of Registered Debt
Securities, in denominations of $1,000 or an integral multiple of $1000 and, in
the case of Bearer Debt Securities, in denominations of $5,000. Debt Securities
may bear legends required by United States Federal tax law and regulations.
(Section 401)
If any of the Debt Securities are sold for any foreign currency or currency
unit or if any payments on the Debt Securities is payable in any foreign
currency or currency unit, the prospectus supplement will contain any
restrictions, elections, tax consequences, specific terms and other information
with respect to such Debt Securities and such foreign currency or currency unit.
Some of the Debt Securities may be issued as original issue discount Debt
Securities (the "Original Issue Discount Securities"). Original Issue Discount
Securities bear no interest or bear interest at below-market rates and will be
sold at a discount below their stated principal amount. The prospectus
supplement will also contain any special tax, accounting or other information
relating to Original Issue Discount Securities or relating to certain other
kinds of Debt Securities that may be offered, including
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<PAGE>
Debt Securities linked to an index or payable in currencies other than U.S.
dollars.
EXCHANGE, REGISTRATION AND TRANSFER
Debt Securities may be transferred or exchanged at the corporate trust
office of the security registrar or at any other office or agency maintained by
us for such purposes, without the payment of any service charge, except for any
tax or governmental charge. (Section 404) The designated security registrar in
the United States for the Senior Debt Securities is The Chase Manhattan Bank
located at 450 West 33rd Street, New York, New York 10001. The security
registrar for the Subordinated Debt Securities will be designated in the
applicable prospectus supplement.
If Debt Securities are issuable as both Registered Debt Securities and
Bearer Debt Securities, the Bearer Debt Securities (with outstanding coupons,
except as provided below) will be exchangeable for Registered Debt Securities.
If a Bearer Debt Security with related coupons is surrendered in exchange for a
Registered Debt Security between a record date and the date set for the payment
of interest, the Bearer Debt Security will be surrendered without the coupon
relating to that interest payment and that payment will be made only to the
holder of the coupon when due.
In the event of any redemption in part of any series of Debt Securities, we
will not be required to:
i. issue, register the transfer of, or exchange, Debt Securities of any
series between the opening of business 15 Business Days before any
selection of Debt Securities of that series to be redeemed and the close
of business on:
a. if Debt Securities of the series are issuable only as Registered
Debt Securities, the day of mailing of the relevant notice of
redemption, and
b. if Debt Securities of the series are issuable as Bearer Debt
Securities, the day of the first publication of the relevant notice
of redemption or, if Debt Securities of the series are also issuable
as Registered Debt Securities and there is no publication, the day
of mailing of the relevant notice of redemption;
ii. register the transfer of, or exchange, any Registered Debt Security
selected for redemption, in whole or in part, except the unredeemed
portion of any Registered Debt Security being redeemed in part; or
iii. exchange any Bearer Debt Security selected for redemption, except to
exchange it for a Registered Debt Security which is simultaneously
surrendered for redemption. (Section 404)
PAYMENT AND PAYING AGENT
We will pay principal, interest and any premium on fully registered
securities in the designated currency or currency unit at the office of a
designated paying agent. Payment of interest on fully registered securities may
be made by check mailed to the persons in whose names the Debt Securities are
registered on days specified in the Indentures or any prospectus supplement.
(Sections 406 and 410)
We will pay principal, interest and any premium on bearer securities in the
designated currency or currency unit at the office of a designated paying agent
or agents outside of the United States. Payments will be made at the offices of
the paying agent in the United States only if the designated currency is US
dollars and payment outside of the United States is illegal or effectively
precluded. (Sections 410 and 1102) If any amount payable on any Debt Security or
coupon remains unclaimed at the end of two years after such amount became due
and payable, the Paying Agent will release any unclaimed amounts to us, and the
holder of the Debt Security or coupon will look only to us for payment. (Section
1103)
The designated paying agent in the United States for the Senior Debt
Securities is The Chase Manhattan Bank located at 450 West 33rd Street, New
York, New York 10001. The paying
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<PAGE>
agent for the Subordinated Debt Securities will be designated in the applicable
prospectus supplement.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global certificates that will be deposited with a depositary
we will identify in a prospectus supplement. Global Debt Securities may be
issued in either registered or bearer form and in either temporary or definitive
form. All Global Debt Securities in bearer form will be deposited with a
depositary outside of the United States (a "Common Depositary"). We will
describe the specific terms of the depositary arrangement with respect to a
series of Debt Securities in the applicable prospectus supplement.
Other than with respect to payments, we may treat a person having a
beneficial interest in a definitive Global Debt Security as the holder of the
principal amount of Outstanding Debt Securities represented by the definitive
Global Debt Security as specified in a written statement delivered to the
Trustee by the holder of the definitive Global Debt Security, or, in the case of
a definitive Global Debt Security in bearer form, by Euro-clear or Cedel Bank
(as defined below). (Section 411) Neither we, the Trustee nor any of our
respective agents will be responsible for any aspect of the records relating to
or payments made on account of beneficial ownership interests in a Global Debt
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests. (Section 411) We anticipate that the
following provisions will apply to all depositary arrangements with a
depositary.
TEMPORARY GLOBAL SECURITIES
All or any portion of the Debt Securities of a series that are issuable as
Bearer Debt Securities initially may be represented by one or more temporary
Global Debt Securities, without interest coupons, to be deposited with a Common
Depositary in London for Morgan Guaranty Trust Company of New York, Brussels
Office, as operator of the Euro-clear System ("Euro-clear"), and Cedel Bank,
societe anonyme ("Cedel Bank") for credit to the accounts of the beneficial
owners of the Debt Securities (or to such other accounts as they may direct). On
and after an exchange date provided in the applicable prospectus supplement,
each temporary Global Debt Security will be exchangeable for definitive Debt
Securities in bearer form, registered form, definitive global bearer form or any
combination thereof, as specified in the prospectus supplement. No Bearer Debt
Security delivered in exchange for a portion of a temporary Global Debt Security
will be mailed or delivered to any location in the United States. (Sections 402
and 403)
Interest on a temporary Global Debt Security will be paid to Euro-clear
and/or Cedel Bank with respect to the portion held for its account only after
they deliver to the Trustee a certificate which states that such portion:
i. is not beneficially owned by a United States person,
ii. has not been acquired by or on behalf of a United States person or for
offer to resell or for resale to a United States person or any person
inside the United States, or
iii. if a beneficial interest has been acquired by a United States person,
(a) that such person is a financial institution (as defined in the
Internal Revenue Code of 1986, as amended (the "Code")), purchasing for
its own account or has acquired the Debt Security through a financial
institution and (b) that the Debt Securities are held by a financial
institution that has agreed in writing to comply with the requirements
of Section 165(j)(3)(A), (B) or (C) of the Code and the regulations
thereunder and that it did not purchase for resale inside the United
States.
The certificate must be based on statements provided by the beneficial
owners of interests in the temporary Global Debt Security. Each of Euro-clear
and Cedel Bank will credit the interest received by it to the accounts of the
beneficial owners of the Debt Security (or to
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<PAGE>
such other accounts as they may direct). (Section 403)
"United States person" means a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States or an estate or trust with income subject to United
States Federal income taxation regardless of its source.
DEFINITIVE GLOBAL SECURITIES
BEARER SECURITIES. The applicable prospectus supplement will describe the
exchange provisions, if any, of Debt Securities issuable in definitive global
bearer form. We will not deliver any Bearer Debt Securities delivered in
exchange for a portion of a definitive Global Debt Security to any location in
the United States. (Section 404)
U.S. BOOK-ENTRY SECURITIES. Debt Securities of a series represented by a
definitive global Registered Debt Security and deposited with or on behalf of a
depositary in the United States ("U.S. Book-Entry Debt Securities") will be
represented by a definitive Global Debt Security registered in the name of the
depositary or its nominee. Upon the issuance of a Global Debt Security and the
deposit of the Global Debt Security with the depositary, the depositary will
credit, on its book-entry registration and transfer system, the respective
principal amounts represented by that Global Debt Security to the accounts of
institutions that have accounts with such depositary or its nominee
("participants"). The accounts to be credited shall be designated by the
underwriters or agents for the sale of such U.S. Book-Entry Debt Securities or
by us, if such Debt Securities are offered and sold directly by us.
Ownership of U.S. Book-Entry Debt Securities will be limited to participants
or persons that may hold interests through participants. In addition, ownership
of U.S. Book-Entry Debt Securities will be evidenced only by, and the transfer
of that ownership will be effected only through, records maintained by the
depositary or its nominee for the definitive Global Debt Security or by
participants or persons that hold through participants.
So long as the depositary, or its nominee, is the registered owner of such
Global Debt Security, such depositary or nominee, as the case may be, will be
considered the sole owner or holder of the U.S. Book-Entry Debt Securities
represented by such Global Debt Security for all purposes under the Indenture.
Payment of principal of, and premium and interest, if any, on, U.S. Book-Entry
Debt Securities will be made to the depositary or its nominee as the registered
owner or the holder of the Global Debt Security representing such U.S.
Book-Entry Debt Securities. Owners of U.S. Book-Entry Debt Securities:
- - will not be entitled to have such Debt Securities registered in their names,
- - will not be entitled to receive physical delivery of the Debt Securities in
definitive form and
- - will not be considered the owners or holders of those Debt Securities under
the Indenture.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such limits and
such laws impair the ability to purchase or transfer U.S. Book-Entry Debt
Securities.
We expect that the depositary for U.S. Book-Entry Debt Securities of a
series, upon receipt of any payment of principal of, or premium or interest, if
any, on, the related definitive Global Debt Security, will immediately credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Debt
Security as shown on the records of such Depositary. We also expect that
payments by participants to owners of beneficial interests in such Global Debt
Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name", and
will be the responsibility of those participants.
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CERTAIN COVENANTS OF THE COMPANY
LIMITATION ON MERGER, CONSOLIDATION AND CERTAIN SALES OF ASSETS. We may,
without the consent of the holders of the Debt Securities, merge into or
consolidate with any other corporation, or convey or transfer all or
substantially all of our properties and assets to another person provided that:
i. the successor is a U.S. corporation;
ii. the successor assumes on the same terms and conditions all the
obligations under the Debt Securities and the Indentures; and
iii. immediately after giving effect to the transaction, there is no default
under the applicable Indenture. (Section 901)
The remaining or acquiring corporation will be substituted for us in the
Indentures with the same effect as if it had been an original party to the
Indenture. (Section 902)
EVENT RISK. Except for the restrictions on Secured Indebtedness and Sale
and Leaseback Transactions described below under "Senior Debt Securities,"
neither Indenture limits our ability to enter into a highly leveraged
transaction or provides special protection to holders of Debt Securities in the
event of such a transaction.
SATISFACTION AND DISCHARGE; DEFEASANCE
We may be discharged from our obligations on the Debt Securities of any
series that have matured or will mature or be redeemed within one year if we
deposit with the Trustee enough cash to pay all the principal, interest and any
premium due to the stated maturity date or redemption date of the Debt
Securities and comply with certain other conditions set forth in the applicable
Indenture. (Section 501)
Each Indenture contains a provision that permits us to elect (i) to be
discharged after 90 days from all of our obligations (subject to limited
exceptions) with respect to any series of Debt Securities then outstanding
("defeasance") and/or (ii) to be released from our obligations under certain
covenants and from the consequences of an event of default resulting from a
breach of those covenants or a cross-default ("covenant defeasance"). To make
either of the above elections, we must deposit in trust with the Trustee money
and/or U.S. Government Obligations, if the Debt Securities are denominated in
U.S. dollars, and/or Foreign Government Securities if the Debt Securities are
denominated in a foreign currency, which through the payment of principal and
interest under their terms will provide sufficient money, without reinvestment,
to repay in full those Senior Debt Securities. As a condition to defeasance or
covenant defeasance, we must deliver to the Trustee an opinion of counsel that
the holders of the Debt Securities will not recognize income, gain or loss for
Federal income tax purposes as a result of the defeasance. (Section 503)
If either of the above events occur, the holders of the Debt Securities of
the series will not be entitled to the benefits of the Indenture, except for
registration of transfer and exchange of Debt Securities and replacement of
lost, stolen or mutilated Debt Securities. (Sections 501 and 503)
EVENTS OF DEFAULT, NOTICE AND WAIVER
If an Event of Default for any series of Debt Securities occurs and
continues, the Trustee or the holders of at least 25% in principal amount of the
Debt Securities of the series may declare the entire principal amount of all the
Debt Securities of that series to be due and payable immediately. Subject to
certain conditions, the declaration may be annulled and past defaults (except
uncured payment defaults and certain other specified defaults) may be waived by
the holders of a majority of the principal amount of the Debt Securities of that
series. (Sections 602 and 613)
Each Indenture defines an Event of Default with respect to any series of
Debt Securities as one or more of the following events:
i. failure to pay interest on any Debt Security of the series for 30 days
when due;
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ii. failure to pay the principal or any premium on any Debt Securities of
the series when due;
iii. failure to make any sinking fund payment for 30 days when due;
iv. failure to perform any other covenant in the Debt Securities of such
series or in the applicable Indenture with respect to Debt Securities
of such series for 90 days after being given notice; and
v. certain events of bankruptcy, insolvency and reorganization.
An Event of Default for a particular series of Debt Securities does not
necessarily constitute an Event of Default for any other series of Debt
Securities issued under an Indenture. (Section 601)
Each Indenture requires the Trustee to, within 90 days after the occurrence
of a default known to it with respect to any outstanding series of Debt
Securities, give the holders of that series notice of the default if uncured or
not waived. However, the Trustee may withhold this notice if it determines in
good faith that the withholding of this notice is in the interest of those
holders, except that the Trustee may not withhold this notice in the case of a
payment default. The term "default" for the purpose of this provision means any
event that is, or after notice or lapse of time or both would become, an Event
of Default with respect to Debt Securities of that series. (Section 702)
Other than the duty to act with the required standard of care during an
Event of Default, a Trustee is not obligated to exercise any of its rights or
powers under the applicable Indenture at the request or direction of any of the
holders of Debt Securities, unless the holders have offered to the Trustee
reasonable indemnification. (Section 703) Each Indenture provides that the
holders of a majority in principal amount of outstanding Debt Securities of any
series may in certain circumstances direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or other power conferred on the Trustee. (Section 612)
Each Senior Indenture includes a covenant that we will file annually with
the Trustee a certificate of no default, or specifying any default that exists.
(Section 1106)
MODIFICATION OF THE INDENTURES
We and the Trustee may modify the Indentures without the consent of the
holders for limited purposes, including adding to our covenants or Events of
Default, establishing forms or terms of Debt Securities, curing ambiguities and
other purposes which do not adversely affect the holders in any material
respect. (Section 1001)
We and the Trustee may make modifications and amendments to each Indenture
with the consent of the holders of a majority in principal amount of the
outstanding Debt Securities of all affected series. However, without the consent
of each affected holder, no modification may:
i. change the Stated Maturity of any Debt Security;
ii. reduce the principal, premium (if any) or rate of interest on any Debt
Security;
iii. change any place of payment or the currency in which any Debt Security
is payable;
iv. impair the right to enforce any payment after the Stated Maturity or
Redemption Date;
v. adversely affect the terms of any conversion right;
vi. reduce the percentage of holders of outstanding Debt Securities of any
series required to consent to any modification, amendment or waiver
under the Indenture;
vii. change any of our obligations, with respect to outstanding Debt
Securities of a series, to maintain an office or agency in the places
and for the purposes specified in the Indenture for such series; or
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viii. change the provisions in the Indenture that relate to its modification
or amendment.
(Section 1002)
MEETINGS
The Indentures contain provisions for convening meetings of the holders of
Debt Securities of a series. (Section 1401) A meeting may be called at any time
by the Trustee and also, upon request, by us or the holders of at least 10% in
principal amount of the outstanding Debt Securities of such series, in any such
case upon notice given in accordance with "Notices" below. (Section 1402)
Persons holding a majority in principal amount of the outstanding Debt
Securities of a series will constitute a quorum at a meeting. A meeting called
by us or the Trustee that did not have a quorum may be adjourned for not less
than 10 days, and if there is not a quorum at the adjourned meeting, the meeting
may be further adjourned for not less than 10 days. Except for any consent which
must be given by the holders of each Debt Security affected by certain
modifications or amendments of the Indenture (which we have described above
under "Modification of the Indentures"), any resolution presented at a meeting
at which a quorum is present may be adopted by the affirmative vote of the
holders of a majority in principal amount of the outstanding Debt Securities of
that series. But any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action which may be
made, given or taken by the holders of a specified percentage, which is equal to
or less than a majority, in principal amount of outstanding Debt Securities of a
series may be adopted at a meeting at which a quorum is present by the
affirmative vote of the holders of such specified percentage in principal amount
of the outstanding Debt Securities of that series. Any resolution passed or
decision taken at any meeting of holders of Debt Securities of any series duly
held in accordance with an Indenture will be binding on all holders of Debt
Securities of that series and the related coupons. However, the Indentures
provide that if any action is taken with respect to any consent, waiver or other
action which the Indentures expressly provide may be given by the holders of a
specified percentage of outstanding Debt Securities of all series affected by
the modification or amendment (acting as one class), only the principal amount
of outstanding Debt Securities of any series represented at a meeting at which a
quorum is present and voting in favor of such action will be counted for
purposes of calculating the aggregate principal amount of outstanding Debt
Securities of all series affected by the modification or amendment favoring such
action. (Section 1404)
NOTICES
In most instances, notices to holders of Bearer Debt Securities will be
given by publication at least once in a daily newspaper in The City of New York
and in London and in such other city or cities as may be specified in such
Bearer Debt Securities and will be mailed to such persons whose names and
addresses were previously filed with the applicable Trustee, within the time
prescribed for the giving of such notice. Notice to holders of Registered Debt
Securities will be given by mail to the addresses of such holders as they appear
in the Security Register. (Section 106)
TITLE
Title to any Bearer Debt Securities and any related coupons will pass by
delivery. We, the Trustee and any agent of ours or the Trustee may treat the
holder of any Bearer Debt Security or related coupon and, prior to due
presentment for registration of transfer, the registered owner of any Registered
Debt Security (including Registered Debt Securities in global registered form),
as the absolute owner of that Security (whether or not such Debt Security or
coupon shall be overdue and notwithstanding any notice to the contrary) for the
purpose of making payment and for all other purposes. (Section 407)
REPLACEMENT OF SECURITIES COUPONS
Debt Securities or coupons that have been mutilated will be replaced by us
at the expense of the holder upon surrender of such mutilated Debt Security or
coupon to the security registrar.
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Debt Securities or coupons that become destroyed, stolen or lost will be
replaced by us at the expense of the holder upon delivery to the security
registrar of evidence of its destruction, loss or theft satisfactory to us and
the security registrar. In the case of a destroyed, lost or stolen Debt Security
or coupon, the holder of the Debt Security or coupon may be required to
indemnify the security registrar and us before a replacement Debt Security will
be issued. (Section 405)
GOVERNING LAW
The Indentures, the Debt Securities and the coupons will be governed by, and
construed under, the laws of the State of New York.
CONCERNING THE TRUSTEES
We may from time to time maintain lines of credit, and have other customary
banking relationships, with the Senior Trustee or the Subordinated Trustee.
SENIOR DEBT SECURITIES
The Senior Debt Securities will be unsecured and will rank equally with all
of our other unsecured and non-subordinated debt.
CERTAIN COVENANTS IN THE SENIOR INDENTURE
LIMITATION ON SECURED INDEBTEDNESS. We will not, and will not permit any
Restricted Subsidiary to, create, assume, incur or guarantee any Secured
Indebtedness without securing the Senior Debt Securities equally and ratably
with, or prior to, such Secured Indebtedness unless (i) the aggregate amount of
all Secured Indebtedness that the Senior Debt Securities are not secured equally
and ratably with and (ii) the discounted present value of all net rentals
payable under leases entered into in connection with Sale and Leaseback
Transactions (as defined below) entered into after July 15, 1985 (except those
leases entered into by a Restricted Subsidiary before the time it became a
Restricted Subsidiary) would not exceed 10% of Consolidated Net Tangible Assets.
