SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported) January 27, 1999.
INTERNATIONAL BUSINESS MACHINES CORPORATION
(Exact name of registrant as specified in its charter)
1-2360 13-0871985
New York (Commission File (I.R.S. Employer
(State of Incorporation) Number) Identification No.)
Armonk, New York 10504
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: 914-499-1900
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Item 7. Financial Information, Pro Forma Financial Information and
Exhibits.
This Current Report on Form 8-K is being filed to
incorporate by reference into Registration Statement No. 333-40669 on
Form S-3, effective December 10, 1997, the documents included as
Exhibits 1 and 2 hereto, relating to $3,000,000,000 aggregate
principal amount of debt securities of the Registrant.
The following exhibits are hereby filed with this report:
Exhibit
Number Description
(1) Underwriting Agreement dated January 27, 1999,
among International Business Machines Corporation,
Morgan Stanley & Co. Incorporated, Bear, Stearns &
Co. Inc., Chase Securities Inc., Credit Suisse First
Boston Corporation, Goldman, Sachs & Co., Lehman
Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Salomon Smith Barney Inc.
(2) Form of 5.375% Note due 2009.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
INTERNATIONAL BUSINESS MACHINES CORPORATION
(Registrant)
By: /s/ Andrew Bonzani
----------------------------
Name: Andrew Bonzani
Title: Assistant Secretary
Date: January 29, 1999.
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Exhibit Index
Exhibit
Number Description
(1) Underwriting Agreement dated January 27,
1999, among International Business Machines
Corporation, Morgan Stanley & Co.
Incorporated, Bear, Stearns & Co. Inc., Chase
Securities Inc., Credit Suisse First Boston
Corporation, Goldman, Sachs & Co., Lehman
Brothers Inc., Merrill Lynch, Pierce, Fenner
& Smith Incorporated and Salomon Smith Barney
Inc.
(2) Form of 5.375% Note due 2009.
INTERNATIONAL BUSINESS MACHINES CORPORATION
Debt Securities
$600,000,000 5.375% Notes due 2009
UNDERWRITING AGREEMENT
New York, New York
To the Representatives named in Schedule I hereto January 27, 1999
of the Underwriters named in Schedule II hereto
Dear Sirs:
International Business Machines Corporation, a New York corporation (the
"Company"), proposes to sell to the underwriters named in Schedule II
hereto (the "Underwriters"), for whom you are acting as representatives
(the "Representatives"), the principal amount of its Securities identified
in Schedule I hereto (the "Securities"), to be issued under an indenture
dated as of October 1, 1993 (the "Indenture"), between the Company and The
Chase Manhattan Bank, as trustee (the "Trustee"), as supplemented by the
First Supplemental Indenture dated as of December 15, 1995. If the firm or
firms listed in Schedule II hereto include only the firm or firms listed in
Schedule I hereto, then the terms "Underwriters" and "Representatives", as
used herein shall each be deemed to refer to such firm or firms.
1. Representations and Warranties. The Company represents and warrants
to, and agrees with each Underwriter that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933 (the "Act") and has filed with the Securities and
Exchange Commission (the "Commission") a registration statement or
statements (the file number or numbers of which is or are set forth in
Schedule I hereto), including a related preliminary prospectus, on such
Form for the registration under the Act of the offering and sale of the
Securities. The Company may have filed one or more amendments thereto,
including the related preliminary prospectus, and has filed a
preliminary prospectus in accordance with Rules 415 and 424(b)(5), each
of which has previously been furnished to you. The Company will next
file with the Commission one of the following: (i) prior to
effectiveness of such registration statement, a further amendment
thereto, including the form of final prospectus, (ii) a final prospectus
in accordance with Rules 430A and 424(b)(1) or (4), or (iii) a final
prospectus in accordance with Rules 415 and 424(b)(2) or (5). In the
case of clause (ii), the Company has included in such registration
statement or statements, as amended at the Effective Date, all
information (other than Rule 430A Information) required by the Act and
the rules thereunder to be included in the Prospectus with respect to
the Securities and the offering thereof. As filed, such amendment and
form of final prospectus, or such final prospectus, shall include all
Rule 430A Information and, except to the extent the Representatives
shall agree in writing to a modification, shall be in all substantive
respects in the form furnished to you prior to the Execution Time or, to
the extent not completed at the Execution Time, shall contain only such
specific additional information and other changes (beyond that contained
in the latest Preliminary Prospectus) as the Company has advised you,
prior to the Execution Time, will be included or made therein. If the
Registration Statement contains the undertaking specified by Regulation
S-K Item 512(a), the Registration Statement, at the Execution Time,
meets the requirements set forth in Rule 415(a)(1)(x).