(Section 1104 of Senior Indenture)
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS. We will not, and will not
permit any Restricted Subsidiary to, enter any lease longer than three years
(except leases of newly acquired, improved or constructed property) covering any
of our Principal Property or any Restricted Subsidiary that is sold to any other
person in connection with such lease (a "Sale and Leaseback Transaction"),
unless either;
a. the sum of (i) the discounted present value of all net rentals payable
under all such leases entered into after July 15, 1985 (except those
leases entered into by a Restricted Subsidiary before the time it became
a Restricted Subsidiary) and (ii) the aggregate amount of all Secured
Indebtedness that the Senior Debt Securities are not secured equally and
ratably with does not exceed 10% of Consolidated Net Tangible Assets, or
b. an amount equal to the greater of (x) the net proceeds to us or a
Restricted Subsidiary from such sale and (y) the discounted present
value of all net rentals payable thereunder, is applied within 180 days
to the retirement of our long-term debt or a such debt of a Restricted
Subsidiary (other than such debt which is subordinated to the Senior
Debt Securities or which is owing to us or a Restricted Subsidiary).
(Section 1105 of Senior Indenture)
The holders of a majority in principal amount of all affected series of
outstanding Debt Securities may waive compliance with each of the above
covenants. (Section 1107 of Senior Indenture)
CERTAIN DEFINITIONS.
"Secured Indebtedness" will mean our indebtedness or indebtedness of a
Restricted Subsidiary for borrowed money secured by any lien upon (or in respect
of any conditional sale or other title retention agreement covering) any
Principal Property or any stock or indebtedness
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of a Restricted Subsidiary, but excluding from such definition all indebtedness:
i. outstanding on July 15, 1985, secured by liens (or arising from
conditional sale or other title retention agreements) existing on that
date;
ii. incurred after July 15, 1985 to finance the acquisition, improvement or
construction of property and either secured by purchase money mortgages
or liens placed on such property within 180 days of acquisition,
improvement or construction or arising from conditional sale or other
title retention agreements;
iii. secured by liens on Principal Property or on the stock or indebtedness
of Restricted Subsidiaries, and, in either case, existing at the time
of acquisition thereof;
iv. owing to us or any Restricted Subsidiary;
v. secured by liens (or conditional sale or other title retention devices)
existing at the time a corporation became or becomes a Restricted
Subsidiary in the case of a corporation which shall have become or
becomes a Restricted Subsidiary after July 15, 1985;
vi. arising from any Sale and Leaseback Transaction;
vii. incurred to finance the acquisition or construction of property secured
by liens in favor of any country or any political subdivision thereof;
and
viii. constituting any replacement, extension or renewal of any such
indebtedness (to the extent such indebtedness is not increased).
"Principal Property" will mean land, land improvements, buildings and
associated factory, laboratory and office equipment (excluding all products that
is marketed by us or any or our subsidiaries) constituting a manufacturing,
development, warehouse, service or office facility owned by or leased to us or a
Restricted Subsidiary, located within the United States and having an
acquisition cost plus capitalized improvements in excess of 0.15% of
Consolidated Net Tangible Assets as of the date of such determination, other
than any such property financed through the issuance of tax-exempt governmental
obligations, or which the Board of Directors determines is not of material
importance to us and our Restricted Subsidiaries taken as a whole, or in which
the interest of us and all of our subsidiaries does not exceed 50%.
"Consolidated Net Tangible Assets" will mean the total assets of us and our
subsidiaries, less current liabilities and certain intangible assets (not
including program products).
"Restricted Subsidiary" will mean:
i. any of our subsidiaries which has substantially all its property in the
United States, which owns or is a lessee of any Principal Property and
in which our investment and the investment of our subsidiaries exceeds
0.15% of Consolidated Net Tangible Assets as of the date of such
determination, other than certain financing subsidiaries and
subsidiaries formed or acquired after July 15, 1985 for the purpose of
acquiring the stock, business or assets of another person and that have
not and do not acquire all or any substantial part of our business or
assets or the business or assets of any Restricted Subsidiary; and
ii. any other subsidiary the Board of Directors may designate as a
Restricted Subsidiary.
(Section 101 of Senior Indenture)
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SUBORDINATED DEBT SECURITIES
The Subordinated Debt Securities will be unsecured. The Subordinated Debt
Securities will be subordinate in right of payment to all Senior Indebtedness.
(Section 1501 of Subordinated Indenture) In addition, claims of creditors of our
subsidiaries, including trade creditors, secured creditors and creditors holding
guarantees issued by our subsidiaries, and claims of preferred stockholders of
our subsidiaries generally will have priority with respect to the assets and
earnings of such subsidiaries over the claims of our creditors, including
holders of the Subordinated Debt Securities, even though such obligations may
not constitute Senior Indebtedness. The Subordinated Debt Securities, therefore,
will be effectively subordinated to creditors (including trade creditors) and
preferred stockholders of our subsidiaries.
The Subordinated Indenture defines "Senior Indebtedness" to mean the
principal of, premium, if any, and interest on, (i) all indebtedness for money
borrowed by us (including all indebtedness of another person for money borrowed
that we guarantee) other than the Subordinated Debt Securities, whether
outstanding on the date of execution of the Subordinated Indenture or thereafter
created, assumed or incurred, unless such indebtedness expressly states to have
the same rank as the Subordinated Debt Securities or to rank junior to the
Subordinated Debt Securities; and (ii) any deferrals, renewals or extensions of
any such Senior Indebtedness, except that Senior Indebtedness will not include:
i. any of our obligations to our subsidiaries;
ii. any liability for Federal, state, local or other taxes owed or owing by
us;
iii. any accounts payable or other liability to trade creditors arising in
the ordinary course of business (including guarantees thereof or
instruments evidencing such liabilities);
iv. any indebtedness, guarantee or obligation of ours which is expressly
subordinate or junior in right of payment in any respect to any other
indebtedness, guarantee or obligation of ours, including any senior
subordinated indebtedness and any subordinated obligations;
v. any obligations with respect to any capital stock; or
vi. any indebtedness incurred in violation of the Subordinated Indenture.
There is no limitation on our ability to issue additional Senior
Indebtedness. The Senior Debt Securities constitute Senior Indebtedness under
the Subordinated Indenture. The Subordinated Debt Securities will rank equally
with our other subordinated indebtedness.
Under the Subordinated Indenture, no payment may be made on the Subordinated
Debt Securities and no purchase, redemption or retirement of any Subordinated
Debt Securities may be made in the event (i) any Senior Indebtedness is not paid
when due or (ii) the maturity of any Senior Indebtedness is accelerated as a
result of a default, unless the default has been cured or waived and the
acceleration has been rescinded or such Senior Indebtedness has been paid in
full. We may, however, pay the Subordinated Debt Securities without regard to
the foregoing if the Subordinated Trustee and us receive written notice
approving such payment from the Representatives of the holders of Senior
Indebtedness with respect to which either of the events set forth above has
occurred and is continuing. During the continuance of any default with respect
to any Senior Indebtedness pursuant to which its maturity may be accelerated
immediately without further notice or the expiration of any applicable grace
periods, we may not pay the Subordinated Debt Securities for 179 days after the
receipt by the Subordinated Trustee of written notice of such default from the
Representatives of the holders of Senior Indebtedness. If the holders of Senior
Indebtedness or the Representatives of such holders have not accelerated the
maturity of such Senior Indebtedness at the end of the 179 day period, we may
resume payments on the Subordinated Debt Securities. Not more than
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one such notice may be given in any consecutive 360-day period, irrespective of
the number of defaults with respect to Senior Indebtedness during such period.
(Section 1503 of Subordinated Indenture)
In the event that we pay or distribute our assets to creditors upon a total
or partial liquidation, dissolution or reorganization of us or our property, the
holders of Senior Indebtedness will be entitled to receive payment in full of
the Senior Indebtedness before the holders of Subordinated Debt Securities are
entitled to receive any payment. Until the Senior Indebtedness is paid in full,
any payment or distribution to which holders of Subordinated Debt Securities
would be entitled but for the subordination provisions of the Subordinated
Indenture (other than distributions of stock and certain debt securities
subordinated to the Senior Indebtedness) will be made to holders of the Senior
Indebtedness as their interests may appear. (Section 1502 of Subordinated
Indenture) If a distribution is made to holders of Subordinated Debt Securities
that, due to the subordination provisions, should not have been made to them,
such holders of Subordinated Debt Securities are required to hold it in trust
for the holders of Senior Indebtedness, and pay it over to them as their
interests may appear. (Section 1505 of Subordinated Indenture)
If payment of the Subordinated Debt Securities is accelerated because of an
Event of Default, either we or the Subordinated Trustee will promptly notify the
holders of Senior Indebtedness or the Representatives of such holders of the
acceleration. We may not pay the Subordinated Debt Securities until five
Business Days after the holders or the Representatives of the Senior
Indebtedness receive notice of such acceleration. Thereafter, we may pay the
Subordinated Debt Securities only if the subordination provisions of the
Subordinated Indenture otherwise permit payment at that time. (Section 1505 of
Subordinated Indenture)
As a result of the subordination provisions contained in the Subordinated
Indenture, in the event of insolvency, our creditors who are holders of Senior
Indebtedness may recover more, ratably, than the holders of Subordinated Debt
Securities, and our creditors who are not holders of Senior Indebtedness may
recover less, ratably, than holders of Senior Indebtedness and may recover more,
ratably, than the holders of Subordinated Indebtedness.
DESCRIPTION OF THE PREFERRED STOCK
The following is a description of certain general terms and provisions of
the Preferred Stock. The particular terms of any series of Preferred Stock will
be described in the applicable prospectus supplement.
The following summary of terms of our Preferred Stock is not complete. You
should refer to the provisions of our Certificate of Incorporation and the
certificate of amendment relating to each series of the Preferred Stock (the
"Certificate of Amendment"), which will be filed with the SEC at or prior to the
time of issuance of such series of the Preferred Stock.
We are authorized to issue up to 150,000,000 shares of Preferred Stock, par
value $.01 per share. As of September 30, 1998, 2,597,261 shares of Series A
7 1/2% Preferred Stock, liquidation preference $100 per share, were outstanding.
Subject to limitations prescribed by law, the Board of Directors is authorized
at any time to:
- issue one or more series of Preferred Stock;
- determine the designation for any series by number, letter or title that
shall distinguish the series from any other series of Preferred Stock; and
- determine the number of shares in any series.
The Board of Directors is authorized to determine, for each series of
Preferred Stock, and the prospectus supplement will set forth with respect to
such series the following information:
- whether dividends on that series of Preferred Stock will be cumulative,
noncumulative, or partially cumulative;
- the dividend rate (or method for determining the rate);
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- the liquidation preference per share of that series of Preferred Stock,
if any;
- any conversion provisions applicable to that series of Preferred Stock;
- any redemption or sinking fund provisions applicable to that series of
Preferred Stock;
- the voting rights of that series of Preferred Stock, if any; and
- the terms of any other preferences or rights, if any, applicable to that
series of Preferred Stock.
DIVIDENDS
Holders of Preferred Stock will be entitled to receive, when, as and if
declared by the Board of Directors, cash dividends at the rates and on the dates
as set forth in the prospectus supplement. Except as set forth below, no
dividends will be declared or paid on any series of Preferred Stock unless full
dividends for all series of Preferred Stock (including cumulative dividends
still owing, if any) have been or contemporaneously are declared and paid. When
those dividends are not paid in full, dividends will be declared pro-rata so
that the amount of dividends declared per share on each series of Preferred
Stock will in all cases bear to each other series the same ratio that (x)
accrued dividends per share for each respective series of Preferred Stock bear
to (y) aggregate accrued dividends for all outstanding shares of Preferred
Stock. In addition, generally, unless all dividends on the Preferred Stock have
been paid, no dividends will be declared or paid on the Capital Stock and
generally we may not redeem or purchase any Capital Stock.
CONVERTIBILITY
No series of Preferred Stock will be convertible into, or exchangeable for,
other securities or property except as set forth in the applicable prospectus
supplement.
REDEMPTION AND SINKING FUND
No series of Preferred Stock will be redeemable or receive the benefit of a
sinking fund except as set forth in the applicable prospectus supplement.
LIQUIDATION
In the event we voluntarily or involuntarily liquidate, dissolve or wind up
our affairs, the holders of each series of Preferred Stock will be entitled to
receive the liquidation preference per share specified in the prospectus
supplement plus an amount equal to accrued and unpaid dividends, if any, before
any distribution to the holders of Capital Stock. If the amounts payable with
respect to Preferred Stock are not paid in full, the holders of Preferred Stock
will share ratably in any distribution of assets based upon the aggregate
liquidation preference for all outstanding shares for each series. After the
holders of shares of Preferred Stock are paid in full, they will have no right
or claim to any of our remaining assets.
VOTING
Except as indicated below or in the prospectus supplement, the holders of
Preferred Stock will not be entitled to vote. If the equivalent of six quarterly
dividends payable on any series of Preferred Stock is in default, the number of
directors constituting our Board of Directors will be increased by two and the
holders of such series of Preferred Stock, voting together as a class with all
other series of Preferred Stock entitled to vote on such election of directors,
will be entitled to elect those additional directors. In the event of such a
default, the Board of Directors will call a special meeting for the holders of
all affected series within 10 business days of the default for the purpose of
electing the additional directors. Alternatively, the holders of record of a
majority of the outstanding shares of all affected series who are entitled to
participate in the election of directors may elect such additional directors by
written consent. If all accumulated dividends on any series of Preferred Stock
have been paid in full, the holders of shares of such series will no longer have
the right to vote on directors and the term of office of each director so
elected will terminate and the number of our directors will, without further
action, be reduced by two.
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Unless otherwise specified in a prospectus supplement, the vote of the
holders of a majority of the outstanding shares of each series of Preferred
Stock voting together as a class, is required to authorize any amendment,
alteration or repeal of the Restated Certificate of Incorporation or any
Certificate of Amendment which would adversely affect the powers, preferences,
or special rights of the Preferred Stock including authorizing any class of
stock with superior dividend and liquidation preferences.
MISCELLANEOUS
The holders of Preferred Stock will have no preemptive rights. The Preferred
Stock, when issued, will be fully paid and nonassessable. Shares of Preferred
Stock that we redeem or otherwise reacquire will resume the status of authorized
and unissued shares of Preferred Stock undesignated as to series, and will be
available for subsequent issuance. There are no restrictions on repurchase or
redemption of the Preferred Stock while there is any arrearage on sinking fund
installments except as may be set forth in a prospectus supplement. Neither the
par value nor the liquidation preference is indicative of the price at which the
Preferred Stock will actually trade on or after the date of issuance. Payment of
dividends on any series of Preferred Stock may be restricted by loan agreements,
indentures and other transactions we may enter into.
NO OTHER RIGHTS
The shares of a series of Preferred Stock will not have any preferences,
voting powers or relative, participating, optional or other special rights
except as set forth above or in the prospectus supplement, the Certificate of
Incorporation or Certificate of Amendment or as otherwise required by law.
TRANSFER AGENT AND REGISTRAR
The transfer agent for each series of Preferred Stock will be described in
the prospectus supplement.
DESCRIPTION OF THE DEPOSITARY SHARES
We may, at our option, elect to offer fractional shares of Preferred Stock,
rather than full shares of Preferred Stock. If we do, we will issue to the
public receipts for Depositary Shares and each of these Depositary Shares will
represent a fraction (to be set forth in the prospectus supplement) of a share
of a particular series of Preferred Stock. Each owner of a Depositary Share will
be entitled, in proportion to the applicable fractional interest in shares of
Preferred Stock underlying that Depositary Share, to all rights and preferences
of the Preferred Stock underlying that Depositary Share. Those rights include
dividend, voting, redemption and liquidation rights.
The shares of Preferred Stock underlying the Depositary Shares will be
deposited with a bank or trust company selected by us (the "Depositary") under a
Deposit Agreement (the "Deposit Agreement") between us, the Depositary and the
holders of the Depositary Receipts (defined below). The Depositary will be the
transfer agent, registrar and dividend disbursing agent for the Depositary
Shares.
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Depositary Agreement ("Depositary Receipts"). Holders of
Depositary Receipts agree to be bound by the Deposit Agreement, which requires
holders to take certain actions such as filing proof of residence and paying
certain charges.
The summary of terms of the Depositary Shares contained in this prospectus
is not complete. You should refer to the forms of the Deposit Agreement, our
Certificate of Incorporation and the Certificate of Amendment for the applicable
series of Preferred Stock that are, or will be, filed with the SEC.
17
<PAGE>
DIVIDENDS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the series of Preferred Stock underlying
the Depositary Shares to the record holders of Depositary Receipts in proportion
to the number of Depositary Shares owned by those holders on the relevant record
date, which will be the same date as the record date for the Preferred Stock.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Receipts
that are entitled to receive the distribution, unless the Depositary determines
that it is not feasible to make the distribution. If this occurs, the Depositary
may, with our approval, adopt another method for the distribution, including
selling the property and distributing the net proceeds to the holders.
LIQUIDATION PREFERENCE
In the event of our voluntary or involuntary liquidation, dissolution or
winding up, the holders of each Depositary Share will be entitled to receive the
fraction of the liquidation preference accorded each share of the applicable
series of Preferred Stock, as set forth in the applicable prospectus supplement.
REDEMPTION
If a series of Preferred Stock underlying the Depositary Shares is subject
to redemption, the Depositary Shares will be redeemed from the proceeds received
by the Depositary resulting from the redemption, in whole or in part, of
Preferred Stock held by the Depositary. Whenever we redeem any Preferred Stock
held by the Depositary, the Depositary will redeem, as of the same redemption
date, the number of Depositary Shares representing the Preferred Stock so
redeemed. The Depositary will mail the notice of redemption to the record
holders of the Depositary Receipts promptly upon receiving the notice from us
and not less than 35 nor more than 60 days prior to the date fixed for
redemption of the Preferred Stock and the Depositary Shares.
VOTING
Upon receipt of notice of any meeting at which the holders of Preferred
Stock are entitled to vote, the Depositary will mail the information contained
in the notice of meeting to the record holders of the Depositary Receipts
underlying the Preferred Stock. Each record holder of those Depositary Receipts
on the record date (which will be the same date as the record date for the
Preferred Stock) will be entitled to instruct the Depositary as to the exercise
of the voting rights pertaining to the amount of Preferred Stock underlying that
holder's Depositary Shares. The Depositary will try, as far as practicable, to
vote the Preferred Stock underlying the Depositary Shares in accordance with
such instructions, and we will agree to take all action which may be deemed
necessary by the Depositary in order to enable the Depositary to do so. The
Depositary will not vote the Preferred Stock to the extent that it does not
receive specific instructions from the holders of Depositary Receipts.
WITHDRAWAL OF PREFERRED STOCK
Owners of Depositary Shares are entitled, upon surrender of Depositary
Receipts at the principal office of the Depositary and payment of any unpaid
amount due the Depositary, to receive the number of whole shares of Preferred
Stock underlying the Depositary Shares. Partial shares of Preferred Stock will
not be issued. Such holders of Preferred Stock will not be entitled to deposit
the shares under the Deposit Agreement or to receive Depositary Receipts
evidencing Depositary Shares for the Preferred Stock.
AMENDMENT AND TERMINATION OF DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may be amended at any time and from time to
time by agreement between us and the Depositary. However, any amendment which
materially and adversely alters the rights of the holders of Depositary Shares
(other than any change in fees) will not be effective unless the amendment has
been approved by at least a
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<PAGE>
majority of the Depositary Shares then outstanding. The Deposit Agreement may be
terminated by us or the Depositary only if (i) all outstanding Depositary Shares
have been redeemed or (ii) there has been a final distribution in respect of the
Preferred Stock in connection with our dissolution and such distribution has
been made to all the holders of Depositary Shares.
CHARGES OF DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will also pay
charges of the Depositary in connection with the initial deposit of the
Preferred Stock and the initial issuance of the Depositary Shares, any
redemption of the Preferred Stock and all withdrawals of Preferred Stock by
owners of Depositary Shares. Holders of Depositary Receipts will pay transfer,
income and other taxes and governmental charges and certain other charges as
provided in the Deposit Agreement to be for their accounts. In certain
circumstances, the Depositary may refuse to transfer Depositary Shares, may
withhold dividends and distributions and sell the Depositary Shares evidenced by
such Depositary Receipt if the charges are not paid.
MISCELLANEOUS
The Depositary will forward to the holders of Depositary Receipts all
reports and communications we deliver to the Depositary that we are required to
furnish to the holders of the Preferred Stock. In addition, the Depositary will
make available for inspection by holders of Depositary Receipts at the principal
office of the Depositary, and at such other places as it may from time to time
deem advisable, any reports and communications we deliver to the Depositary as
the holder of Preferred Stock.
Neither we nor the Depositary will be liable if either of us are prevented
or delayed by law or any circumstance beyond our control in performing our
respective obligations under the Deposit Agreement. Our obligations and those of
the Depositary will be limited to performance in good faith of our respective
duties under the Deposit Agreement. Neither we nor the Depositary will be
obligated to prosecute or defend any legal proceeding in respect of any
Depositary Shares or Preferred Stock unless satisfactory indemnity is furnished.
We and the Depositary may rely on written advice of counsel or accountants, on
information provided by holders of Depositary Receipts or other persons believed
in good faith to be competent to give such information and on documents believed
to be genuine and to have been signed or presented by the proper party or
parties.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering a notice to us of its
election to do so. We may remove the Depositary at any time. Any such
resignation or removal will take effect upon the appointment of a successor
Depositary and its acceptance of such appointment. The successor Depositary must
be appointed within 60 days after delivery of the notice for resignation or
removal and must be a bank or trust company having its principal office in the
United States of America and having a combined capital and surplus of at least
$150,000,000.
FEDERAL INCOME TAX CONSEQUENCES
Owners of the Depositary Shares will be treated for Federal income tax
purposes as if they were owners of the Preferred Stock underlying the Depositary
Shares. Accordingly, such owners will be entitled to take into account for
Federal income tax purposes income and deductions to which they would be
entitled if they were holders of such Preferred Stock. In addition, (i) no gain
or loss will be recognized for Federal income tax purposes upon the withdrawal
of Preferred Stock in exchange for Depositary Shares, (ii) the tax basis of each
share of Preferred Stock to an exchanging owner of Depositary Shares will, upon
such exchange, be the same as the aggregate tax basis of the Depositary Shares
exchanged, and (iii) the holding period for Preferred Stock in the hands of an
exchanging owner of Depositary Shares will include the period during which such
person owned such Depositary Shares.
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<PAGE>
DESCRIPTION OF THE CAPITAL STOCK
As of the date of this prospectus, we are authorized to issue up to
1,875,000,000 shares of Capital Stock, $0.50 par value per share. As of
September 30, 1998, 922,851,792 shares of Capital Stock were outstanding.
DIVIDENDS. Holders of Capital Stock are entitled to receive dividends, in
cash, securities, or property, as may from time to time be declared by our Board
of Directors (subject to the rights of the holders of the preferred stock).
VOTING. Each holder of Capital Stock is entitled to one vote per share on
all matters requiring a vote of the stockholders (subject to the provisions of
our By-laws with respect to the closing of the transfer books and the fixing of
a record date).
RIGHTS UPON LIQUIDATION. In the event of our voluntary or involuntary
liquidation, dissolution, or winding up, the holders of Capital Stock shall be
entitled to share equally in our assets available for distribution after payment
in full of all debts and after the holders of preferred stock have received
their liquidation preferences in full.
MISCELLANEOUS. Shares of Capital Stock are not redeemable and have no
subscription, conversion or preemptive rights.
DESCRIPTION OF THE WARRANTS
We may issue Warrants for the purchase of Debt Securities, Preferred Stock
or Capital Stock. Warrants may be issued independently or together with Debt
Securities, Preferred Stock or Capital Stock and may be attached to or separate
from any offered Securities. Each series of Warrants will be issued under a
separate warrant agreement (a "Warrant Agreement") to be entered into between us
and a bank or trust company, as warrant agent (the "Warrant Agent"). The Warrant
Agent will act solely as our agent in connection with the Warrants and will not
have any obligation or relationship of agency or trust for or with any holders
or beneficial owners of Warrants. This summary of certain provisions of the
Warrants is not complete. You should refer to the provisions of the Warrant
Agreement that will be filed with the SEC in connection with the offering of
Warrants for the complete terms of the Warrant Agreement.
DEBT WARRANTS
The prospectus supplement relating to a particular issue of Warrants to
issue Debt Securities ("Debt Warrants") will describe the terms of the Debt
Warrants, including the following:
- - the title of the Debt Warrants;
- - the offering price for the Debt Warrants, if any;
- - the aggregate number of the Debt Warrants;
- - the designation and terms of the Debt Securities purchasable upon exercise of
the Debt Warrants;
- - if applicable, the designation and terms of the Debt Securities that the Debt
Warrants are issued with and the number of Debt Warrants issued with each
Debt Security;
- - if applicable, the date from and after which the Debt Warrants and any Debt
Securities issued with them will be separately transferable;
- - the principal amount of Debt Securities that may be purchased upon exercise
of a Debt Warrant and the price at which the Debt Securities may be
purchased upon exercise (which may be payable in cash, securities or other
property);
- - the dates on which the right to exercise the Debt Warrants will commence and
expire;
- - if applicable, the minimum or maximum amount of the Debt Warrants that may be
exercised at any one time;
- - whether the Debt Warrants represented by the Debt Warrant certificates or
Debt Securities that may be issued upon exercise of the Debt Warrants will
be issued in registered or bearer form;
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<PAGE>
- - information with respect to book-entry procedures, if any;
- - the currency or currency units in which the offering price, if any, and the
exercise price are payable;
- - if applicable, a discussion of material United States federal income tax
considerations;
- - the antidilution provisions of the Debt Warrants, if any;
- - the redemption or call provisions, if any, applicable to the Debt Warrants;
and
- - any additional terms of the Debt Warrants, including terms, procedures, and
limitations relating to the exchange and exercise of the Debt Warrants.
STOCK WARRANTS
The prospectus supplement relating to a particular issue of Warrants to
issue Capital Stock or Preferred Stock will describe the terms of the Warrants,
including the following:
- - the title of the Warrants;
- - the offering price for the Warrants, if any;
- - the aggregate number of the Warrants;
- - the designation and terms of the Capital Stock or Preferred Stock that may be
purchased upon exercise of the Warrants;
- - if applicable, the designation and terms of the Securities that the Warrants
are issued with and the number of Warrants issued with each Security;
- - if applicable, the date from and after which the Warrants and any Securities
issued with the Warrants will be separately transferable;
- - the number of shares of Capital Stock or Preferred Stock that may be
purchased upon exercise of a Warrant and the price at which such shares may
be purchased upon exercise;
- - the dates on which the right to exercise the Warrants shall commence and
expire;
- - if applicable, the minimum or maximum amount of the Warrants that may be
exercised at any one time;
- - the currency or currency units in which the offering price, if any, and the
exercise price are payable;
- - if applicable, a discussion of material United States federal income tax
considerations;
- - the antidilution provisions of the Warrants, if any;
- - the redemption or call provisions, if any, applicable to the Warrants; and
- - any additional terms of the Warrants, including terms, procedures, and
limitations relating to the exchange and exercise of the Warrants.
PLAN OF DISTRIBUTION
We may sell the Securities (i) through underwriters, (ii) through agents or
(iii) directly to a limited number of institutional purchasers or to a single
purchaser. The applicable prospectus supplement will set forth the terms of the
offering of the Securities, including the following:
- - the name or names of any underwriters;
- - the purchase price and the proceeds we will receive from such sale;
- - any underwriting discounts and other items constituting underwriters'
compensation;
- - any initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers; and
- - any securities exchanges on which the Securities of such series may be
listed.
If underwriters are used in the sale, the Securities will be acquired by the
underwriters for their own account and may be resold from time to time in one or
more transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. The Securities may be
either offered to the public through underwriting syndicates represented by
managing underwriters or by underwriters without a
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<PAGE>
syndicate. The obligations of the underwriters to purchase Securities will be
subject to certain conditions precedent and the underwriters will be obligated
to purchase all the Securities of a series if any are purchased. Any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
Securities may be sold directly by us or through agents designated by us
from time to time. Any agent involved in the offer or sale of the Securities in
respect of which this prospectus is delivered will be named, and any commissions
payable by us to such agent will be set forth, in the prospectus supplement.
Unless otherwise indicated in the prospectus supplement, any agent will be
acting on a best efforts basis for the period of its appointment.
We may authorize agents or underwriters to solicit offers by certain types
of institutions to purchase Securities from us at the public offering price set
forth in the prospectus supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future. The
conditions to these contracts and the commissions payable for solicitation of
such contracts will be set forth in the applicable prospectus supplement.
Agents and underwriters may be entitled to indemnification by us against
certain civil liabilities, including liabilities under the Securities Act of
1933, or to contribution with respect to payments which the agents or
underwriters may be required to make relating to such liabilities. Agents and
underwriters may be customers of, engage in transactions with, or perform
services for, us in the ordinary course of business.
Each series of Securities will be a new issue of securities with no
established trading market. Any underwriter may make a market in such
Securities, but will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for any Securities.
LEGAL OPINIONS
The legality of the Securities will be passed upon by David S. Hershberg,
our Vice President and Assistant General Counsel. Mr. Hershberg, together with
members of his family, owns, has options to purchase and has other interests in
shares of our common stock.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to our Annual Report on Form 10-K for the year ended December 31, 1997
have been incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of that firm as experts in
auditing and accounting.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following statement sets forth the estimated amounts of expenses, other
than underwriting discounts, to be borne by us in connection with the offering
described in this Registration Statement:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee............. $1,112,000
Trustee's Fees.................................................. 50,000
Printing and Engraving Expenses................................. 120,000
Rating Agency Fees.............................................. 150,000
Accounting Fees and Expenses.................................... 50,000
Legal Fees and Expenses......................................... 170,000
Blue Sky Fees and Expenses...................................... 50,000
Listing Fee..................................................... 50,000
Miscellaneous Expenses.......................................... 20,000
---------
Total Expenses................................................ $1,772,000
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our By-Laws (Article VI, Section 6) provide the following:
"The Corporation shall, to the fullest extent permitted by applicable law as
in effect at any time, indemnify any person made, or threatened to be made, a
party to an action or proceeding whether civil or criminal (including an action
or proceeding by or in the right of the Corporation or any other corporation of
any type or kind, domestic or foreign, or any partnership, joint venture, trust,
employee benefit plan or other enterprise, for which any director or officer of
the Corporation served in any capacity at the request of the Corporation), by
reason of the fact that such person or such person's testator or intestate was a
director or officer of the Corporation, or served such other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise in
any capacity, against judgments, fines, amounts paid in settlement and
reasonable expenses, including attorneys' fees actually and necessarily incurred
as a result of such action or proceeding, or any appeal therein. Such
indemnification shall be a contract right and shall include the right to be paid
advances of any expenses incurred by such person in connection with such action,
suit or proceeding, consistent with the provisions of applicable law in effect
at any time. Indemnification shall be deemed to be "permitted' within the
meaning of the first sentence hereof if it is not expressly prohibited by
applicable law as in effect at the time."
Our Certificate of Incorporation (Article ELEVEN) provides the following:
"Pursuant to Section 402(b) of the Business Corporation Law of the State of
New York, the liability of the Corporation's directors to the Corporation or its
stockholders for damages for breach of duty as a director shall be eliminated to
the fullest extent permitted by the Business Corporation Law of the State of New
York, as it exists on the date hereof or as it may hereafter be amended. No
amendment to or repeal of this Article shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal."
With certain limitations, Sections 721 through 726 of the New York Business
Corporation Law permit a corporation to indemnify a director or officer made a
party to an action (i) by a corporation or in its right in order to procure a
judgment in its favor unless he shall have breached his duties, or
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<PAGE>
(ii) other than an action by or in the right of the corporation in order to
procure a judgment in its favor, if such director or officer acted in good faith
and in a manner he reasonably believed to be in or, in certain cases not opposed
to such corporation's interest and additionally, in criminal actions, had no
reasonable cause to believe his conduct was unlawful.
In addition, we maintain directors' and officers' liability insurance
policies.
ITEM 16. EXHIBITS.
<TABLE>
<S> <C>
(1)(a) Proposed Form of Underwriting Agreement.*
(1)(b) Proposed Form of Agency Agreement.*
(3)(a) By-laws********
(4)(a) Certificate of Incorporation.***
(4)(b) Indenture dated as of October 1, 1993, between us and The Chase Manhattan Bank
(National Association) as Trustee.**
(4)(c) First Supplemental Indenture dated as of December 15, 1995, to Indenture dated as
of October 1, 1993, between us and The Chase Manhattan Bank (National
Association).******
(4)(d) Form of Subordinated Indenture.******
(4)(h) Form of Temporary Global Fixed Rate Bearer Medium-Term Note.**
(4)(i) Form of Definitive Global Fixed Rate Bearer Medium-Term Note.**
(4)(j) Form of Definitive Fixed Rate Bearer Medium-Term Note.**
(4)(k) Form of Fixed Rate Debt Security with Optional Redemption.**
(4)(l) Form of Fixed Rate Debt Security with Optional Redemption and Sinking Fund.**
(4)(m) Form of Extendible Debt Security with Optional Redemption.**
(4)(n) Form of Zero Coupon Debt Security with Optional Redemption.**
(4)(o) Form of Original Issue Discount Debt Security with Optional Redemption.**
(4)(p) Form of Certificate of Amendment.****
(4)(q) Form of Preferred Stock Certificate.****
(4)(r) Form of Deposit Agreement.****
(4)(s) Form of Depositary Receipt (included as Exhibit A to the Form of Deposit
Agreement).****
(4)(t) Form of Warrant Agreement.*****
(4)(u) Form of Warrant Certificate.*****
(4)(aa) Form of Floating Rate Non-Redeemable Medium Term Note*******
(4)(bb) Form of Floating Rate Redeemable Medium Term Note*******
(4)(cc) Form of Fixed Rate Redeemable Medium Term Note*******
(4)(dd) Form of Floating Rate Non-Redeemable Medium Term Note*******
(4)(ee) Form of Fixed Rate Redeemable Medium Term Note*******
(5) Opinion of David S. Hershberg, Esq.*
(12) Computation of Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed
Charges and Preferred Stock Dividends.********
(23)(a) Consent of Independent Accountants.*
(23)(b) Consent of Counsel (included in Exhibit 5).*
(24)(a) Powers of Attorney.*
(24)(b) Certified copy of a resolution adopted by our Board of Directors authorizing
execution of the registration statement by power of attorney.*
(25)(a) Statement of Eligibility and Qualification on Form T-1 of The Chase Manhattan
Bank (National Association) to act as Trustee under the Senior Indenture dated
October 1, 1993.*
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
(25)(b) Statement of Eligibility and Qualification on Form T-1 of the Subordinated
Trustee to act as Trustee under the Subordinated Indenture.*****
</TABLE>
- ------------------------
*Filed electronically with this Registration Statement.
**Incorporated by reference to our Registration Statement on Form S-3
(Registration No. 33-50537).
***Incorporated by reference to Exhibit 3(i) of our Form 8-K dated May 7, 1997.
****Incorporated by reference to our Registration Statement on Form S-3
(Registration No. 33-49475).
*****To be filed as an Exhibit to a report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934.
******Incorporated by reference to our Registration Statement on Form S-3
(Registration No. 33-65119).
*******Incorporated by reference to our Current Report on Form 8-K dated March
8, 1996.
********Incorporated by reference to exhibit 3 of our Form 10-Q for the fiscal
quarter ended September 30, 1998.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement (other than as provided
in the proviso and instructions to Item 512(a) of Regulation S-K) (i) to include
any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii)
to reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement; and (iii) to include
any material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) To file an application for the purpose of determining the eligibility of
the trustee to act under subsection (a) of Section 310 of the Trust Indenture
Act in accordance with the rules and regulations prescribed by the Commission
under Section 305(b)(2) of the Trust Indenture Act.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 15 above, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and is,
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therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person in the successful defense
of any action, suit or proceeding) is asserted by such officer, director or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether or not such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 13th day of January, 1999.
<TABLE>
<S> <C> <C>
INTERNATIONAL BUSINESS MACHINES CORPORATION
By: *
-----------------------------------------
Louis V. Gerstner, Jr.
CHAIRMAN OF THE BOARD OF DIRECTORS
AND CHIEF EXECUTIVE OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Chairman of the Board and
* Chief Executive Officer
- ------------------------------ (Principal January 13, 1999
Louis V. Gerstner, Jr. Executive Officer)
Senior Vice President
* and Chief Financial
- ------------------------------ Officer January 13, 1999
Douglas L. Maine (Principal Financial
Officer)
Vice President and
* Controller
- ------------------------------ (Principal Accounting January 13, 1999
Mark Loughridge Officer)
*
- ------------------------------ Director January 13, 1999
Cathleen Black
*
- ------------------------------ Director January 13, 1999
Kenneth I. Chenault
*
- ------------------------------ Director January 13, 1999
Nannerl O. Keohane
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
*
- ------------------------------ Director January 13, 1999
Charles F. Knight
*
- ------------------------------ Director January 13, 1999
Minoru Makihara
*
- ------------------------------ Director January 13, 1999
Lucio A. Noto
*
- ------------------------------ Director January 13, 1999
John B. Slaughter
*
- ------------------------------ Director January 13, 1999
Alex Trotman
*
- ------------------------------ Director January 13, 1999
Lodewijk C. van Wachem
*
- ------------------------------ Director January 13, 1999
Charles M. Vest
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ ANDREW BONZANI
-------------------------
Andrew Bonzani
ATTORNEY-IN-FACT
</TABLE>
II-6
<PAGE>
EXHIBIT (1)(a)
INTERNATIONAL BUSINESS MACHINES CORPORATION
Debt Securities
UNDERWRITING AGREEMENT
New York, New York
To the Representatives named in Schedule I hereto
of the Underwriters named in Schedule II hereto
Dear Sirs:
International Business Machines Corporation, a New York corporation
(the "Company"), proposes to sell to the underwriters named in Schedule II
hereto (the "Underwriters"), for whom you are acting as representatives (the
"Representatives"), the principal amount of its Securities identified in
Schedule I hereto (the "Securities"), to be issued under an indenture dated as
of October 1, 1993 (the "Indenture"), between the Company and The Chase
Manhattan Bank, as trustee (the "Trustee"), as supplemented by the First
Supplemental Indenture dated as of December 15, 1995. If the firm or firms
listed in Schedule II hereto include only the firm or firms listed in Schedule I
hereto, then the terms "Underwriters" and "Representatives", as used herein
shall each be deemed to refer to such firm or firms.
1. Representations and Warranties. The Company represents and warrants
to, and agrees with each Underwriter that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933 (the "Act") and has filed with the Securities and
Exchange Commission (the "Commission") a registration statement or statements
(the file number or numbers of which is or are set forth in Schedule I hereto),
including a related preliminary prospectus, on such Form for the registration
under the Act of the offering and sale of the Securities. The Company may have
filed one or more amendments thereto, including the related preliminary
prospectus, and has filed a preliminary prospectus in accordance with Rules 415
and 424(b)(5), each of which has previously been furnished to you. The Company
will next file with the Commission one of the following: (i) prior to
effectiveness of such registration statement, a further amendment thereto,
including the form of final prospectus, (ii) a final prospectus in accordance
with Rules 430A and 424(b)(1) or (4), or (iii) a final prospectus in accordance
with Rules 415 and 424(b)(2) or (5). In the case of clause (ii), the Company has
included in such registration statement or statements, as amended at the
Effective Date, all information (other than Rule 430A Information) required by
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<PAGE>
the Act and the rules thereunder to be included in the Prospectus with respect
to the Securities and the offering thereof. As filed, such amendment and form of
final prospectus, or such final prospectus, shall include all Rule 430A
Information and, except to the extent the Representatives shall agree in writing
to a modification, shall be in all substantive respects in the form furnished to
you prior to the Execution Time or, to the extent not completed at the Execution
Time, shall contain only such specific additional information and other changes
(beyond that contained in the latest Preliminary Prospectus) as the Company has
advised you, prior to the Execution Time, will be included or made therein. If
the Registration Statement contains the undertaking specified by Regulation S-K
Item 512(a), the Registration Statement, at the Execution Time, meets the
requirements set forth in Rule 415(a)(1)(x).
The terms which follow, when used in this Agreement, shall have the
meanings indicated. The term the "Effective Date" shall mean each date that the
Registration Statement and any post-effective amendment or amendments thereto
became or become effective. "Execution Time" shall mean the date and time that
this Agreement is executed and delivered by the parties hereto. "Preliminary
Prospectus" shall mean any preliminary prospectus referred to in the preceding
paragraph and any preliminary prospectus included in the Registration Statement
at the Effective Date that omits Rule 430A Information. "Prospectus" shall mean
the prospectus relating to the Securities that is first filed pursuant to Rule
424(b) after the Execution Time or, if no filing pursuant to Rule 424(b) is
required, shall mean the form of final prospectus included in the Registration
Statement at the Effective Date. "Registration Statement" shall mean the
registration statement or statements referred to in the preceding paragraph,
including incorporated documents as of the filing of the Company's Quarterly
Report on Form 10-Q for the three month period ended __________________,
exhibits and financial statements, in the form in which it or they has or have
or shall become effective and, in the event any post-effective amendment thereto
becomes effective prior to the Closing Date (as hereinafter defined), shall also
mean such registration statement or statements as so amended. Such term shall
include Rule 430A Information deemed to b included therein at the Effective Date
as provided by Rule 430A. "Rule 415", "Rule 424", "Rule 430A" and "Regulation
S-K" refer to such rules under the Act. "Rule 430A Information" means
information with respect to the Securities and the offering thereof permitted to
be omitted from the Registration Statement when it becomes effective pursuant to
Rule 430A. Any reference herein to the Registration Statement, a Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Securities Exchange Act of 1934 (the "Exchange Act")
on or before the effective date of the Registration Statement or the date of
such Preliminary Prospectus or the Prospectus, as the case may be; and any
reference herein to the terms "amend", "amendment" or "supplement" with respect
to the Registration Statement, any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include the filing of an document under the
Exchange Act after the effective date of the Registration Statement, or the date
of any Preliminary Prospectus or the Prospectus, as the case may be, deemed to
be incorporated therein by reference.