The terms which follow, when used in this Agreement, shall have the
meanings indicated. The term the "Effective Date" shall mean each date
that
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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 March 31, 1997, exhibits and financial statements, in the
form in which it or they has or have or shall become effective and, in
the event any post-effective amendment thereto becomes effective prior
to the Closing Date (as hereinafter defined), shall also mean such
registration statement or statements as so amended. Such term shall
include Rule 430A Information deemed to be included therein at the
Effective Date as provided by Rule 430A. "Rule 415", "Rule 424", "Rule
430A" and "Regulation S-K" refer to such rules under the Act. "Rule 430A
Information" means information with respect to the Securities and the
offering thereof permitted to be omitted from the Registration Statement
when it becomes effective pursuant to Rule 430A. Any reference herein to
the Registration Statement, a Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed under
the Securities Exchange Act of 1934 (the "Exchange Act") on or before
the effective date of the Registration Statement or the date of such
Preliminary Prospectus or the Prospectus, as the case may be; and any
reference herein to the terms "amend", "amendment" or "supplement" with
respect to the Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after the effective date of the
Registration Statement, or the date of any Preliminary Prospectus or the
Prospectus, as the case may be, deemed to be incorporated therein by
reference.
(b) On the Effective Date, the Registration Statement did or will,
and when the Prospectus is first filed (if required) in accordance with
Rule 424(b) and on the Closing Date, the Prospectus (and any supplements
thereto) will, comply in all material respects with the applicable
requirements of the Act and the Exchange Act and the respective rules
thereunder; on the Effective Date and on the Closing Date the Indenture
did or will comply in all material respects with the requirements of the
Trust Indenture Act of 1939 (the "Trust Indenture Act") and the rules
thereunder; on the Effective Date, the Registration Statement did not or
will not contain any untrue statement of a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, the Prospectus, if not filed
pursuant to Rule 424(b), did not or will not, and on the date of any
filing pursuant to Rule 424(b) and on the Closing Date, the Prospectus
(together with any supplement thereto) will not, include any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations or warranties as to
(i) that part of the Registration Statement which shall constitute the
Statement of Eligibility and Qualification (Form T-1) under the Trust
Indenture Act of the Trustee or (ii) the information contained in or
omitted from the Registration Statement or the Prospectus (or any
supplement thereto) in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any Underwriter
through the Representatives specifically for use in
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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 the principal amount of the
Securities for which Delayed Delivery Contracts are made. Delayed Delivery
Contracts are to be with institutional investors, including commercial and
savings banks, insurance companies, pension funds, investment companies and
educational and charitable institutions. The Company will make Delayed
Delivery Contracts in all cases where sales of Contract Securities arranged
by the Underwriters have been approved by the Company but, except as the
Company may otherwise agree, each such Delayed Delivery Contract must be
for not less than the minimum principal amount set forth in Schedule I
hereto and the aggregate principal amount of Contract Securities may not
exceed the maximum aggregate principal amount set forth in Schedule I
hereto. The Underwriters will not have any responsibility in respect of the
validity or performance of Delayed Delivery Contracts. The principal amount
of Securities to be purchased by each Underwriter as set forth in Schedule
II hereto shall be reduced by an amount which shall bear the same
proportion to the total principal amount of Contract Securities as the
principal amount of Securities set forth opposite the name of such
Underwriter bears to the aggregate principal amount set forth in Schedule
II hereto, except to the extent that you determine that such reduction
shall be otherwise than in such proportion and so advise the Company in
writing; provided, however, that the total principal amount of Securities
to be purchased by all Underwriters shall be the aggregate principal amount
set forth in Schedule II hereto, less the aggregate principal amount of
Contract Securities.
3. Delivery and Payment. Delivery of and payment for the Underwriters'
Securities shall be made at the office, on the date and at the time
specified in Schedule I hereto, which date and time may be postponed by
agreement between the Representatives and the Company or as provided in
Section 8 hereof (such date and time of delivery and payment for the
Securities being called the "Closing Date"). Delivery of the Underwriters'
Securities shall be made to the Representatives for the respective accounts
of the several Underwriters against payment by the several Underwriters
through the Representatives of the purchase price thereof to or upon the
order of the Company by certified or official bank check or checks payable,
or wire transfers, in immediately available funds. The Securities shall be
delivered in definitive global form through the facilities of The
Depository Trust Company.