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<PAGE>
(b) On the Effective Date, the Registration Statement did or will, and
when the Prospectus is first filed (if required) in accordance with Rule 424(b)
and on the Closing Date, the Prospectus (and any supplements thereto) will,
comply in all material respects with the applicable requirements of the Act and
the Exchange Act and the respective rules thereunder; on the Effective Date and
on the Closing Date the Indenture did or will comply in all material respects
with the requirements of the Trust Indenture Act of 1939 (the "Trust Indenture
Act") and the rules thereunder; on the Effective Date, the Registration
Statement did not or will not contain any untrue statement of a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; and, on the Effective Date, the Prospectus, if not filed
pursuant to Rule 424(b), did not or will not, and on the date of any filing
pursuant to Rule 424(b) and on the Closing Date, the Prospectus (together with
any supplement thereto) will not, include any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no representations or
warranties as to (i) that part of the Registration Statement which shall
constitute the Statement of Eligibility and Qualification (Form T-1) under the
Trust Indenture Act of the Trustee or (ii) the information contained in or
omitted from the Registration Statement or the Prospectus (or any supplement
thereto) in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Underwriter through the
Representatives specifically for use in connection with the preparation of the
Registration Statement or the Prospectus (or any supplement thereto).
2. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, at the purchase price set forth in
Schedule I hereto, the respective principal amounts of the Securities set forth
opposite each respective Underwriter's name in Schedule II hereto, except that,
if Schedule I hereto provides for the sale of Securities pursuant to delayed
delivery arrangements, the respective principal amounts of Securities to be
purchased by the Underwriters shall be as set forth in Schedule II hereto, less
the respective amounts of Contract Securities determined as provided below.
Securities to be purchased by the Underwriters are herein sometimes called the
"Underwriters' Securities" and Securities to be purchased pursuant to Delayed
Delivery Contracts as hereinafter provided are herein called "Contract
Securities".
If so provided in Schedule I hereto, the Underwriters are authorized to
solicit offers to purchase Securities from the Company pursuant to delayed
delivery contracts ("Delayed Delivery Contracts"), substantially in the form of
Schedule III hereto but with such changes therein as the Company may authorize
or approve. The Underwriters will endeavor to make such arrangements and, as
compensation therefor, the Company will pay to the Representatives, for the
account of underwriters, on the Closing Date, the percentage set forth in
Schedule I hereto of
3
<PAGE>
the principal amount of the Securities for which Delayed Delivery Contracts are
made. Delayed Delivery Contracts are to be with institutional investors,
including commercial and savings banks, insurance companies, pension funds,
investment companies and educational and charitable institutions. The Company
will make Delayed Delivery Contracts in all cases where sales of Contract
Securities arranged by the Underwriters have been approved by the Company but,
except as the Company may otherwise agree, each such Delayed Delivery Contract
must be for not less than the minimum principal amount set forth in Schedule I
hereto and the aggregate principal amount of Contract Securities may not exceed
the maximum aggregate principal amount set forth in Schedule I hereto. The
Underwriters will not have any responsibility in respect of the validity or
performance of Delayed Delivery Contracts. The principal amount of Securities to
be purchased by each Underwriter as set forth in Schedule II hereto shall be
reduced by an amount which shall bear the same proportion to the total principal
amount of Contract Securities as the principal amount of Securities set forth
opposite the name of such Underwriter bears to the aggregate principal amount
set forth in Schedule II hereto, except to the extent that you determine that
such reduction shall be otherwise than in such proportion and so advise the
Company in writing; provided, however, that the total principal amount of
Securities to be purchased by all Underwriters shall be the aggregate principal
amount set forth in Schedule II hereto, less the aggregate principal amount of
Contract Securities.
3. Delivery and Payment. Delivery of and payment for the Underwriters'
Securities shall be made at the office, on the date and at the time specified in
Schedule I hereto, which date and time may be postponed by agreement between the
Representatives and the Company or as provided in Section 8 hereof (such date
and time of delivery and payment for the Securities being called the "Closing
Date"). Delivery of the Underwriters' Securities shall be made to the
Representatives for the respective account of the several Underwriters against
payment by the several Underwriters through the Representatives of the purchase
price thereof to or upon the order of the Company by certified or official bank
check or checks payable, or wire transfers, in immediately available funds. The
Debentures shall be delivered in definitive global form through the facilities
of The Depository Trust Company.
4. Agreements.
(A) The Company agrees with the several Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement, and any amendment thereof, if not effective at the Execution Time, to
become effective. If the Registration Statement has become or becomes effective
pursuant to Rule 430A, or filing of the Prospectus is otherwise required under
Rule 424(b), the Company will file the Prospectus, properly completed, pursuant
to the applicable paragraph of Rule 424(b) within the time period prescribed and
will provide evidence satisfactory to the Representatives of such timely filing.
The Company will promptly advise the Representatives (i) when the Registration
Statement shall
4
<PAGE>
have become effective, (ii) when any amendment to the Registration Statement
relating to the Securities shall have become effective, (iii) of any request by
the Commission for any amendment of the Registration Statement or amendment of
or supplement to the Prospectus or for any additional information, (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding for
that purpose and (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. The Company will use its best efforts to prevent the issuance of any
such stop order and, if issued, to obtain as soon as possible the withdrawal
thereof. The Company will not file any amendment of the Registration Statement
or supplement to the Prospectus unless the Company has furnished you a copy for
your review prior to filing and will not file any such proposed amendment or
supplement to which you reasonably object.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein in the light of the circumstances under which they
were made not misleading, or if it shall be necessary to amend or supplement the
Prospectus to comply with the Act or the Exchange Act or the respective rules
thereunder, the Company will give the Representatives immediate notice of the
occurrence of such event and promptly will prepare and file with the Commission,
subject to the first sentence of paragraph (a) of this Section 4, an amendment
or supplement which will correct such statement or omission or an amendment
which will effect such compliance.
(c) The Company will make generally available to its security holders
and to the Representatives as soon as practicable, but not later than 45 days
after the end of the 12-month period beginning at the end of the current fiscal
quarter of the Company, an earnings statement (which need not be audited) of the
Company and its subsidiaries, covering a period of at least 12 months beginning
after the end of the current fiscal quarter of the Company, which will satisfy
the provisions of Section 11(a) of the Act.
(d) The Company will furnish to the Representatives and counsel for the
Underwriters, without charge, copies of the Registration Statement (including
exhibits thereto) and each amendment thereto which shall become effective on or
prior to the Closing Date and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Act, as many copies of any
Preliminary Final Prospectus and the Final Prospectus and any amendments thereof
and supplements thereto as the Representatives may reasonably request.
(e) The Company will arrange for the qualification of the Securities
for sale under the laws of such jurisdictions as the Representatives may
designate, will maintain such qualifications
5
<PAGE>
in effect so long as required for the distribution of the Securities and will
arrange for the determination of the legality of the Securities for purchase by
institutional investors.
(f) Until the earlier of the day on which the distribution of the
Securities is completed or the business day following the Closing Date, the
Company will not, without the consent of the Representatives, offer or sell, or
announce the offering of, any debt securities covered by the Registration
Statement or any other registration statement filed under the Act.
(B) The several Underwriters agree with the Company that:
(a) The several Underwriters will pay the expenses of printing all
documents relating to the offering.
(b) The several Underwriters will pay the reasonable fees and
disbursements of outside counsel for the Company and the Trustee relating to the
offering.
(c) The several Underwriters will pay any fees of Moody's Investors
Service, Inc. and Standard & Poor's Ratings Group, a division of the McGraw-Hill
Companies, Inc. relating to the rating of the Securities.
(d) The several Underwriters will pay the fees and disbursements of
PricewaterhouseCoopers LLP relating to the preparation of the letter required by
Section 5(e) of this Agreement.
5. Conditions to the Obligations of the Underwriters. The obligations
of the Underwriters to purchase the Underwriters' Securities shall be subject to
the accuracy of the representations and warranties on the part of the Company
contained herein as of the Execution Time, as of the date of the effectiveness
of any amendment to the Registration Statement filed prior to the Closing Date
(including the filing of any document incorporated by reference therein) and as
of the Closing Date, to the accuracy of the statements of the Company made in
any certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective prior to the
Execution Time, unless the Representatives agree in writing to a later time, the
Registration Statement shall have become effective not later than (i) 6:00 P.M.
New York City time, on the date of determination of the public offering price,
if such determination occurred at or prior to 3:00 P.M. New York City time on
such date or (ii) 12:00 Noon on the business day following the day on which the
public offering price was determined, if such determination occurred after 3:00
P.M. New York City time on such date; if filing of the Prospectus, or any
supplement thereto, is required pursuant to Rule 424(b), the Prospectus shall
have been filed in the manner and within
6
<PAGE>
the time period required by Rule 424(b); and no stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, shall
have been issued and no proceedings for that purpose shall have been instituted
or threatened.
(b) The Company shall have furnished to the Representatives:
(i) the opinion of the General Counsel, an Assistant General Counsel,
an Associate General Counsel or other counsel of the Company, dated the Closing
Date, to the effect that:
(A) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of New York, with full corporate power and
authority to own its properties and conduct its business as
described in the Prospectus, and is duly qualified to do
business as a foreign corporation and is in good standing
under the laws of each jurisdiction within the United States
which requires such qualifications wherein it owns or leases
material properties or conducts material business;
(B) the Securities conform in all material respects
to the description thereof contained in the Prospectus;
(C) the Indenture has been duly authorized, executed
and delivered, has been duly qualified under the Trust
Indenture Act, and constitutes a legal, valid and binding
obligation enforceable against the Company in accordance with
its terms (subject to applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other
similar laws affecting creditors' rights generally from time
to time in effect, and subject, as to enforceability, to
general principle of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at
law); and the Securities have been duly authorized and, when
executed and authenticated in accordance with the provisions
of the Indenture and delivered to and paid for by the
Underwriters pursuant to this Agreement, in the case of the
Underwriters' Securities, or by the purchasers thereof
pursuant to Delayed Delivery Contracts, in the case of any
Contract Securities, will constitute legal, valid and binding
obligations of the Company entitled to the benefits of the
Indenture (subject to applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium, and other
similar laws affecting creditors' rights generally from time
to time in effect);
(D) to the best knowledge of such counsel, there is
no pending or threatened action, suit or proceeding before any
court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries,
of a character required to be disclosed in the Registration
Statement which is not adequately
7
<PAGE>
disclosed in the Prospectus, and there is no franchise,
contract or other document of a character required to be
described in the Registration Statement or Prospectus, or to
be filed as an exhibit, which is not described or filed as
required;
(E) the Registration Statement and any amendments
thereto have become effective under the Act; any required
filing of the Prospectus and any supplement thereto pursuant
to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); to the best knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement, as amended, has been issued, no
proceedings for that purpose have been instituted or are
pending or contemplated under the Act;
(F) this Agreement and any Delayed Delivery Contracts
have been duly authorized, executed and delivered by the
Company;
(G) no authorization, approval or other action by,
and no notice to, consent of, order of, or filing with, any
United States Federal or New York governmental authority or
regulatory body is required for the consummation of the
transactions contemplated herein or in any Delayed Delivery
Contracts, except such as have been obtained under the Act and
such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution
of the Securities and such other approvals (specified in such
opinion) as have been obtained;
(H) such counsel has no reason to believe that (1)
the Registration Statement and the Prospectus (except the
financial statements and the notes thereto and other
information of an accounting or financial nature included
therein, and the Statement of Eligibility (Form T-1) included
as an exhibit to the Registration Statement, as to which such
counsel need express no view) were not appropriately
responsive in all material respects to requirements of the Act
and the applicable rules and regulations of the Commission
thereunder and (2) the Registration Statement or any amendment
thereof at the time it became effective contained any untrue
statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus, as
amended or supplemented, contains any untrue statement of a
material fact or omits to state a material fact necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading (in each case
except for the financial statements and the notes thereto and
other information of an accounting or financial nature
included therein, as to which such counsel need express no
view); and
8
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(I) none of the issue and sale of the Securities, the
consummation of any other of the transactions herein
contemplated or the fulfillment of the terms hereof or of any
Delayed Delivery Contracts will conflict with, result in a
breach of, or constitute a default under, the charter or
by-laws of the Company or the terms of any indenture or other
agreement or instrument known to such counsel and to which the
Company or any of its subsidiaries is a party or bound, or any
decre or regulation known to such counsel to be applicable to
the Company or any of its subsidiaries of any court,
regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Company or any of its
subsidiaries.
The statements described in one or more of paragraphs (B), (C), (E),
(F), (G) and (H)(1) of this subsection 5(b)(i) may be omitted from the opinion
of such counsel; provided, however, that in such event the Company shall also
have furnished to the Representatives the corresponding opinion or letter of
Cravath, Swaine & Moore, counsel for the Company, described in subsection
5(b)(ii) or 5(b)(iii) immediately following.
(ii) in the event that the statements described in one or more of
paragraphs (B), (C), (E), (F) or (G) of foregoing subsection 5(b)(i) is omitted
from the opinion delivered pursuant to such subsection, the opinion of Cravath,
Swaine & Moore, counsel for the Company, dated the Closing Date, to the effect
of the statements so omitted.
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
New York or the United States, to the extent they deem proper and specified in
such opinion, upon the opinion of other counsel of good standing whom they
believe to be reliable and who are satisfactory to counsel for the Underwriters;
and (B) as to matters of fact, to the extent they deem proper, on certificates
of responsible officers of the Company an public officials.
(iii) in the event that the statements in paragraph (H)(1) of
subsection 5(b)(i) are omitted from the opinion provided pursuant to such
subsection, a letter of Cravath, Swaine & Moore dated the Closing Date to the
effect that, having participated in conferences with certain officers of, and
with the accountants for, the Company and having made certain inquiries and
investigations in connection with the preparation of the Registration Statement
and the Prospectus, such counsel has no reason to believe that (i) the
Registration Statement and the Prospectus (except the financial statements and
the notes thereto and other information of an accounting or financial nature
included therein, and the Statement of Eligibility (Form T-1) included as an
exhibit to the Registration Statement, as to which such counsel need express no
view) were not appropriately responsive in all material respects with
requirements of the Act and the applicable rules and regulations of the
Commission thereunder and (ii) the Registration Statement at the Effective Date
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not
9
<PAGE>
misleading, or that the Prospectus on the Closing Date includes any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading (in each case except for the financial statements
and the notes thereto and other information of an accounting or financial nature
included therein, as to which such counsel need express no view).
(c) The Representatives shall have received from Davis Polk & Wardwell,
counsel for the Underwriters, such opinion or opinions, dated the Closing Date,
with respect to the issuance and sale of the Securities, the Indenture, any
Delayed Delivery Contracts, the Registration Statement, the Prospectus and other
related matters as the Representatives may reasonably require, and the Company
shall have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(d) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the principal financial or accounting
officer (or Vice President and Treasurer) of the Company, dated the Closing
Date, to the effect that the signer of such certificate has carefully examined
the Registration Statement, the Prospectus, any supplement to the Prospectus and
this Agreement and that:
(i) the representations and warranties of the Company in this Agreement
are true and correct in all material respects on and as of the Closing Date with
the same effect as if made on the Closing Date and the Company has complied with
all the agreements and satisfied all the conditions on its part to be performed
or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the Registration
Statement, as amended, has been issued and no proceedings for that purpose have
been instituted or, to the Company's knowledge, threatened; and
(iii) since the date of the most recent financial statements included
in the Prospectus, there has been no material adverse change in the condition
(financial or other), earnings, business or properties of the Company and its
subsidiaries, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus.
(e) At the Closing Date, PricewaterhouseCoopers LLP shall have
furnished to the Representatives a letter or letters (which may refer to a
letter previously delivered to one or more of the Representatives), dated as of
the Closing Date, in form and substance satisfactory to the Representatives,
confirming that they are independent accountants within the meaning of the Act
and the Exchange Act and the respective applicable published rules and
regulations thereunder, that the response, if any, to Item 10 of the
Registration Statement is correct insofar as it relates to them and stating in
effect that:
10
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(i) in their opinion the audited financial statements and schedules
thereto included or incorporated in the Registration Statement and the
Prospectus and reported on by them comply as to form in all material respects
with the applicable accounting requirements of the Exchange Act and the
published rules and regulations thereunder with respect to financial statements
and financial statement schedules included or incorporated in annual reports on
Form 10-K under the Exchange Act;
(ii) on the basis of a reading of the unaudited financial statements
included or incorporated in the Registration Statement and the Prospectus and of
the latest unaudited financial statements made available by the Company and its
subsidiaries; carrying out certain specified procedures (but not an examination
in accordance with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the comments set
forth in such letter; a reading of the minutes of the meetings of the
stockholders, directors and executive committees of the Company and the
Subsidiaries since the date of the latest audited balance sheet, through a
specified date not more than five business days prior to the date of the letter;
and inquiries of certain officials of the Company who have responsibility for
financial and accounting matters of the Company and its subsidiaries as to
transactions and events subsequent to the date of the most recent financial
statements incorporate in the Registration Statement and the Prospectus, nothing
came to their attention which caused them to believe that:
(1) any unaudited financial statements included or incorporated in the
Registration Statement and the Prospectus do not comply as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the Commission with respect to financial statements
included or incorporated in quarterly reports on Form 10-Q under the Exchange
Act; and said unaudited financial statements are not stated on a basis
substantially consistent with that of the audited financial statements included
or incorporated in the Registration Statement and the Prospectus; or
(2) with respect to the period subsequent to the date of the most
recent financial statements incorporated in the Registration Statement and the
Prospectus, there were, at a specified date not more than five business days
prior to the date of the letter, any increases in long-term debt of the Company
and its subsidiaries or decreases in the capital stock of the Company or
decreases in the stockholders' equity of the Company and its subsidiaries as
compared with the amounts shown on the most recent consolidated balance sheet
included or incorporated in the Registration Statement and the Prospectus,
except in all instances for increases or decreases set forth in such letter, in
which case the letter shall be accompanied by an explanation by the Company as
to the significance thereof unless said explanation is not deemed necessary by
the Representatives; and
(iii) they have performed certain other procedures as a result of which
they determined
11
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that the information described in a schedule to be delivered on behalf of the
Underwriters of an accounting, financial or statistical nature (which is limited
to accounting, financial or statistical information derived from the general
ledger of the Company) set forth in the Registration Statement, as amended, the
Prospectus, as amended or supplemented, and in Exhibit 12 to the Registration
Statement (including selected accounting, financial or statistical information
included or incorporated in the Company's Annual Report on Form 10-K
incorporated in the Prospectus or any of the Company's Quarterly Reports on Form
l0-Q incorporated therein), agrees with the general ledger of the Company and
its subsidiaries, excluding any questions of legal interpretation.
References to the Prospectus in this paragraph (e) include any
supplements thereto at the date of the letter.
(f) Subsequent to the respective dates of which information is given in
the Registration Statement and the Prospectus, there shall not have been (i) any
change or decrease specified in the letter or letters referred to in paragraph
(e) of this Section 5 or (ii) any change, or any development involving a
prospective change, in or affecting the business or properties of the Company
and its subsidiaries the effect of which, in any case referred to in clause (i)
or (ii) above, is, in the judgmen of the Representatives, so material and
adverse as to make it impractical or inadvisable to proceed with the public
offering or the delivery of the Securities as contemplated by the Registration
Statement and the Prospectus.
(g) Prior to the Closing Date, the Company shall have furnished to the
Representatives such further information, certificates and documents as the
Representatives may reasonably request.
(h) The Company shall have accepted Delayed Delivery Contracts in any
case where sales of Contract Securities arranged by the Underwriters have been
approved by the Company.