<PAGE>
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 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 in effect so long as
required for
<PAGE>
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 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 LLC relating to the preparation of the letter
required by Section 5(e) of this Agreement.
(e) The several Underwriters will pay the reasonable fees and
expenses of The Chase Manhattan Bank as Trustee.
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
the time period required by Rule 424(b); and no stop order suspending
the effectiveness of the Registration Statement, as amended from time to
time, shall have been issued and no proceedings for that purpose shall
have been instituted or threatened.
(b) The Company shall have furnished to the Representatives:
(i) the opinion of the General Counsel, an Assistant General
Counsel or an Associate General Counsel of the Company, dated the
Closing Date, to the effect that:
(A) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of New
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York, with full corporate power and authority to own its
properties and conduct its business as described in the
Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each
jurisdiction within the United States which requires such
qualifications wherein it owns or leases material properties or
conducts material business;
(B) the Securities conform in all material respects to the
description thereof contained in the Prospectus;
(C) the Indenture has been duly authorized, executed and
delivered, has been duly qualified under the Trust Indenture Act,
and constitutes a legal, valid and binding obligation enforceable
against the Company in accordance with its terms (subject to
applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws affecting
creditors' rights generally from time to time in effect, and
subject, as to enforceability, to general principles of equity,
regardless of whether such enforceability is considered in a
proceeding in equity or at law); and the Securities have been duly
authorized and, when executed and authenticated in accordance with
the provisions of the Indenture and delivered to and paid for by
the Underwriters pursuant to this Agreement, in the case of the
Underwriters' Securities, or by the purchasers thereof pursuant to
Delayed Delivery Contracts, in the case of any Contract
Securities, will constitute legal, valid and binding obligations
of the Company entitled to the benefits of the Indenture (subject
to applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium, and other similar laws affecting
creditors' rights generally from time to time in effect);
(D) to the best knowledge of such counsel, there is no pending
or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving
the Company or any of its subsidiaries, of a character required to
be disclosed in the Registration Statement which is not adequately
disclosed in the Prospectus, and there is no franchise, contract
or other document of a character required to be described in the
Registration Statement or Prospectus, or to be filed as an
exhibit, which is not described or filed as required;
(E) the Registration Statement and any amendments thereto have
become effective under the Act; any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) has
been made in the manner and within the time period required by
Rule 424(b); to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement, as
amended, has been issued, no proceedings for that purpose have
been instituted or are pending or contemplated under the Act;
(F) this Agreement and any Delayed Delivery Contracts have been
duly authorized, executed and delivered by the Company;
(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;
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(H) such counsel has no reason to believe that (1) the
Registration Statement and the Prospectus (except the financial
statements and the notes thereto and other information of an
accounting or financial nature included therein, and the Statement
of Eligibility (Form T-1) included as an exhibit to the
Registration Statement, as to which such counsel need express no
view) were not appropriately responsive in all material respects
to requirements of the Act and the applicable rules and
regulations of the Commission thereunder and (2) the Registration
Statement or any amendment thereof at the time it became effective
contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary
to make the statements therein not misleading or that the
Prospectus, as amended or supplemented, contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (in each
case except for the financial statements and the notes thereto and
other information of an accounting or financial nature included
therein, as to which such counsel need express no view); and
(I) none of the issue and sale of the Securities, the
consummation of any other of the transactions herein contemplated
or the fulfillment of the terms hereof or of any Delayed Delivery
Contracts will conflict with, result in a breach of, or constitute
a default under, the charter or by-laws of the Company or the
terms of any indenture or other agreement or instrument known to
such counsel and to which the Company or any of its subsidiaries
is a party or bound, or any decree or regulation known to such
counsel to be applicable to the Company or any of its subsidiaries
of any court, regulatory body, administrative agency, governmental
body or arbitrator having jurisdiction over the Company or any of
its subsidiaries.