(i) Subsequent to the Execution Time, there shall not have been any
decrease in the ratings of any of the Securities by Moody's Investor's Service,
Inc. ("Moody's") or Standard & Poor's Corporation ("S&P") and neither Moody's
nor S&P shall have publicly announced that it has placed any of the Securities
on a credit watch with negative implications.
If any of the conditions specified in this Section 5 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and their counsel, this Agreement and all
obligations of the Underwriters hereunder may be cancelled at, or at any time
prior to, the Closing Date by the Representatives. Notice of such cancellation
shall be given to the Company in writing or by telephone or telegraph confirmed
in writing.
12
<PAGE>
6. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 5 hereof is not satisfied
or because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or comply with any provision hereof other than by
reason of a default by any of the Underwriters, the Company will reimburse the
Underwriters severally upon demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the proposed purchase and sale of the Securities.
7. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person who controls any
Underwriter within the meaning of either the Act or the Exchange Act against any
and all losses, claims, damages or liabilities, joint or several, to which they
or any of them may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement for the
registration of the Securities as originally filed or in any amendment thereof,
or in any Preliminary Prospectus or the Prospectus, or in any amendment thereof
or supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party for any legal or other expenses reasonably incurred,
as incurred, by them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that (i) the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter through the Representatives
specifically for use in connection with the preparation thereof, and (ii) such
indemnity with respect to any Preliminary Prospectus shall not inure to the
benefit of any Underwriter (or any person controlling such Underwriter) from
whom the person asserting any such loss, claim, damage or liability purchased
the Securities which are the subject thereof if such person did not receive a
copy of the Prospectus (or the Prospectus as supplemented) excluding documents
incorporated therein by reference at or prior to the confirmation of the sale of
such Securities to such person in any case where such delivery is required by
the Act and the untrue statement or omission of a material fact contained in
such Preliminary Prospectus was corrected in the Prospectus (or the Prospectus
as supplemented prior to the confirmation of the sale of such Securities to such
person). This indemnity agreement will be in addition to any liability which the
Company may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company,
13
<PAGE>
each of its directors, each of its officers who signs the Registration
Statement, and each person who controls the Company within the meaning of either
the Act or the Exchange Act, to the same extent as the foregoing indemnity from
the Company to each Underwriter, but only with reference to written information
relating to such Underwriter furnished to the Company by or on behalf of such
Underwriter through the Representatives specifically for use in the preparation
of the documents referred to in the foregoing indemnity. This indemnity
agreement will be in addition to any liability which any Underwriter may
otherwise have. The Company acknowledges that the statements set forth in the
last paragraph of the cover page of the Prospectus and under the heading
"Underwriting" or "Plan of Distribution" and, if Schedule I hereto provides for
sales of Securities pursuant to delayed delivery arrangements, in the last
sentence under the heading "Delayed Delivery Arrangements" in any Preliminary
Prospectus and the Prospectus, constitute the only information furnished in
writing by or on behalf of the several Underwriters for inclusion in any
Preliminary Prospectus or the Prospectus, and you, as the Representatives,
confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under this Section 7
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 7, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 7. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to appoint counsel satisfactory to such
indemnified party to represent the indemnified party in such action; provided,
however, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to appoint counsel to defend such action
and approval by the indemnified party of counsel, the indemnifying party will
not be liable to such indemnified party under this Section 7 for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel (in addition to any local
counsel), approved by the Representatives in the case of paragraph (a) of this
Section 7, representing the indemnified parties under such paragraph (a) who are
parties to such action), (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
action or (iii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party; and except
that, if
14
<PAGE>
clause (i) or (iii) is applicable, such liability shall be only in respect of
the counsel referred to in such clause (i) or (iii).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a) of this
Section 7 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company on grounds of policy or otherwise, the
Company and the Underwriters shall contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably incurred
in connection with investigating or defending same) to which the Company and one
or more of the Underwriters may be subject in such proportion so that the
Underwriters are responsible for that portion represented by the percentage that
the underwriting discount bears to the sum of such discount and the purchase
price of the Securities set forth on Schedule I hereto and the Company is
responsible for the balance; provided, however, that (y) in no case shall any
Underwriter (except as may be provided in any agreement among underwriters
relating to the offering of the Securities) be responsible for any amount in
excess of the underwriting discount applicable to the Securities purchased by
such Underwriter hereunder and (z) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person who controls an
Underwriter within the meaning of either the Act or the Exchange Act shall have
the same rights to contribution as such Underwriter, and each person who
controls the Company within the meaning of either the Act or the Exchange Act,
each officer of the Company who shall have signed the Registration Statement and
each director of the Company shall have the same rights to contribution as the
Company, subject in each case to clauses (y) and (z) of this paragraph (d). Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this paragraph (d), notify such party or parties from whom contribution
may be sought, but the omission to so notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any other
obligation it or they may have hereunder or otherwise than under this paragraph
(d).
8. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule II
15
<PAGE>
hereto bears to the aggregate amount of Securities set forth opposite the names
of all the remaining Underwriters) the Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase; provided, however,
that in the event that the aggregate amount of Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of
the aggregate amount of Securities set forth in Schedule II hereto, the
remaining Underwriters shall have the right to purchase all, but shall not be
under any obligation to purchase any, of the Securities, and if such
nondefaulting Underwriters do not purchase all the Securities, this Agreement
will terminate without liability to any nondefaulting Underwriter or the
Company. In the event of a default by any Underwriter as set forth in this
Section 8, the Closing Date shall be postponed for such period, not exceeding
seven days, as the Representatives shall determine in order that the required
changes in the Registration Statement and the Final Prospectus or in any other
documents or arrangements may be effected. Nothing contained in this Agreement
shall relieve any defaulting Underwriter of its liability, if any, to the
Company and any nondefaultin Underwriter for damages occasioned by its default
hereunder.
9. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company prior
to delivery of and payment for the Securities, if prior to such time (i) trading
in securities generally on the New York Stock Exchange shall have been suspended
or limited or minimum prices shall have been established on such Exchange, (ii)
a banking moratorium shall have been declared either by Federal or New York
State authorities or (iii) there shall have occurred any outbreak or material
escalation of hostilities or other calamity or crisis the effect of which on the
financial markets of the United States is such as to make it, in the judgment of
the Representatives, impracticable to market the Securities.
10. Representations and Indemnities to Survive. The respective
agreement representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors or controlling persons referred to in Section 7 hereof,
and will survive delivery of and payment for the Securities. The provisions of
Sections 6 and 7 hereof shall survive the termination or cancellation of this
Agreement.
11. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telegraphed and confirmed to them, at the address specified in
Schedule I hereto; or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it, at Armonk, New York 10504; attention of the
Treasurer.
12. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7 hereof, and no
other person will have any right or obligation hereunder.
13. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
16
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
INTERNATIONAL BUSINESS MACHINES
CORPORATION
By:
-----------------------------------
The foregoing Agreement is hereby
confirmed and accepted on the
date specified in Schedule I hereto.
By:
By:
---------------------------------
For themselves and the other several
Underwriters, if any, named in Schedule
II to the foregoing Agreement.
17
<PAGE>
SCHEDULE I
Debt Securities
Underwriting Agreement dated
Registration Statement No. 333-
Representatives:
Title of Securities:
Principal Amount:
Interest Rate:
Purchase Price:
Offering Price:
Interest Payment Dates:
Subordination Provisions:
Optional Redemption:
Sinking Fund Provisions:
Delayed Delivery:
Closing Date and Time:
Method of Payment of Underwriters' Securities:
Other provisions of or Amendments to
Underwriting Agreement:
18
<PAGE>
Additional Covenants Pursuant to Section 4:
[Until [ ], the Company will not, without the consent of the
Representatives, offer, sell or contract to sell, or otherwise dispose of,
directly or indirectly, or announce the offering of, any securities issued or
guaranteed by the Company (other than the Securities).]
Additional Covenants Pursuant to Section 5:
[At or prior to the Closing Date, the Indenture dated as of the Closing Date,
between the Company and [ ], as Trustee, in form and substance
satisfactory to the Underwriters, shall have been executed and delivered by
the parties thereto and shall be in full force and effect.]
Units
Title and principal amount of Debt Securities or title and number of shares of
Common Stock, Preferred Stock, Warrants or Depositary Shares in one Unit:
Purchase Price and currency:
Section 4(g) Listing upon notice of issuance on any national securities exchange
or automated quotation system:
Detachable Date:
Overallotment option:
Other provisions:
Section 5(h) provisions, if any:
Delayed Delivery: [None]
[Underwriters' commission shall be __% of the principal amount of Designated
Securities for which Delayed Delivery Contracts have been entered into and the
check given in payment of such commission shall be drawn to the order of
_____________]
19
<PAGE>
[Maximum aggregate principal amount of Designated Securities to be offered and
sold pursuant to Delayed Delivery Contracts: [$]_______________]
[Minimum principal amount of each Delayed Delivery Contract: [$]______________]
20
<PAGE>
SCHEDULE I
Common Stock
Preferred Stock
Depositary Shares
Warrants
Underwriting Agreement dated
Registration Statement No. 333-
Representative(s):
Designation, Purchase Price and Description:
Designation:
Liquidation preference per share:
Number of shares:
Purchase price per share (include accrued dividends, if any):
Other provisions:
Over-allotment option:
[Subject to the terms and conditions and in reliance upon the representations
and warranties set forth in the Underwriting Agreement, the Company hereby
grants an option to the several Underwriters named in Schedule II hereto to
purchase, severally and not jointly, up to [ ] additional shares of [ ] (the
"[U.S.] Option Securities", [together with the International Option Securities
(as hereinafter defined]), the "Option Securities") at the same purchase price
per share as the Underwriters shall pay for the Securities. Said option may be
exercised only to cover over-allotments in the sale of the Securities by the
Underwriters. Said option may be exercised in whole or in part at any time (but
not more than once) on or before the day after the date of the Final Prospectus,
upon written or telegraphic notice by the Representatives to the Company setting
forth the number of shares of [U.S.] Option Securities as to which the several
Underwriters are exercising the option and the Settlement Date, as defined in
the Underwriting Agreement. The number of shares of [U.S.] Option
21
<PAGE>
Securities to be purchased by each Underwriter shall be the same percentage of
the total number of shares of [U.S.] Option Securities to be purchased by the
several Underwriters as such Underwriter is purchasing of the securities, as set
forth in Schedule II hereto, subject to such adjustments as the Representatives
in their absolute discretion shall make to eliminate any fractional shares.
If the option provided for herein is exercised after the business day
prior to the Closing Date, as defined in the Underwriting Agreement, the Company
will deliver (at the expense of the Company) to the Representatives, at [ ], New
York, New York, on the date specified by the Representatives (which shall be
within three business days after exercise of said option) (the "Settlement
Date"), certificates for [U.S.] Option Securities in such names and
denominations as the Representatives shall have requested not less than three
full business days in advance of the Settlement Date unless the parties
otherwise agree against payment of the purchase price thereof to or upon the
order of the Company by certified or official bank check or checks payable in,
or wire transfers of, (next day) funds. If settlement for [U.S.] Option
Securities occurs after the Closing Date, the Company will deliver to the
Representatives on the Settlement Date for [U.S.] Option Securities, and the
obligation of the Underwriters to purchase the [U.S.] Option Securities shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 5 of the Underwriting Agreement.]
Other provisions of or Amendments to Underwriting Agreement:
[The Company is concurrently entering into an International Underwriting
Agreement dated the date hereof (the "International Underwriting Agreement")
providing for the issue and sale by the Company of [ ] outside the United States
and Canada through arrangements with certain underwriters outside the United
States and Canada (the "International Underwriters"), for whom [ ] are acting as
representatives (the "International Representatives"), and providing for the
grant to the International Underwriters of an option to purchase from the
Company up to [ ] additional shares of [ ] (the "International Option
Securities"). It is further understood and agreed that the Underwriters and the
International Underwriters have entered into an Agreement dated the date hereof
(the "Agreement between Underwriters and International Underwriters"), pursuant
to which, among other things, the International Underwriters may purchase from
the Underwriters a portion of the Securities to be sold pursuant to the
Underwriting Agreement and the Underwriters may purchase from the International
Underwriters a portion of the Securities to be sold pursuant to the
International Underwriting Agreement.
It is understood that two forms of Preliminary Final Prospectuses and
two forms of Final Prospectuses are to be used in connection with the offering
and sale of the Securities pursuant to the Underwriting Agreement and
International Underwriting Agreement: one form of Preliminary Final Prospectus
and one form of Final Prospectus relating to the Securities, which are to be
22
<PAGE>
offered and sold to United States and Canadian Persons, and one form of
Preliminary Final Prospectus and one form of Final Prospectus relating to the
Securities, which are to be offered and sold to persons other than United States
and Canadian Persons. The two forms of Preliminary Final Prospectuses and the
two forms of Final Prospectuses are identical except for the outside front cover
page, the discussion under the heading "Underwriting" and the outside back cover
page. The form of Preliminary Final Prospectus, the form of Final Prospectus and
the form of any Rule 434 term sheet relating to the Securities which are to be
offered to U.S. and Canadian Persons, as first filed pursuant to Rule 424(b) or
Rule 434 or, if no filing pursuant to Rule 424(b) is made, such form of
Preliminary Final Prospectus, Final Prospectus and any Rule 434 term sheet
included in the Registration Statement at the Effective Date, is hereinafter
called the "U.S. Prospectus"; such form of Preliminary Final Prospectus, such
form of Final Prospectus and such form of any Rule 434 term sheet relating to
the Securities which are to be offered to Persons other than United States and
Canadian Persons, as first filed pursuant to Rule 424(b) or Rule 434 or, if no
filing pursuant to Rule 424(b) is made, such form of Preliminary Final
Prospectus, such form of Final Prospectus and such form of any Rule 434 terms
sheet included in the Registration Statement at the Effective Date, is
hereinafter called the "International Prospectus"; and the U.S. Prospectus and
the International Prospectus are hereinafter collectively called the
"Prospectuses."
Each Underwriter agrees that (i) it is not purchasing any of the
Securities or Option Securities for the account of anyone other than a United
States or Canadian Person, (ii) it has not offered or sold, and will not offer
or sell, directly or indirectly, any of the Securities or Option Securities or
distribute any U.S. Prospectus to any person outside the United States or
Canada, or to anyone other than a United States or Canadian Person, and (iii)
any dealer to whom it may sell any of the Securities will represent that it is
not purchasing for the account of anyone other than a United States or Canadian
Person and agree that it will not offer or resell, directly or indirectly, any
of the Securities or Option Securities outside the United States or Canada, or
to anyone other than a United States or Canadian Person or to any other dealer
who does not so represent and agree; provided, however, that the foregoing shall
not restrict (a) purchases and sales between the Underwriters on the one hand
and the International Underwriters on the other hand pursuant to the Agreement
between Underwriters and International Underwriters, (b) stabilization
transactions contemplated under the Agreement between Underwriters and
International Underwriters, conducted through [ ] as part of the distribution of
the Securities or Option Securities, and (c) sales to or through (or
distributions of U.S. Prospectuses or U.S. Preliminary Prospectuses to) United
States or Canadian Persons who are investment advisors, or who otherwise
exercise investment discretion, and who are purchasing for the account of anyone
other than a United States or Canadian Person.
The agreements of the Underwriters and International Underwriters set
forth above shall terminate upon the earlier of the following events:
(i) a mutual agreement of the Representatives and the International
Representatives to terminate the selling restrictions set forth above and in
Schedule I of the International
23
<PAGE>
Underwriting Agreement; or
(ii) the expiration of a period of 30 days after the Closing Date,
unless (A) the Representatives shall have given notice to the Company and the
International Representatives that the distribution of the Securities by the
Underwriters has not yet been completed or (B) the International Representatives
shall have given notice to the Company and the Underwriters that the
distribution of the International Securities by the International Underwriters
has not yet been completed. If such notice by the Representatives or the
International Representatives is given, the agreements set forth above shall
survive until the earlier of (1) the event referred to in clause (i) above or
(2) the expiration of an additional period of 30 days from the date of any such
notice].
Additional Covenants Pursuant to Section 4:
[Until the [ ], the Company will not, without the consent of the
Representatives, offer, sell or contract to sell, or otherwise dispose of,
directly or indirectly, or announce the offering of, any securities issued or
guaranteed by the Company (other than the Securities).]
[The Company will arrange for the listing of the Equity Securities upon notice
of issuance on [designate any national securities exchange or automated
quotation system].]
Additional Covenants Pursuant to Section 5:
Supplemental matters to be covered by the opinion of Cravath, Swaine & Moore
and/or the General Counsel, an Assistant General Counsel or an Associate General
Counsel of the Company, to be delivered pursuant to Section 5(b):
Modification of items to be covered by the letter from PricewaterhouseCoopers
LLP delivered pursuant to Section 5(e) at the Execution Time:
Section 5(h) provisions, if any:
Deposit Agreement: Terms and Conditions
Warrant Agreement: Terms and Conditions
Purchased Securities Closing Date and Time:
Method of Payment of Underwriters' Securities:
24
<PAGE>
Delayed Delivery Arrangements:
Fee:
Minimum principal amount of each contract:
Maximum aggregate principal amount of all contracts:
Convertibility:
Exchangeability into Debt Securities:
Closing Date and Time:
25
<PAGE>
SCHEDULE II
Amount
Underwriter To Be Purchased
- ----------- ---------------
26
<PAGE>
SCHEDULE III
Delayed Delivery Contract
[Date]
[Insert name and address
of lead Representative]
Ladies and Gentlemen:
The undersigned hereby agrees to purchase from International Business
Machines Corporation (the "Company"), and the Company agrees to sell to the
undersigned, on , 19 , (the "Delivery Date"), principal amount of the Company's
(the "Securities") offered by the Company's Prospectus dated , 199 , and related
Prospectus Supplement dated , 199 , receipt of a copy of which is hereby
acknowledged, at a [purchase price of % of the] [principal amount] [thereof,
plus] [accrued interest] [amortization of original issue discount], if any,
thereon from , 199 , to the date of payment and delivery, and on the further
terms and conditions set forth in this contract.
Payment for the Securities to be purchased by the undersigned shall be
made on or before 11:00 AM, New York City time, on the Delivery Date to or upon
the order of the Company in New York Clearing House (next day) funds, at your
office or at such other place as shall be agreed between the Company and the
undersigned, upon delivery to the undersigned of the Securities in definitive
fully registered form and in such authorized denominations and registered in
such names as the undersigned may reques by written or telegraphic communication
addressed to the Company not less than five full business days prior to the
Delivery Date. If no request is received, the Securities will be registered in
the name of the undersigned and issued in a denomination equal to the aggregate
principal amount or number of Securities to be purchased by the undersigned on
the Delivery Date.
The obligation of the undersigned to take delivery of and make payment
for Securities on the Delivery Date, and the obligation of the Company to sell
and deliver Securities on the Delivery Date, shall be subject to the conditions
(and neither party shall incur any liability by reason of the failure thereof)
that (1) the purchase of Securities to be made by the undersigned, which
purchase the undersigned represents is not prohibited on the date hereof, shall
not on the Delivery Date be prohibited under the laws of the jurisdiction to
which the undersigned is subject, and (2) the Company, on or before the Delivery
Date, shall have sold to certain
27
<PAGE>
underwriters (the "Underwriters") such principal amount or number of Securities
as is to be sold to them pursuant to the Underwriting Agreement referred to in
the Prospectus and Prospectus Supplement mentioned above. Promptly after
completion of such sale to the Underwriters, the Company will mail or deliver to
the undersigned at its address set forth below notice to such effect,
accompanied by a copy of the opinion of counsel for the Company delivered to the
Underwriters in connection therewith. The obligation of the undersigned to take
delivery of and make payment for the Securities, and the obligation of the
Company to cause the Securities to be sold and delivered, shall not be affected
by the failure of any purchaser to take delivery of and make payment for the
Securities pursuant to other contracts similar to this contract.
This contract will inure to the benefit of and be binding upon the
parties hereto and their respective successors, but will not be assignable by
either party hereto without the written consent of the other.
It is understood that acceptance of this contract and other similar
contracts is in the Company's sole discretion and, without limiting the
foregoing, need not be on a first come, first served basis. If this contract is
acceptable to the Company, it is required that the Company sign the form of
acceptance below and mail or deliver one of the counterparts hereof to the
undersigned at its address set forth below. This will become a binding contract
between the Company and the undersigned, as of the date first above written,
when such counterpart is so mailed or delivered.
This agreement shall be governed by and construed in accordance with
the laws of the State of New York without reference to choice of law principles.