The statements described in one or more of paragraphs (B), (C),
(E), (F), (G) and (H)(1) of this subsection 5(b)(i) may be omitted
from the opinion of such counsel; provided, however, that in such
event the Company shall also have furnished to the Representatives
the corresponding opinion or letter of Cravath, Swaine & Moore,
counsel for the Company, described in subsection 5(b)(ii) or
5(b)(iii) immediately following.
(ii) in the event that the statements described in one or more of
paragraphs (B), (C), (E), (F) or (G) of foregoing subsection 5(b)(i)
is omitted from the opinion delivered pursuant to such subsection,
the opinion of Cravath, Swaine & Moore, counsel for the Company,
dated the Closing Date, to the effect of the statements so omitted.
In rendering such opinions, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction
other than the State of New York or the United States, to the
extent they deem proper and specified in such opinion, upon the
opinion of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Underwriters;
and (B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public
officials.
(iii) in the event that the statements in paragraph (H)(1) of
subsection 5(b)(i) are omitted from the opinion provided pursuant to
such subsection, a letter of Cravath, Swaine & Moore dated the
Closing Date to the effect that, having participated in conferences
with certain officers of, and with the accountants for, the Company
and having made certain inquiries and investigations in connection
with the preparation of the
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Registration Statement and the Prospectus, such counsel has no reason
to believe that (i) the Registration Statement and the Prospectus
(except the financial statements and the notes thereto and other
information of an accounting or financial nature included therein,
and the Statement of Eligibility (Form T-1) included as an exhibit to
the Registration Statement, as to which such counsel need express no
view) were not appropriately responsive in all material respects with
requirements of the Act and the applicable rules and regulations of
the Commission thereunder and (ii) the Registration Statement at the
Effective Date contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the
Prospectus on the Closing Date includes any untrue statement of a
material fact or omits to state a material fact necessary in order to
make the statements therein, in light of the circumstances under
which they were made, not misleading (in each case except for the
financial statements and the notes thereto and other information of
an accounting or financial nature included therein, as to which such
counsel need express no view).
(c) The Representatives shall have received from Davis Polk &
Wardwell, counsel for the Underwriters, such opinion or opinions, dated
the Closing Date, with respect to the issuance and sale of the
Securities, the Indenture, any Delayed Delivery Contracts, the
Registration Statement, the Prospectus and other related matters as the
Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as they request for the purpose
of enabling them to pass upon such matters.
(d) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the principal financial or
accounting officer (or Vice President and Treasurer) of the Company,
dated the Closing Date, to the effect that the signer of such
certificate has carefully examined the Registration Statement, the
Prospectus, any supplement to the Prospectus and this Agreement and
that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and the Company has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at or
prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement, as amended, has been issued and no
proceedings for that purpose have been instituted or, to the
Company's knowledge, threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectus, there has been no material adverse change
in the condition (financial or other), earnings, business or
properties of the Company and its subsidiaries, whether or not
arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Prospectus.
(e) At the Closing Date, PricewaterhouseCoopers LLC 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:
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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
incorporated in the Registration Statement and the Prospectus,
nothing came to their attention which caused them to believe that:
(1) any unaudited financial statements included or incorporated
in the Registration Statement and the Prospectus do not comply as
to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the
Commission with respect to financial statements included or
incorporated in quarterly reports on Form 10-Q under the Exchange
Act; and said unaudited financial statements are not stated on a
basis substantially consistent with that of the audited financial
statements included or incorporated in the Registration Statement
and the Prospectus; or
(2) with respect to the period subsequent to the date of the
most recent financial statements incorporated in the Registration
Statement and the Prospectus, there were, at a specified date not
more than five business days prior to the date of the letter, any
increases in long-term debt of the Company and its subsidiaries or
decreases in the capital stock of the Company or decreases in the
stockholders' equity of the Company and its subsidiaries as
compared with the amounts shown on the most recent consolidated
balance sheet included or incorporated in the Registration
Statement and the Prospectus, except in all instances for
increases or decreases set forth in such letter, in which case the
letter shall be accompanied by an explanation by the Company as to
the significance thereof unless said explanation is not deemed
necessary by the Representatives; and
(iii) they have performed certain other procedures as a result of
which they determined that the information described in a schedule to
be delivered on behalf of the Underwriters of an accounting,
financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general ledger
of the Company) set forth in the Registration Statement, as amended,
the Prospectus, as amended or supplemented, and in Exhibit 12 to the
Registration Statement (including selected accounting, financial or
statistical information included or incorporated in the Company's
Annual Report on Form 10-K incorporated in the Prospectus or any of
the Company's Quarterly Reports on Form l0-Q incorporated therein),
agrees with the general ledger of the Company and its subsidiaries,
excluding any questions of legal interpretation.