Very truly yours,
-------------------------
(Name of Purchaser)
By:
----------------------
(Signature and Title of Officer)
-------------------------------
(Address)
Accepted:
International Business Machines Corporation
28
<PAGE>
By:
--------------------------
Title:
-----------------------
<PAGE>
EXHIBIT (1)(b)
$----------------
International Business Machines Corporation
U.S. Medium-Term Notes
AGENCY AGREEMENT
__________ __, 199_
[Agent Addresses]
Dear Sirs:
1. Introduction. International Business Machines Corporation, a New
York corporation (the "Issuer"), confirms its agreement with each of you
(individually an "Agent" and collectively the "Agents") with respect to the
issue and sale from time to time by the Issuer on or after the date hereof of up
to $___________ in aggregate initial offering price of its Medium-Term
Securities (or for Medium-Term Securities denominated in currencies or currency
units other than U.S. dollars, the equivalent thereof based on the prevailing
exchange rates at the respective times such Medium-Term Securities are first
offered) (the "Securities") issued under Article Three of the Indenture, dated
as of October 1, 1993 (the "Trustee"), as supplemented by the First Supplemental
Indenture thereto dated as of December 15, 1995 (the "Indenture"), between the
Issuer and The Chase Manhattan Bank, 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-_____ and
333-40669), 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
<PAGE>
"Registration Statement," and the prospectus dated _________ __, 199_,
a form of which is included in Registration Statement No. 333-_______,
as supplemented as of the Closing Date, including all material
incorporated by reference therein, being hereinafter referred to as the
"Prospectus"). Any reference in this Agreement to amending or
supplementing the Prospectus shall be deemed to include the filing of
materials incorporated by reference in the Prospectus after the Closing
Date and any reference in this Agreement to any amendment or supplement
to the Prospectus shall be deemed to include any such materials
incorporated by reference in the Prospectus after the Closing Date.
(b) On the effective date of each registration statement
included in the definition of Registration Statement, such registration
statement conformed, and on the Closing Date the Prospectus as then
amended or supplemented will conform, in all 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 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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
to purchase Securities but the related settlement has not occurred, the
Issuer, subject to th 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 time to time, such other information
concerning the issuer a 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
<PAGE>
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 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) an
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
<PAGE>
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 to the Issuer or any of its subsidiaries of any
court, regulatory body, administrative agency,
<PAGE>
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
<PAGE>
been obtained.
(ii) such counsel shall also furnish a letter, dated
the Closing Date, that shall state that such counsel has no
reason to believe that: (A) the Registration Statement or any
amendment thereof at the time it became effective contained an
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the
Prospectus, as amended or supplemented, includes an untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading (in each case, except for the financial statements
and other information of an accounting 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 PricewaterhouseCoopers LLP ("PWC"),
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
<PAGE>
effect that:
(i) in their opinion, the audited financial
statements and schedules thereto included or incorporated in
the Registration Statement and Prospectus and reported on by
them comply as to form in all material respects with the
applicable accounting requirements of the Exchange Act and the
related published Rules and Regulations thereunder with
respect to financial statements and financial statement
schedules included or incorporated in annual reports on Form
10-K under the Exchange Act;
(ii) on the basis of a reading of the unaudited
financial statements included or incorporated in the
Registration Statement and Prospectus and of the latest
unaudited financial statements made available by the Issuer
and its subsidiaries; carrying out certain specified
procedures (but not an examination in accordance with
generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of
the Board of Directors of the Issuer and the Pricing Committee
appointed by the Board of Directors of the Issuer, if any; and
inquiries of certain officials of the Issuer who have
responsibility for financial and accounting matters as to
transactions and events subsequent to the date of the most
recent financial statements included or incorporated in the
Registration Statement and the Prospectus, nothing came to
their attention that caused them to believe that:
(A) any unaudited financial statements
included or incorporated in the Registration
Statement and Prospectus do not comply as to form in
all material respects with applicable accounting
requirements and with the published rules and
regulations of the Commission with respect to
financial statements included or incorporated in
quarterly reports on Form 10-Q under the Exchange
Act; or said unaudited financial statements are not
fairly presented (except as permitted by Form 10-Q)
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
<PAGE>
(iii) they have performed certain other procedures as
a result of which they determined that certain information of
an accounting, financial or statistical nature (which is
limited to accounting, financial or statistical information
derived from the general accounting records of the Issuer) set
forth in the Registration Statement and the Prospectus,
including the information included or incorporated in Items 1
and 7 of the Issuer's Annual Report on Form 10-K incorporated
therein or in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included or
incorporated in any of the Issuer's Quarterly Reports on Form
10-Q incorporated therein, agrees with the accounting records
of the Issuer and its subsidiaries, excluding any questions of
legal interpretation.
References to the Registration Statement and the Prospectus in
this subsection (f) are to such documents as amended and supplemented
at the date of the letter.
(g) The Agents shall have received from Davis Polk & Wardwell,
counsel for the Agents, such opinion or opinions, dated the Closing
Date, with respect to the validity of the Securities, the Registration
Statement, the Prospectus and other related matters as they may
require, and the Issuer shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters.
(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 o contemplated solicitation) and such other
documents and certificates (including an opinion of Davis Polk &
Wardwell to the
<PAGE>
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:
(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 bein 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 an 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 statement 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)
<PAGE>
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 & 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 and at the expense of the Agents, the Issuer shall cause PWC
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, PWC 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
<PAGE>
Securities as the result of solicitation by any Agent pursuant hereto
to make payment for and take delivery of such Securities shall be
subject to (i) the accuracy, on the related settlement date fixed
pursuant to the Procedures, of the Issuer's representation and warranty
deemed to be made to the Agents pursuant to the last sentence of
subsection (a) of this Section 6, and (ii) the satisfaction, on such
settlement date, of each of the conditions set forth in Sections 5(a),
(b) and (c), it being understood that under no circumstance shall any
Agent have any duty or obligation to exercise the judgment permitted
under Section 5(b) or (c) on behalf of any such person.
7. Indemnification and Contribution.
(a) The Issuer agrees to indemnify and hold harmless each
Agent and each person who controls such Agent within the meaning of
either the Act or the Exchange Act against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them
may become subject, under the Act, the Exchange Act or other Federal or
State statutory law or regulation, at common law or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the registration
statement relating to the Registered Securities as originally filed or
in any amendment thereto, or in any preliminary prospectus or the
Prospectus, or arise out of or are based upon the omission 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 Agen 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.
<PAGE>
(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 cas any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the
extent that it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel
satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assert such legal
defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upo 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
<PAGE>
(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 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
<PAGE>
Securities as a result of solicitation by any Agent pursuant hereto, and whose
offer the Issuer has accepted, the Issuer (i) shall hold the Agents harmless
against any loss, claim or damages arising from or as a result of such default
by the Issuer, and (ii) in particular, shall pay to the Agents any commission to
which they would be entitled in connection with such sale.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Issuer or its officers and of the Agents set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation,
or statement as to the results thereof, made by or on behalf of any Agent, the
Issuer or any of their respective representatives, officers or directors or any
controlling person and will survive delivery of and payment for the Securities.
If this Agreement is terminated pursuant to Section 10 or for any other reason,
the Issuer shall remain responsible for the expenses to be paid or reimbursed by
it pursuant to Section 4(g) and the obligations of the Issuer under Section 4(f)
and the respective obligations of the Issuer and the Agents pursuant to Section
7 shall remain in effect. In addition, if any such termination shall occur
either (i) at a time when any Agent shall own any of the Securities with the
intention of reselling them as contemplated by Section 11 hereof or (ii) after
the Issuer has accepted an offer to purchase Securities solicited by any Agent
pursuant hereto and prior to the related settlement, the obligations of the
Issuer under the last sentence of Section 4(b), under Sections 4(a), 4(c), 4(d),
4(e), 6(a), and 6(e) and, in the case of a termination occurring as described in
(ii) above, under Section 3(c) and under the last sentence of Section 8, shall
also remain in effect.
10. Termination. This Agreement may be terminated for any reason at any
time by the Issuer as to any Agent or, in the case of any Agent, by such Agent
insofar as this Agreement 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 agre 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
<PAGE>
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:
Notices to ____________________ shall be directed to it at
______________________, Attention: ____________________ (Fax: _____________).
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.
<PAGE>
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.
If the foregoing correctly sets forth our agreement, please indicate
your acceptance hereof in the space provided for that purpose below.
Very truly yours,
INTERNATIONAL BUSINESS
MACHINES CORPORATION
By
-----------------------------
Title:
CONFIRMED AND ACCEPTED, as of the date first above written:
By
--------------------------
Title:
By
--------------------------
Title
By
--------------------------
Title:
By
--------------------------
Title
<PAGE>
By
--------------------------
Title:
<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>
EXHIBIT B
The Medium-Term Notes due one year or more from their issue
date (the "Notes") are to be offered on a continuing basis by International
Business Machines Corporation (the "Issuer").
, as agents (each individually an "Agent" and
collectively the "Agents"), have agreed to use reasonable efforts to solicit
purchases of the Notes pursuant to an Agency Agreement dated _______________
(the "Agency Agreement"), among the Issuer and the Agents. No Agent will be
obligated to purchase Notes for its own account. The Notes will be issued
pursuant to an Indenture, dated as of October 1, 1993 (the "Indenture"), between
the Issuer and The Chase Manhattan Bank (National Association), as trustee (the
"Trustee"), as supplemented by the First Supplemental Indenture thereto dated as
of December 15, 1995. The Notes will rank equally with all other unsecured and
unsubordinated indebtedness of the Issuer and have been registered with the
Securities and Exchange Commission (the "Commission").
Each Note will be represented initially by either a global
security registered in the name of a nominee of The Depository Trust Company, as
Depositary ("DTC") (a "BookEntry Note") or a certificate issued in definitive
form (a "Certificate Note"). It is currently contemplated that both Fixed Rate
Notes (as defined below) and Floating Rate Notes (as defined below) may be
issued as Book-Entry Notes.
Administrative procedures and specific terms of the Notes and
the offering, to the extent Notes are offered and sold through the Agents, are
explained below. Administrative and record-keeping responsibilities will be
handled for the Issuer by its Treasury Department. The Issuer will advise each
Agent in writing of those persons handling administrative responsibilities with
whom each Agent is to communicate regarding offers to purchase Notes and the
details of their delivery. To the extent that the following procedures conflict
with the provisions of the Notes, the Indenture or the Letter (as defined
below), the relevant provisions of the Note, the Indenture or the Letter shall
control.
<PAGE>
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.
<PAGE>
Price to Public: Each Note will be issued at 100% of principal amount,
unless otherwise agreed between the Issuer and the
relevant Agent.
Denominations: Unless otherwise agreed between the Issuer and the
relevant Agent, the denominations of the Notes will
be $1,000 or any multiple thereof. The denominations
of Notes denominated in currencies or currency units
other than U.S. dollars will be as agreed between the
Issuer and the relevant Agent.
Registration: Notes will be issued only in fully registered form.
Interest Payment: Unless otherwise specified in 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
<PAGE>
specified therein and in the related Pricing
Supplement (each an "Interest Payment Date" with
respect to such Floating Rate Note). Interest payable
on a Fixed Rate Note (including payments for partial
periods) will be calculated and paid on the basis of
a 360-day year of 12 30-day months. Interest payable
on a Floating Rate Note will be calculated and paid
on the basis of the actual number of days elapsed in
the interest period and a year of 360 days; provided,
however, that interest payable on a Floating Rate
Note which has a rate of interest determined in
accordance with the Treasury Rate will be calculated
on the basis of the actual number of days in the
year. Interest will be payable on each Interest
Payment Date to the person in whose name the Note is
registered at the close of business 15 calendar days
prior to such Interest Payment Date whether or not
such day is a Business Day (as defined in the
Indenture) (the "Record Date") except that (a)
on any Note originally issued after a Record
Date and prior to the next succeeding Interest
Payment Date, the first payment of interest on such
Note will be made on the Interest Payment Date
following the next succeeding Regular Record Date to
the registered owner on such next Regular Record Date
and (b) interest payable at maturity (or, in the case
of a Fixed Rate Note, upon redemption) will be
payable to the person to whom principal shall be
payable. With respect to Fixed Rate Notes, each
payment of interest 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
<PAGE>
accept offers to purchase Notes and may reject any
such offer, in whole or in part. If the Issuer
rejects an offer solicited by an Agent, the Issuer
will promptly notify the Agent involved.
Settlement: All offers accepted by the Issuer will be settled on
the third Business Day next succeeding the date of
acceptance unless otherwise agreed by any purchaser
and the Issuer. Prior to 3:00 p.m., New York City
time, on the Business Day next preceding the
settlement date, the Issuer will instruct the Trustee
to authenticate and deliver the Notes no later than
2:15 p.m., New York City time, on the settlement
date.
Details for Settlement: For each offer solicited by an Agent that is accepted
by the Issuer, the Agent who presented the offer (the
"Presenting Agent") shall communicate to the Issuer's
Treasury Department by telephone, facsimile
transmission or other acceptable means the following
information (the "Purchase Information"):
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
<PAGE>
multiplier, maximum or minimum interest rates, index
maturity, Interest Determination Dates, Interest
Reset Dates (as such terms are defined in the
applicable Prospectus Supplement) interest reset
period, interest payment period and Interest Payment
Dates of Notes, in each case, to the extent
applicable.
6. The currency, currencies, currency unit or
currency units in which the Note or Notes are to be
denominated and (if not the same) payable.
7. Maturity date of Notes.
8. Initial redemption date of Notes, if any.
9. Optional redemption price (including the fixed
percentage by which the premium, if any, annually
declines) of Notes, if any.
10. Original issue date of Notes.
11. Settlement date for Notes.
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
<PAGE>
Agent, the Issuer will, after recording the details
and any necessary calculations, communicate the
Purchase Information by telephone, facsimile
transmission or other acceptabl means, to the
Trustee. Prior to preparing the Notes for delivery,
the Trustee will confirm the Purchase Information by
telephone with the Presenting Agent. The Trustee will
assign to and enter on each Note a transaction
number.
Special provisions relating to Certificate Notes
denominated or payable in a currency, currencies, a
currency unit or currency units other than U.S.
dollars may be agreed by the Issuer and the Agents at
a later time.
Confirmation: For each accepted offer solicited by an Agent, the
Presenting Agent will issue a confirmation to the
purchaser, with a copy to the Issuer's Treasury
Department and the Trustee, setting forth the
Purchase Information and delivery and payment
instructions.
Note Deliveries Upon the receipt of appropriate
and Cash Payment: documentation and instructions, which may be by
telephone to be confirmed in writing from the Issuer,
and verification thereof, the Trustee will cause the
Notes to be prepared and authenticated and hold the
Notes for delivery against payment.
The Trustee will deliver the Notes, in accordance
with instructions from the Issuer, to the Presenting
Agent, as the Issuer's agent, for the benefit of the
purchaser only against delivery of a receipt
therefor.
Agents' addresses for delivery of Certificate Notes:
<PAGE>
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 paymen 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 us of funds during the period
when they were credited to the account of the Issuer.
<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
<PAGE>
record indications of interest in purchasing Fixed
Rate Notes at the posted fixed interest rates. After
such filing, sales, mailing of confirmations and
settlements at the posted rates may resume, subject
to the provisions of "Delivery of Prospectus" below.
Outdated stickers, and copies of the Prospectus to
which they are attached (other than those retained
for files), will be destroyed.
Suspension of As provided in the Agency Agreement, the Issuer may
Solicitation suspend Amendment or solicitation of purchases at any
Amendment or time and, upon receipt of notice from the Issuer,
Supplement: 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
<PAGE>
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 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
<PAGE>
agreed to between the Issuer and such purchaser or a
change in posted rates not applicable to such
purchaser, such purchaser shall not receive the
Prospectus as supplemented by such new supplement,
but shall receive the Prospectus as supplemented to
reflect the terms of the Notes being purchased by
such purchaser and otherwise as most recently amended
or supplemented on the date of delivery of the
Prospectus.
Agents' addresses for delivery of Pricing
Supplements:
Authenticity of 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>
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 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 origina
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.
<PAGE>
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 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
<PAGE>
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 delivere
and at least 30 days before the next Interest Payment
Date for such Book-Entry Notes, on which such Global
Securities shall be exchanged for a single
replacement Global Security and (iii) a new CUSIP
number to be assigned to such replacement Global
Security. Upon receipt of such a notice, DTC will
send to its Participants (including the Trustee) a
written reorganization notice to the effect that such
exchange will occur on such date. Prior to the
specified exchange date, the Trustee will deliver to
the CUSIP Service Bureau a written notice setting
forth such exchange date and the new CUSIP number and
stating that, as of such exchange date, the CUSIP
numbers of the Global Securities to be exchanged will
no longer be valid. On the specified exchange date,
the Trustee will exchange such Global Securities for
a single Global Security bearing the new CUSIP number
and a new original issue date and the CUSIP numbers
of the exchanged Global Securities will, in
accordance with CUSIP Service Bureau procedures, be
canceled and not immediately reassigned.
Notwithstanding the
<PAGE>
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 Repayment: The Trustee will comply with the terms of the Letter
with regard to redemptions and repayments of the
Notes. If a Global Security is to be redeemed or
repaid in part, the Trustee will exchange such Global
Security for two Global Securities, one of which
shall represent the portion of the Global Security
being redeemed or repaid and shall be canceled
immediately after issuance and the other of which
shall represent the remaining portion of such Global
Security and shall bear the CUSIP number of the
surrendered Global Security.
<PAGE>
Denominations: Unless otherwise agreed between the Issuer and the
relevant Agent, Book-Entry Notes will be issued in
principal amounts of $1,000 or any multiple thereof.
Global Securities will be denominated in principal
amounts not in excess of $200,000,000. If one or more
Book-Entry Notes having an aggregate principal amount
in excess of $200,000,000 would, but for the
preceding sentence, be represented by a single Global
Security, then one Global Security will be issued to
represent each $200,000,000 principal amount of such
Book-Entry Note or Notes and an additional Global
Security will be issued to represent any remaining
principal amount of such Book-Entry Note or Notes. In
such a case, each of the Global Securities
representing such Book-Entry Note or Notes shall be
assigned the same CUSIP number.
Interest: Publication. Standard & Poor's Corporation will use
the information received in the pending deposit
message described under the Settlement Procedure "C"
below in order to include the amount of any interest
payable and certain other information regarding the
related Global Security in the appropriate weekly
bond report published by Standard & Poor's
Corporation.
Notice of Interest Payment On the first Business Day of January, April, July and
and Regular Record Dates: October of each year, the Trustee will deliver to the
Issuer and DTC a written list of Regular Record Dates
and Interest Payment Dates that will occur with
respect to Book-Entry Notes during the six-month
period beginning on such first Business Day. Promptly
after each Interest Determination Date or Calculation
Date, as applicable (as defined in the applicable
Note) for Floating Rate Notes, the Company, upon
receiving notice thereof, will notify Standard &
Poor's Corporation of the interest rate determined on
such Interest Determination Date or Calculation Date,
as applicable.
<PAGE>
Payments of Principal and Payments of Interest Only. Promptly after each
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
eac 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 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
<PAGE>
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
<PAGE>
accordance with its SDFS operating procedures then in
effect, such amounts in funds available for immediate
use to the respective Participants in whose names the
Book-Entry Notes represented by such Global
Securities are recorded in the book-entry system
maintained by DTC. Neither of the Issuer or 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.
<PAGE>
B. After receiving the details for each offer
from the Presenting Agent, the Issuer will,
after recording the details and any
necessary calculations, communicate the
Purchase Information by telephone, facsimile
transmission or other acceptable means, to
the Trustee.
C. The Trustee will assign a CUSIP number to
the Global Security representing such Note
and will 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
<PAGE>
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.
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
<PAGE>
such Global Security pursuant to the
Medium-Term Note Certificate Agreement
between the Trustee and DTC.
H. The Presenting Agent will enter an SDFS
deliver order through DTC's Participant
Terminal System instructing DTC (i) to debit
such Note to the Presenting Agent's
participant account and credit such Note to
the participant accounts of the Participants
with respect to such Note and (ii) to debit
the settlement accounts of such Participants
and credit the settlement account of The
Presenting Agent for an amount equal to the
price of such Note.
I. Transfers of funds in accordance with SDFS
deliver orders described in Settlement
Procedures "G" and "H" will be settled in
accordance with SDFS operating procedures in
effect on the settlement date.
J. The Trustee, upon confirming receipt of such
funds, will wire transfer to the account of
the Issuer maintained at Chase Manhattan
Bank, New York N.Y., Account of
International Business Machines Corporation,
Cash Concentration, ABA Number 021000021,
Account Number 323 213 499, in funds
available for immediate use in the amount
transferred to the Trustee in accordance
with Settlement Procedure "G".
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.
<PAGE>
Settlement Procedures For orders of Book-Entry Notes solicited by
Timetable: an Agent 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.
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
<PAGE>
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 tim 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 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
<PAGE>
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 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
Note to have been represented by such Global
Security and will make appropriate entries
in its records.
<PAGE>
EXHIBIT C
, 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 __________________ (the "Agency Agreement"):
Principal Amount
$
--------------------------
Interest Rate
--------------------------
Maturity Date
_______________, 19___
Discount
________% of Principal Amount
Price to be paid
<PAGE>
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 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
<PAGE>
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
negativ 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.]
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.
<PAGE>
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>
Exhibit(5)
[LETTERHEAD OF INTERNATIONAL BUSINESS MACHINES CORPORATION]
January 13, 1999
Ladies & Gentlemen:
As Vice President and Assistant General Counsel of International
Business Machines Corporation (the "Company") and an attorney duly admitted to
practice in the State of New York, I am giving this opinion in connection with
the proposed issuance and sale from time to time pursuant to Rule 415 under the
Securities Act of 1993 (the "Securities Act") of up to $5,115,000,000 of senior
or subordinated debt securities of the Company, to be issued under an Indenture
dated as of October 1, 1993, as supplemented by the First Supplemental Indenture
thereto dated as of December 15, 1995 (the "Senior Indenture"), between the
Company and The Chase Manhattan Bank (the "Senior Trustee") or an Indenture (the
"Subordinated Indenture") to be entered into between the Company and a Trustee
(the "Subordinated Trustee"), preferred stock (the "Preferred Stock") of the
Company, depositary shares (the "Depositary Shares") of the Company representing
a fractional interest in a share of Preferred Stock, capital stock (the "Capital
Stock") of the Company and/or warrants to purchase Debt Securities, Preferred
Stock or Capital Stock (the "Warrants") of the Company (the Debt Securities,
Preferred Stock, Depositary Shares, Capital Stock and Warrants are collectively
referred to herein as the "Securities").
I, together with competent members of my legal staff acting under my
direct supervision and control, have examined the Certificate of Incorporation
of the Company, as amended; the By-laws of the Company, the Senior Indenture;
and the forms of Subordinated Indenture and Deposit Agreement (the "Deposit
Agreement") filed as Exhibits to the Registration Statement. In addition, I am
familiar with the proceedings by which such instruments and the transactions
contemplated thereby were authorized by the Company.
Based upon and subject to the foregoing and assuming that (i) the
Registration Statement and any amendments thereto (including post-effective
amendments) will have become effective and comply with all applicable laws; (ii)
the Registration Statement will be effective and will comply with all applicable
laws at the time the Securities are offered or issued as contemplated by the
Registration Statement; (iii) a Prospectus Supplement, Pricing Supplement or
term sheet will have been prepared and file with the Securities and Exchange
Commission describing the Securities offered thereby and will comply with all
applicable laws; (iv) all Securities will be issued and sold in compliance with
applicable federal and state securities laws and in the manner
<PAGE>
stated in the Registration Statement and the appropriate Prospectus Supplement;
(v) a definitive purchase, underwriting or similar agreement with respect to any
Securities offered or issued will have been duly authorized and validly executed
and delivered by the Company and the other parties thereto; and (vi) any
Securities issuable upon conversion, exchange or exercise of any Security being
offered or issued will be duly authorized, created and, if appropriate, reserved
for issuance upon such conversion, exchange or exercise, I am of the opinion
that:
(1) the Company has been duly incorporated and is a validly existing
corporation under the laws of the State of New York.
(2) with respect to Debt Securities to be issued under either the
Senior Indenture or Subordinated Indenture, when (A) the Senior Trustee or
Subordinated Trustee, as applicable, is qualified to act as Senior Trustee or
Subordinated Trustee, as applicable, under the Senior Indenture or Subordinated
Indenture, as applicable, (B) the Senior Trustee or Subordinated Trustee, as
applicable, has duly executed and delivered the Subordinated Indenture or Senior
Indenture, as applicable, (C) the Senior Indenture or Subordinated Indenture, as
applicable, has been duly authorized and validly executed and delivered by the
Company to the Senior Trustee or Subordinated Trustee, as applicable, (D) the
Senior Indenture or Subordinated Indenture, as applicable, has been duly
qualified under the Trust Indenture Act of 1939, as amended, (E) the Board of
Directors of the Company or a duly constituted and acting committee thereof
(such Board of Directors or committee being hereinafter referred to as the
"Board") ha taken all necessary corporate action to approve the issuance and
terms of such Debt Securities, the terms of the offering thereof and related
matters, and (F) such Debt Securities have been duly executed, authenticated,
issued and delivered in accordance with the provisions of the Senior Indenture
or Subordinated Indenture, as applicable, and the applicable definitive
purchase, underwriting or similar agreement approved by the Board upon payment
of the consideration therefor provided for therein, such Deb Securities will be
validly issued and will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms (subject to
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws in effect and subject to general principles of
equity, regardless of whether such enforceability is considered in a proceeding
in equity or at law);
(3) with respect to shares of Preferred Stock, when both (A) the Board
has taken all necessary corporate action to approve the issuance and terms of
the shares of Preferred Stock, the terms of the offering thereof, and related
matters, including the adoption of a Certificate of Amendment relating to such
Preferred Stock (a "Certificate") and the filing of the Certificate with the
Secretary of State of the State of New York, and (B) certificates representing
the shares of Preferred Stock have bee duly executed, countersigned, registered
and delivered either (i) in accordance with the applicable definitive purchase,
underwriting or similar agreement approved by the Board upon payment of the
consideration therefor (not less than the par value of the Preferred Stock)
provided for therein or (ii) upon conversion or exercise of such Security or the
<PAGE>
instrument governing such Security providing for such conversion or exercise as
approved by the Board, for the consideration approved by the Board (not less
than the par value of the Preferred Stock), then the shares of Preferred Stock
will be validly issued, fully paid and nonassessable;
(4) with respect to Depositary Shares, when (A) the Board has taken all
necessary corporate action to approve the issuance and terms of the Depositary
Shares, the terms of the offering thereof, and related matters, including the
adoption of a Certificate relating to the Preferred Stock underlying such
Depositary Shares and the filing of the Certificate with the Secretary of State
of the State of New York, (B) the Deposit Agreement or Agreements relating to
the Depositary Shares and the related Depositary Receipts have been duly
authorized and validly executed and delivered by the Company and the Depositary
appointed by the Company, (C) the shares of Preferred Stock underlying such
Depositary Shares have been deposited with a bank or trust company (which meets
the requirements for the Depositary set forth in the Registration Statement)
under the applicable Deposit Agreement, and (D) the Depositary Receipts
representing the Depositary Shares have been duly executed, countersigned,
registered and delivered in accordance with the appropriate Deposit Agreement
and the applicable definitive purchase, underwriting or similar agreement
approved by the Board upon payment of the consideration therefor provided for
therein, the Depositary Shares will be validly issued;
(5) with respect to shares of Capital Stock, when both (A) the Board
has taken all necessary corporate action to approve the issuance of and the
terms of the offering of the shares of Capital Stock and related matters and (B)
certificates representing the shares of Capital Stock have been duly executed,
countersigned, registered and delivered either (i) in accordance with the
applicable definitive purchase, underwriting or similar agreement approved by
the Board upon payment of the consideration therefor (not less than the par
value of the Capital Stock) provided for therein or (ii) upon conversion or
exercise of any other Security, in accordance with the terms of such Security or
the instrument governing such Security providing for such conversion or exercise
as approved by the Board, for the consideration approved by the Board (not less
than the par value of the Capital Stock), then the shares of Capital Stock will
be validly issued, fully paid and nonassessable; and
(6) with respect to the Warrants, when (A) the Board has taken all
necessary corporate action to approve the creation of and the issuance and terms
of the Warrants, the terms of the offering thereof, and related matters, (B) the
Warrant Agreement or Agreements relating to the Warrants have been duly
authorized and validly executed and delivered by the Company and the Warrant
Agent appointed by the Company, and (C) the Warrants or certificates
representing the Warrants have been duly executed, countersigned, registered and
delivered in accordance with the appropriate Warrant Agreement or Agreements and
the applicable definitive purchase, underwriting or similar agreement approved
by the Board upon payment of the consideration therefor provided for therein,
the Warrants will be validly issued.
<PAGE>
I understand that I may be referred to, as counsel who has passed upon
the validity of the Debt Securities or the issuance of the Preferred Stock,
Depositary Shares, Capital Stock or Warrants on behalf of the Company, in a
supplement to the Prospectus forming a part of the Registration Statement on
Form S-3 relating to the Securities filed with the Securities and Exchange
Commission pursuant to the Securities Act, and I hereby consent to such use of
my name in said Registration Statement and to the use of this opinion for filing
with said Registration Statement as Exhibit (5) thereto.
Very truly yours,
/s/ David S. Hershberg
David S. Hershberg
<PAGE>
EXHIBIT (23)(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
January 19, 1998, which appears on page 39 of the 1997 Annual Report to
Stockholders of International Business Machines Corporation, which is
incorporated by reference in International Business Machines Corporation's
Annual Report on Form 10-K for the year ended December 31, 1997. We also consent
to the incorporation by reference of our report on the Financial Statement
Schedule, which appears on page 10 of such Annual Report on Form 10-K. We also
consent to the reference to us under the heading "Experts" in such Prospectus.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
January 12, 1999
<PAGE>
EXHIBIT (24)(a)
POWER OF ATTORNEY OF LOUIS V. GERSTNER, JR.
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Chairman of
the Board of Directors and Chief Executive Officer of International Business
Machines Corporation, a New York corporation (the "Corporation"), which may file
with the Securities and Exchange Commission (the "SEC"), Washington, D.C., under
the provisions of the Securities Act of 1933, a shelf registration statement
pursuant to Rule 415 under the Securities Act of 1933 in a total amount which
includes $4,000,000,000 authorized by resolutions dated the date hereof plus all
amounts available for issuance pursuant to Registration Statement No. 333-40669,
of Indebtedness, Preferred Stock, Depositary Shares, Capital Stock and Warrants
(collectively the "Securities") of the Corporation, hereby constitute and
appoint Lawrence R. Ricciardi, Douglas L. Maine, Jeffrey D. Serkes, Mark
Loughridge, Daniel E. O'Donnell, Andrew Bonzani and James H. Hodge, and
each of them, my true and lawful attorneys-in-fact and agents, with full power
to act, together or each without the others, for me and in my name, place and
stead, in any and all capacities, to sign, or cause to be signed electronically,
such registration statement and any and all amendments to the aforementioned
registration statement, and to file said registration statement and amendments
thereto so signed with all exhibits thereto, and any and all other documents in
connection therewith, with the SEC, hereby granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as I might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 27th day of October, 1998.
/s/ Louis V. Gerstner, Jr.
------------------------------
Louis V. Gerstner, Jr.
Chairman of the Board of Directors
and Chief Executive Officer
<PAGE>
POWER OF ATTORNEY OF DOUGLAS L. MAINE
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Senior Vice
President and Chief Financial Officer of International Business Machines
Corporation, a New York corporation (the "Corporation"), which may file with the
Securities and Exchange Commission (the "SEC"), Washington, D.C., under the
provisions of the Securities Act of 1933, a shelf registration statement
pursuant to Rule 415 under the Securities Act of 1933 in a total amount which
includes $4,000,000,000 authorized by resolution dated the date hereof plus all
amounts available for issuance pursuant to Registration Statement No. 333-40669,
of Indebtedness, Preferred Stock, Depositary Shares, Capital Stock and Warrants
(collectively the "Securities") of the Corporation, hereby constitute and
appoint Louis V. Gerstner, Jr., Lawrence R. Ricciardi, Mark Loughridge, Jeffrey
D. Serkes, Daniel E. O'Donnell, Andrew Bonzani and James H. Hodge, and
each of them, my true and lawful attorneys-in-fact and agents, with full power
to act, together or each without the others, for me and in my name, place and
stead, in any and all capacities, to sign, or cause to be signed electronically,
such registration statement and any and all amendments to the aforementioned
registration statement, and to file said registration statement and amendments
thereto so signed with all exhibits thereto, and any and all other documents in
connection therewith, with the SEC, hereby granting unto said attorneys- in-fact
and agents, and each of them, full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as I might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 27th day of October, 1998.
/s/ Douglas L. Maine
-----------------------
Douglas L. Maine
Senior Vice President and
Chief Financial Officer
<PAGE>
POWER OF ATTORNEY OF MARK LOUGHRIDGE
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Vice
President and Controller of International Business Machines Corporation, a New
York corporation (the "Corporation"), which may file with the Securities and
Exchange Commission (the "SEC"), Washington, D.C., under the provisions of the
Securities Act of 1933, a shelf registration statement pursuant to Rule 415
under the Securities Act of 1933 in a total amount which includes $4,000,000,000
authorized by resolutions dated the date hereof plus all amounts available for
issuance pursuant to Registration Statement No. 333-40669, of Indebtedness,
Preferred Stock, Depositary Shares, Capital Stock and Warrants (collectively the
"Securities") of the Corporation, hereby constitute and appoint Louis V.
Gerstner, Jr., Lawrence R. Ricciardi, Douglas L. Maine Jeffrey D. Serkes, Daniel
E. O'Donnell, Andrew Bonzani and James H. Hodge, and each of them, my true
and lawful attorneys-in-fact and agents, with full power to act, together or eac
without the others, for me and in my name, place and stead, in any and all
capacities, to sign, or cause to be signed electronically, such registration
statement and any and all amendments to the aforementioned registration
statement, and to file said registration statement and amendments thereto so
signed with all exhibits thereto, and any and all other documents in connection
therewith, with the SEC, hereby granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform any and all acts
and things requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as I might or could do in person, hereby
ratifying and confirming all that said attorneys-in- fact and agents or any of
them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 27th day of October, 1998.
/s/ Mark Loughridge
-------------------------
Mark Loughridge
Vice President and Controller
<PAGE>
POWER OF ATTORNEY OF IBM DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which may file with the Securities and Exchange Commission (the
"SEC"), Washington, D.C., under the provisions of the Securities Act of 1933, a
shelf registration statement pursuant to Rule 415 under the Securities Act of
1933 in a total amount which includes $4,000,000,000 authorized by resolutions
dated the date hereof, plus all amounts available for issuance pursuant to
Registration Statement No. 333- 40669, of Indebtedness, Preferred Stock,
Depositary Shares, Capital Stock and Warrants (collectively the "Securities") of
the Corporation, hereby constitute and appoint Louis V. Gerstner, Jr., Lawrence
R. Ricciardi, Douglas L. Maine, Jeffrey D. Serkes, Mark Loughridge, Daniel E.
O'Donnell, Andrew Bonzani and James H. Hodge, and each of them, my true
and lawful attorneys-in-fact and agents, with full power to act, together or
each without the others, for me and in my name, place and stead, in any and all
capacities, to sign, or cause to be signed electronically, such registration
statement and any and all amendments to the aforementioned registration
statement, and to file said registration statement and amendments thereto so
signed with all exhibits thereto, and any and all other documents in connection
therewith, with the SEC, hereby granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform any and all acts
and things requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as I might or could do in person, hereby
ratifying and confirming all that said attorneys-in- fact and agents or any of
them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 27th day of October, 1998.
/s/ Cathleen Black
-----------------------------
Director
<PAGE>
POWER OF ATTORNEY OF IBM DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which may file with the Securities and Exchange Commission (the
"SEC"), Washington, D.C., under the provisions of the Securities Act of 1933, a
shelf registration statement pursuant to Rule 415 under the Securities Act of
1933 in a total amount which includes $4,000,000,000 authorized by resolutions
dated the date hereof, plus all amounts available for issuance pursuant to
Registration Statement No. 333- 40669, of Indebtedness, Preferred Stock,
Depositary Shares, Capital Stock and Warrants (collectively the "Securities") of
the Corporation, hereby constitute and appoint Louis V. Gerstner, Jr., Lawrence
R. Ricciardi, Douglas L. Maine, Jeffrey D. Serkes, Mark Loughridge, Daniel E.
O'Donnell, Andrew Bonzani and James H. Hodge, and each of them, my true
and lawful attorneys-in-fact and agents, with full power to act, together or
each without the others, for me and in my name, place and stead, in any and all
capacities, to sign, or cause to be signed electronically, such registration
statement and any and all amendments to the aforementioned registration
statement, and to file said registration statement and amendments thereto so
signed with all exhibits thereto, and any and all other documents in connection
therewith, with the SEC, hereby granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform any and all acts
and things requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as I might or could do in person, hereby
ratifying and confirming all that said attorneys-in- fact and agents or any of
them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 27th day of October, 1998.
/s/ Kenneth I. Chenault
------------------------------------
Director
<PAGE>
POWER OF ATTORNEY OF IBM DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which may file with the Securities and Exchange Commission (the
"SEC"), Washington, D.C., under the provisions of the Securities Act of 1933, a
shelf registration statement pursuant to Rule 415 under the Securities Act of
1933 in a total amount which includes $4,000,000,000 authorized by resolutions
dated the date hereof, plus all amounts available for issuance pursuant to
Registration Statement No. 333- 40669, of Indebtedness, Preferred Stock,
Depositary Shares, Capital Stock and Warrants (collectively the "Securities") of
the Corporation, hereby constitute and appoint Louis V. Gerstner, Jr., Lawrence
R. Ricciardi, Douglas L. Maine, Jeffrey D. Serkes, Mark Loughridge, Daniel E.
O'Donnell, Andrew Bonzani and James H. Hodge, and each of them, my true
and lawful attorneys-in-fact and agents, with full power to act, together or
each without the others, for me and in my name, place and stead, in any and all
capacities, to sign, or cause to be signed electronically, such registration
statement and any and all amendments to the aforementioned registration
statement, and to file said registration statement and amendments thereto so
signed with all exhibits thereto, and any and all other documents in connection
therewith, with the SEC, hereby granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform any and all acts
and things requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as I might or could do in person, hereby
ratifying and confirming all that said attorneys-in- fact and agents or any of
them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 27th day of October, 1998.
/s/ Nannerl O. Keohane
------------------------
Director
<PAGE>
POWER OF ATTORNEY OF IBM DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which may file with the Securities and Exchange Commission (the
"SEC"), Washington, D.C., under the provisions of the Securities Act of 1933, a
shelf registration statement pursuant to Rule 415 under the Securities Act of
1933 in a total amount which includes $4,000,000,000 authorized by resolutions
dated the date hereof, plus all amounts available for issuance pursuant to
Registration Statement No. 333- 40669, of Indebtedness, Preferred Stock,
Depositary Shares, Capital Stock and Warrants (collectively the "Securities") of
the Corporation, hereby constitute and appoint Louis V. Gerstner, Jr., Lawrence
R. Ricciardi, Douglas L. Maine, Jeffrey D. Serkes, Mark Loughridge, Daniel E.
O'Donnell, Andrew Bonzani and James H. Hodge, and each of them, my true
and lawful attorneys-in-fact and agents, with full power to act, together or
each without the others, for me and in my name, place and stead, in any and all
capacities, to sign, or cause to be signed electronically, such registration
statement and any and all amendments to the aforementioned registration
statement, and to file said registration statement and amendments thereto so
signed with all exhibits thereto, and any and all other documents in connection
therewith, with the SEC, hereby granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform any and all acts
and things requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as I might or could do in person, hereby
ratifying and confirming all that said attorneys-in- fact and agents or any of
them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 27th day of October, 1998.
/s/ Charles F. Knight
--------------------------
Director
<PAGE>
POWER OF ATTORNEY OF IBM DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which may file with the Securities and Exchange Commission (the
"SEC"), Washington, D.C., under the provisions of the Securities Act of 1933, a
shelf registration statement pursuant to Rule 415 under the Securities Act of
1933 in a total amount which includes $4,000,000,000 authorized by resolutions
dated the date hereof, plus all amounts available for issuance pursuant to
Registration Statement No. 333- 40669, of Indebtedness, Preferred Stock,
Depositary Shares, Capital Stock and Warrants (collectively the "Securities") of
the Corporation, hereby constitute and appoint Louis V. Gerstner, Jr., Lawrence
R. Ricciardi, Douglas L. Maine, Jeffrey D. Serkes, Mark Loughridge, Daniel E.
O'Donnell, Andrew Bonzani and James H. Hodge, and each of them, my true
and lawful attorneys-in-fact and agents, with full power to act, together or
each without the others, for me and in my name, place and stead, in any and all
capacities, to sign, or cause to be signed electronically, such registration
statement and any and all amendments to the aforementioned registration
statement, and to file said registration statement and amendments thereto so
signed with all exhibits thereto, and any and all other documents in connection
therewith, with the SEC, hereby granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform any and all acts
and things requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as I might or could do in person, hereby
ratifying and confirming all that said attorneys-in- fact and agents or any of
them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 27th day of October, 1998.
/s/ Minoru Makihara
-------------------------
Director
<PAGE>
POWER OF ATTORNEY OF IBM DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which may file with the Securities and Exchange Commission (the
"SEC"), Washington, D.C., under the provisions of the Securities Act of 1933, a
shelf registration statement pursuant to Rule 415 under the Securities Act of
1933 in a total amount which includes $4,000,000,000 authorized by resolutions
dated the date hereof, plus all amounts available for issuance pursuant to
Registration Statement No. 333- 40669, of Indebtedness, Preferred Stock,
Depositary Shares, Capital Stock and Warrants (collectively the "Securities") of
the Corporation, hereby constitute and appoint Louis V. Gerstner, Jr., Lawrence
R. Ricciardi, Douglas L. Maine, Jeffrey D. Serkes, Mark Loughridge, Daniel E.
O'Donnell, Andrew Bonzani and James H. Hodge, and each of them, my true
and lawful attorneys-in-fact and agents, with full power to act, together or
each without the others, for me and in my name, place and stead, in any and all
capacities, to sign, or cause to be signed electronically, such registration
statement and any and all amendments to the aforementioned registration
statement, and to file said registration statement and amendments thereto so
signed with all exhibits thereto, and any and all other documents in connection
therewith, with the SEC, hereby granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform any and all acts
and things requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as I might or could do in person, hereby
ratifying and confirming all that said attorneys-in- fact and agents or any of
them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 27th day of October, 1998.
/s/ Lucio A. Noto
-----------------
Director
<PAGE>
POWER OF ATTORNEY OF IBM DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which may file with the Securities and Exchange Commission (the
"SEC"), Washington, D.C., under the provisions of the Securities Act of 1933, a
shelf registration statement pursuant to Rule 415 under the Securities Act of
1933 in a total amount which includes $4,000,000,000 authorized by resolutions
dated the date hereof, plus all amounts available for issuance pursuant to
Registration Statement No. 333- 40669, of Indebtedness, Preferred Stock,
Depositary Shares, Capital Stock and Warrants (collectively the "Securities") of
the Corporation, hereby constitute and appoint Louis V. Gerstner, Jr., Lawrence
R. Ricciardi, Douglas L. Maine, Jeffrey D. Serkes, Mark Loughridge, Daniel E.
O'Donnell, Andrew Bonzani and James H. Hodge, and each of them, my true
and lawful attorneys-in-fact and agents, with full power to act, together or
each without the others, for me and in my name, place and stead, in any and all
capacities, to sign, or cause to be signed electronically, such registration
statement and any and all amendments to the aforementioned registration
statement, and to file said registration statement and amendments thereto so
signed with all exhibits thereto, and any and all other documents in connection
therewith, with the SEC, hereby granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform any and all acts
and things requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as I might or could do in person, hereby
ratifying and confirming all that said attorneys-in- fact and agents or any of
them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 27th day of October, 1998.
/s/ John B. Slaughter
---------------------
Director
<PAGE>
POWER OF ATTORNEY OF IBM DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which may file with the Securities and Exchange Commission (the
"SEC"), Washington, D.C., under the provisions of the Securities Act of 1933, a
shelf registration statement pursuant to Rule 415 under the Securities Act of
1933 in a total amount which includes $4,000,000,000 authorized by resolutions
dated the date hereof, plus all amounts available for issuance pursuant to
Registration Statement No. 333- 40669, of Indebtedness, Preferred Stock,
Depositary Shares, Capital Stock and Warrants (collectively the "Securities") of
the Corporation, hereby constitute and appoint Louis V. Gerstner, Jr., Lawrence
R. Ricciardi, Douglas L. Maine, Jeffrey D. Serkes, Mark Loughridge, Daniel E.
O'Donnell, Andrew Bonzani and James H. Hodge, and each of them, my true
and lawful attorneys-in-fact and agents, with full power to act, together or
each without the others, for me and in my name, place and stead, in any and all
capacities, to sign, or cause to be signed electronically, such registration
statement and any and all amendments to the aforementioned registration
statement, and to file said registration statement and amendments thereto so
signed with all exhibits thereto, and any and all other documents in connection
therewith, with the SEC, hereby granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform any and all acts
and things requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as I might or could do in person, hereby
ratifying and confirming all that said attorneys-in- fact and agents or any of
them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 27th day of October, 1998.
/s/ Alex Trotman
----------------
Director
<PAGE>
POWER OF ATTORNEY OF IBM DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which may file with the Securities and Exchange Commission (the
"SEC"), Washington, D.C., under the provisions of the Securities Act of 1933, a
shelf registration statement pursuant to Rule 415 under the Securities Act of
1933 in a total amount which includes $4,000,000,000 authorized by resolutions
dated the date hereof, plus all amounts available for issuance pursuant to
Registration Statement No. 333- 40669, of Indebtedness, Preferred Stock,
Depositary Shares, Capital Stock and Warrants (collectively the "Securities") of
the Corporation, hereby constitute and appoint Louis V. Gerstner, Jr., Lawrence
R. Ricciardi, Douglas L. Maine, Jeffrey D. Serkes, Mark Loughridge, Daniel E.
O'Donnell, Andrew Bonzani and James H. Hodge, and each of them, my true
and lawful attorneys-in-fact and agents, with full power to act, together or
each without the others, for me and in my name, place and stead, in any and all
capacities, to sign, or cause to be signed electronically, such registration
statement and any and all amendments to the aforementioned registration
statement, and to file said registration statement and amendments thereto so
signed with all exhibits thereto, and any and all other documents in connection
therewith, with the SEC, hereby granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform any and all acts
and things requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as I might or could do in person, hereby
ratifying and confirming all that said attorneys-in- fact and agents or any of
them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 27th day of October, 1998.
/s/ Lodewijk C. van Wachem
---------------------------
Director
<PAGE>
POWER OF ATTORNEY OF IBM DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which may file with the Securities and Exchange Commission (the
"SEC"), Washington, D.C., under the provisions of the Securities Act of 1933, a
shelf registration statement pursuant to Rule 415 under the Securities Act of
1933 in a total amount which includes $4,000,000,000 authorized by resolutions
dated the date hereof, plus all amounts available for issuance pursuant to
Registration Statement No. 333- 40669, of Indebtedness, Preferred Stock,
Depositary Shares, Capital Stock and Warrants (collectively the "Securities") of
the Corporation, hereby constitute and appoint Louis V. Gerstner, Jr., Lawrence
R. Ricciardi, Douglas L. Maine, Jeffrey D. Serkes, Mark Loughridge, Daniel E.
O'Donnell, Andrew Bonzani and James H. Hodge, and each of them, my true
and lawful attorneys-in-fact and agents, with full power to act, together or
each without the others, for me and in my name, place and stead, in any and all
capacities, to sign, or cause to be signed electronically, such registration
statement and any and all amendments to the aforementioned registration
statement, and to file said registration statement and amendments thereto so
signed with all exhibits thereto, and any and all other documents in connection
therewith, with the SEC, hereby granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform any and all acts
and things requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as I might or could do in person, hereby
ratifying and confirming all that said attorneys-in- fact and agents or any of
them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 27th day of October, 1998.
/s/ Charles M. Vest
--------------------
Director
<PAGE>
EXHIBIT 24(b)
INTERNATIONAL BUSINESS MACHINES CORPORATION
Certificate of the Assistant Secretary
The undersigned, Andrew Bonzani, Assistant Secretary of International
Business Machines Corporation (the "Corporation") does hereby certify that
attached hereto as Exhibit A is a true, correct and complete copy of resolutions
adopted by the Corporation's Board of Directors authorizing the officers of the
Corporation to execute the Registration Statement, to which this certificate is
attached as an exhibit, by power of attorney.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of
this 13th day of January, 1999.
INTERNATIONAL BUSINESS
MACHINES CORPORATION
By: /s/ Andrew Bonzani
------------------------
Andrew Bonzani
Assistant Secretary
<PAGE>
EXHIBIT A
RESOLUTIONS REGARDING SEC UNIVERSAL SHELF REGISTRATION
RESOLVED, that the Board of Directors of the Corporation hereby
authorizes (in addition to the authority previously granted by resolutions of
the Board of Directors, all of which other resolutions remain in full force and
effect) the issuance and sale by the Corporation during the period from the date
hereof through and including the date which is two years from the date the
registration statement authorized to be filed with the Securities and Exchange
Commission pursuant to these resolutions becomes effective (the "Period") of an
additional $4,000,000,000 of: (a) notes, debentures or other debt instruments
(the "Indebtedness"); (b) shares of preferred stock, $.01 par value, of the
Corporation (the "Preferred Stock") or depositary shares representing ownership
of and entitlement to all rights and preferences of a fraction of a share of
Preferred Stock (the "Depositary Shares"); (c) shares of Capital Stock, $0.50
par value, of the Corporation (the "Capital Stock"); and (d) warrants or other
rights to acquire Capital Stock, Preferred Stock or Indebtedness of the
Corporation or securities of any other corporation (the "Warrants"). The
Indebtedness, Preferred Stock, Depositary Shares, Capital Stock and Warrants
shall sometimes hereinafter be referred to collectively as the "Securities." The
issuance of any Securities hereunder shall require the prior approval of the
Senior Vice President and General Counsel or such other person as may be
designated by the General Counsel from time to time; and be it further
RESOLVED, that the Indebtedness, for purposes of these resolutions,
shall exclude all debt having a maturity of less than one year at the time of
issuance, all notes issued to banks pursuant to lines of credit, and all debt
which is privately placed or sold pursuant to an exemption from the U.S.
securities laws. The Indebtedness shall include, without limitation, debt
denominated in U.S. dollars or in a foreign currency computed at a conversion
rate prevailing on dates determined by either the Chief Executive Officer, the
Senior Vice President and Chief Financial Officer or the Vice President and
Treasurer to be relevant to the issuance of such Indebtedness, with such
Indebtedness to be registered under the Securities Act of 1933, or sold pursuant
to an exemption therefrom or outside the scope thereof; and be it further
RESOLVED, that the Chief Executive Officer, the Senior Vice President
and Chief Financial Officer, and the Vice President and Treasurer, or any of
them acting individually, be, and they hereby are, delegated full power and
authority to authorize and approve during the Period the issuance of
Indebtedness of the Corporation pursuant to the foregoing resolutions and, in
connection therewith, to determine the terms and provisions of such Indebtedness
and of the issuance and sale thereof, including, without limitation, the
following: (i) the principal amount of such Indebtedness, (ii) the final
maturity date of such Indebtedness and any sinking fund or
<PAGE>
other repayment provisions, (iii) the effective rate of interest of such
Indebtedness, (iv) the price at which such Indebtedness shall be sold by the
Corporation, (v) the provisions, if any, for the redemption of such Indebtedness
and the premiums, if any, to be paid upon any such redemption, (vi) the right to
convert such Indebtedness into or exchang such Indebtedness for shares or other
securities of the Corporation or any other corporation or to issue warrants or
other rights to acquire shares or other securities of the Corporation or any
other corporation in conjunction with such Indebtedness, and all terms of such
conversion or exchange provisions or warrants or other rights, including the
conversion, exchange or exercise prices and any antidilution provisions, and the
authorization of the issuance of any shares and the delivery of such shares or
other securities of the Corporation or any other corporation upon the conversion
or exchange of such Indebtedness or the exercise of such warrants or other
rights, (vii) the form, terms and provisions of any indentures, fiscal agency
agreements or other instruments under which such Indebtedness may be issued and
the banks or trust companies to act as trustees, fiscal agents and paying agents
thereunder, (viii) the preparation and filing of all documents necessary or
appropriate in connection with the registration of the Indebtedness under the
Securities Act of 1933, the qualification of an indenture under the Trust
Indenture Act of 1939 and the qualification under any other applicable Federal,
foreign, state, local or other governmental requirements, (ix) the preparation
of any offering memorandum or other descriptive material relating to the
issuance of such Indebtedness, (x) the listing of the Indebtedness on any United
States or non-United States stock exchange, and (xi) underwriting arrangements;
and be it further
RESOLVED, that the Executive Committee of the Board of Directors, is delegated,
without further action of the Board of Directors, full power and authority to
authorize the issuance and sale by the Corporation during the Period of Capital
Stock, Preferred Stock and Depositary Shares. In connection therewith, the
Executive Committee be, and it hereby is, delegated full power and authority to
determine the terms and provisions of the Preferred Stock and of the issuance
and sale thereof, including, without limitation, with respect to: (i) whether
the holders thereof shall be entitled to cumulative, noncumulative or partially
cumulative dividends and, with respect to shares entitled to dividends, the
dividend rate or rates, including, without limitation the methods and procedures
for determining such rate or rates, and any other terms and conditions relating
to such dividends, (ii) whether, and if so to what extent and upon what terms
and conditions, the holders thereof shall be entitled to rights upon the
liquidation of, or upon any distribution of the assets of, the Company, (iii)
whether, and if so upon what terms and conditions, such shares shall be
convertible into, or exchangeable for, shares or other securities of the
Corporation or any other corporation, (iv) whether, and if so upon what terms
and conditions, such shares shall be redeemable, (v) whether the shares shall be
redeemable and subject to any sinking fund provided for the purchase or
redemption of such shares and, if so, the terms of such fund, (vi) whether the
holders thereof shall be entitled to voting rights and, if so, the terms and
conditions for the exercise thereof, subject to the provisions of Section 2(f)
of Article Four of the Certificate of Incorporation, and (vii) whether the
holders thereof shall be entitled to any other preferences or rights and, if so,
the qualifications, limitations, or restrictions of such preferences
<PAGE>
or rights; and be it further
RESOLVED, that the Executive Committee of the Board of Directors, is
delegated, without further action of the Board of Directors, full power and
authority to authorize the issuance and sale by the Corporation during the
Period of Warrants, and the Executive Committee be, and it hereby is, delegated
power and authority to determine the terms and provisions of the Warrants and of
the issuance and sale thereof, including, without limitation, with respect to:
(i) whether such warrants will be for Indebtedness, Preferred Stock, Depositary
Shares or Capital Stock, and (ii) the form, terms and provisions of any warrant
agreements; and be it further
RESOLVED, that the proper officers of the Corporation be, and hereby
are, authorized, and directed to prepare for filing with the Securities and
Exchange Commission (the "SEC"), Washington, D.C., under the provisions of the
Securities Act of 1933, a shelf registration statement pursuant to Rule 415
under the Securities Act of 1933, for a total amount which includes both the
$4,000,000,000 authorized herein plus all amounts then available for issuance
pursuant to Registration Statement No. 333- 40669, of Indebtedness, Preferred
Stock, Depositary Shares, Capital Stock and Warrants (collectively the
"Securities") of the Corporation that may be issued in the future pursuant to
these resolutions, and that each of Louis V. Gerstner, Jr., Lawrence R.
Ricciardi, Douglas L. Maine, Jeffrey D. Serkes, Mark Loughridge, Daniel E.
O'Donnell, Andrew Bonzani and James H. Hodge, be, and each of them is
hereby vested with full power to act, together or each without the others, in
any and all capacities, in the name and on behalf of the Corporation to sign, or
cause to be signed electronically, such registration statement (which may
constitute a post-effective amendment to a registration statement previously
filed with the SEC) and any and all amendments to the aforementioned
registration statement, and to file said registration statement and amendments
thereto so signed with all exhibits thereto, and any and all other documents in
connection therewith, with the SEC, and all actions in connection with the
preparation, execution and filing of said registration statement with the SEC on
behalf of and as attorneys for the Corporation are hereby ratified, approved and
adopted in all respects; and be it further
RESOLVED, that the proper officers of the Corporation be, and they
hereby are, authorized in the name and on behalf of the Corporation, to take any
and all action which they may deem necessary or advisable in order to effect the
registration or qualification (or exemption therefrom) of the Securities for
issue, offer, sale or trade under the Blue Sky or securities laws of any of the
States of the United States of America as well as in any foreign jurisdiction
and political subdivisions thereof, and in connection therewith to execute,
acknowledge, verify, deliver, file or cause to be published any applications,
reports, consents to service of process, appointments of attorneys to receive
service of process and other papers and instruments which may be required under
such laws, and to take any and all further action which they may deem necessary
or advisable in order to maintain any such registration, qualification or
exemption for
<PAGE>
as long as they deem necessary or as required by law, and that the execution by
such officers of any such paper or document, or the doing by them of any act in
connection with the foregoing matters shall conclusively establish their
authority therefor from the Corporation and the ratification by the Corporation
of the papers and documents so executed and the actions so taken; and be it
further
RESOLVED, that the Corporation is hereby authorized to list the
Securities on any public exchanges, and that the proper officers of the
Corporation are hereby authorized on behalf of the Corporation to execute all
listing applications, fee agreements and other documents in connection with the
foregoing; and be it further
RESOLVED, that the proper officers of the Corporation be, and they
hereby are, authorized to take all such further action and to execute all such
further instruments and, and to pay all expenses and taxes as in their judgment
shall be necessary, proper or documents in the name and on behalf of the
Corporation and under its corporate seal or otherwise advisable in order fully
to carry out the intent and accomplish the purposes of the foregoing
Resolutions; and be it further
RESOLVED, that the proper officers of the Corporation shall have the
authority to further delegate, in whole or in part, the authority provided in
these Resolutions to any other officer or employee of the Corporation.
<PAGE>
EXHIBIT (25)(a)
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
<PAGE>
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
-------------------------------------------
International Business Machines Corporation
(Exact name of obligor as specified in its charter)
New York 13-0871985
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
New Orchard Road
Armonk, NY 10504
(Address of principal executive offices) (Zip Code)
Debt Securities
(Title of the indenture securities)
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
<PAGE>
None.
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
<PAGE>
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 7th day of December, 1998.
THE CHASE MANHATTAN BANK
By: /s/ Michael A. Smith
--------------------
Michael A. Smith
Vice President
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business September 30, 1998, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Millions
Cash and balances due from depository institutions:
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Noninterest-bearing balances and
currency and coin .......................................................$ 11,951
Interest-bearing balances ...................................................4,551
Securities:
Held to maturity securities.......................................................1,740
Available for sale securities ...................................................48,537
Federal funds sold and securities purchased under
agreements to resell .......................................................29,730
Loans and lease financing receivables:
Loans and leases, net of unearned income ...........................$ 127,379
Less: Allowance for loan and lease losses ..............................2,719
Less: Allocated transfer risk reserve ............................... 0
-
Loans and leases, net of unearned income,
allowance, and reserve ................................................. 124,660
Trading Assets ..................................................................51,549
Premises and fixed assets (including capitalized
leases)......................................................................3,009
Other real estate owned ............................................................272
Investments in unconsolidated subsidiaries and
associated companies ..........................................................300
Customers' liability to this bank on acceptances
outstanding .................................................................1,329
Intangible assets ................................................................1,429
Other assets ....................................................................13,563
<PAGE>
TOTAL ASSETS .................................................................$ 292,620
<PAGE>
LIABILITIES
Deposits
In domestic offices .....................................................$ 98,760
Noninterest-bearing ...............................$39,071
Interest-bearing ...............................59,689
-------
In foreign offices, Edge and Agreement,
subsidiaries and IBF's .....................................................75,403
Noninterest-bearing ........................................$ 3,877
Interest-bearing ............................................71,526
Federal funds purchased and securities sold under agree-
ments to repurchase .............................................................34,471
Demand notes issued to the U.S. Treasury ........................ 1,000
Trading liabilities .............................................................41,589
Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases):
With a remaining maturity of one year or less ........... 3,781
With a remaining maturity of more than one year .
through three years.......................................................213
With a remaining maturity of more than three years...........................104
Bank's liability on acceptances executed and outstanding 1,329
Subordinated notes and debentures ................................................5,408
<PAGE>
Other liabilities ...............................................................12,041
TOTAL LIABILITIES ..............................................................274,099
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock .....................................................................1,211
Surplus (exclude all surplus related to preferred stock)... 10,441
Undivided profits and capital reserves .......................................... 6,287
Net unrealized holding gains (losses)
on available-for-sale securities ............................................... 566
Cumulative foreign currency translation adjustments ......... 16
TOTAL EQUITY CAPITAL ........................................................... 18,521
------
TOTAL LIABILITIES AND EQUITY CAPITAL ......................................... $292,620
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named
bank, do hereby declare that this Report of Condition has
been prepared in conformance with the instructions issued
by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
<PAGE>
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR. )