<PAGE>
References to the Prospectus in this paragraph (e) include any
supplements thereto at the date of the letter.
(f) Subsequent to the respective dates of which information is given
in the Registration Statement and the Prospectus, there shall not have
been (i) any change or decrease specified in the letter or letters
referred to in paragraph (e) of this Section 5 or (ii) any change, or
any development involving a prospective change, in or affecting the
business or properties of the Company and its subsidiaries the effect of
which, in any case referred to in clause (i) or (ii) above, is, in the
judgment of the Representatives, so material and adverse as to make it
impractical or inadvisable to proceed with the public offering or the
delivery of the Securities as contemplated by the Registration Statement
and the Prospectus.
(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 cancelation shall be given to the Company
in writing or by telephone or telegraph confirmed in writing.
6. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to
the obligations of the Underwriters set forth in Section 5 hereof is not
satisfied or because of any refusal, inability or failure on the part of
the Company to perform any agreement herein or comply with any provision
hereof other than by reason of a default by any of the Underwriters, the
Company will reimburse the Underwriters severally upon demand for all
out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the
proposed purchase and sale of the Securities.
7. Indemnification and Contribution. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person who controls any
Underwriter within the meaning of either the Act or the Exchange Act
against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement for the registration of the
Securities as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the
<PAGE>
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, 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
<PAGE>
indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding
sentence (it being understood, however, that the indemnifying party shall
not be liable for the expenses of more than one separate counsel (in
addition to any local counsel), approved by the Representatives in the case
of paragraph (a) of this Section 7, representing the indemnified parties
under such paragraph (a) who are parties to such action), (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory
to the indemnified party to represent the indemnified party within a
reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party; and except
that, if clause (i) or (iii) is applicable, such liability shall be only in
respect of the counsel referred to in such clause (i) or (iii).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a) of
this Section 7 is due in accordance with its terms but is for any reason
held by a court to be unavailable from the Company on grounds of policy or
otherwise, the Company and the Underwriters shall contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending
same) to which the Company and one or more of the Underwriters may be
subject in such proportion so that the Underwriters are responsible for
that portion represented by the percentage that the underwriting discount
bears to the sum of such discount and the purchase price of the Securities
set forth on Schedule I hereto and the Company is responsible for the
balance; provided, however, that (y) in no case shall any Underwriter
(except as may be provided in any agreement among underwriters relating to
the offering of the Securities) be responsible for any amount in excess of
the underwriting discount applicable to the Securities purchased by such
Underwriter hereunder and (z) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, each person
who controls an Underwriter within the meaning of either the Act or the
Exchange Act shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall
have signed the Registration Statement and each director of the Company
shall have the same rights to contribution as the Company, subject in each
case to clauses (y) and (z) of this paragraph (d). Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim
for contribution may be made against another party or parties under this
paragraph (d), notify such party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any
other obligation it or they may have hereunder or otherwise than under this
paragraph (d).
8. Default by an Underwriter. If any one or more Underwriters shall fail
to purchase and pay for any of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase
shall constitute a default in the performance of its or their obligations
under this Agreement, the remaining Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the
amount of Securities set forth opposite their names in Schedule II hereto
bears to the aggregate amount of Securities set forth opposite the names of
all the remaining Underwriters) the Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase; provided,
however, that in the event that the aggregate amount of Securities which
the defaulting Underwriter or Underwriters agreed but failed to purchase
shall exceed 10% of the aggregate amount of Securities set forth in
<PAGE>
Schedule II hereto, the remaining Underwriters shall have the right to
purchase all, but shall not be under any obligation to purchase any, of the
Securities, and if such nondefaulting Underwriters do not purchase all the
Securities, this Agreement will terminate without liability to any
nondefaulting Underwriter or the Company. In the event of a default by any
Underwriter as set forth in this Section 8, the Closing Date shall be
postponed for such period, not exceeding seven days, as the Representatives
shall determine in order that the required changes in the Registration
Statement and the Final Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall
relieve any defaulting Underwriter of its liability, if any, to the Company
and any nondefaulting Underwriter for damages occasioned by its default
hereunder.
9. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company
prior to delivery of and payment for the Securities, if prior to such time
(i) trading in securities generally on the New York Stock Exchange shall
have been suspended or limited or minimum prices shall have been
established on such Exchange, (ii) a banking moratorium shall have been
declared either by Federal or New York State authorities or (iii) there
shall have occurred any outbreak or material escalation of hostilities or
other calamity or crisis the effect of which on the financial markets of
the United States is such as to make it, in the judgment of the
Representatives, impracticable to market the Securities.
10. Representations and Indemnities to Survive. The respective agreement
representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless
of any investigation made by or on behalf of any Underwriter or the Company
or any of the officers, directors or controlling persons referred to in
Section 7 hereof, and will survive delivery of and payment for the
Securities. The provisions of Sections 6 and 7 hereof shall survive the
termination or cancellation of this Agreement.
11. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telegraphed and confirmed to them, at the address
specified in Schedule I hereto; or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it, at Armonk, New York 10504;
attention of the Treasurer.
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.
<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: /s/ James H. Hodge
----------------------------------
Name: James H. Hodge
Title: Assistant Treasurer
The foregoing Agreement is hereby
confirmed and accepted on the date
specified in Schedule I hereto.
Morgan Stanley & Co. Incorporated
Bear, Stearns & Co. Inc.
Chase Securities Inc.
Credit Suisse First Boston Corporation
Goldman, Sachs & Co.
Lehman Brothers Inc.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Salomon Smith Barney Inc.
By: Morgan Stanley & Co. Incorporated
By: /s/ Harold J. Hendershot, III
----------------------------------
Name: Harold J. Hendershot, III
Title: Vice President
For themselves and the other several
Underwriters, if any, named in
Schedule II to the foregoing Agreement.
<PAGE>
Schedule I
Underwriting Agreement dated January 27, 1999.
Registration No. 333-40669.
Representatives:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Chase Securities Inc.
270 Park Avenue
New York, New York 10017-2020
Credit Suisse First Boston Corporation
11 Madison Avenue
New York, New York 10010
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285-2400
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
250 Vesey Street
World Financial Center-North Tower
New York, New York 10281
Salomon Smith Barney Inc.
Seven World Trade Center
New York, New York 10048
Title, Purchase Price and Description of Securities:
Title: 5.375% Notes due 2009.
Principal amount: $600,000,000.
Purchase price: 99.273% of the principal amount of Notes plus accrued
interest from February 1, 1999.
Offering price: 99.923% of the principal amount of Notes plus accrued
interest from February 1, 1999.
Interest: Payable on February 1 and August 1 of each year, commencing on
August 1, 1999.
Sinking fund provisions: None.
Redemption provisions: The Notes are redeemable as a whole or in part,
at the option of the Company at any time, at a redemption price equal
to the greater of (i) 100% of the principal amount of such Notes and
(ii) the sum of the present values of the Remaining Scheduled
Payments (as defined in the Prospectus) thereon discounted at the
Treasury Rate (as defined in the Prospectus) plus ten basis points,
plus in either case accrued interest to the date of redemption.
Closing Date, Time and Location: February 1, 1999, 10:00 A.M., at the
offices of Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue,
New York, New York.
Delayed Delivery Arrangements: None.
Items specified pursuant to Section 5(e)(iii) to be covered by the letter
from PricewaterhouseCoopers LLC delivered pursuant to Section 5(e): As
set forth in a schedule delivered on the date hereof on behalf of the
Underwriters.
<PAGE>
Schedule II
International Business Machines Corporation
$600,000,000 5.375% Notes Due 2009
Underwriters Principal Amount of
Notes to be Purchased
Morgan Stanley & Co. Incorporated......... $418,000,000
Bear, Stearns & Co. Inc................... 26,000,000
Chase Securities Inc...................... 26,000,000
Credit Suisse First Boston
Corporation ............................ 26,000,000
Goldman, Sachs & Co....................... 26,000,000
Lehman Brothers Inc....................... 26,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................... 26,000,000
Salomon Smith Barney Inc.................. 26,000,000
----------
Total................................... $600,000,000
============
<PAGE>
Schedule III
Delayed Delivery Contract
[Insert name and address
of lead Representative] ,199
Dear Sirs:
The undersigned hereby agrees to purchase from International Business
Machines Corporation (the "Company"), and the Company agrees to sell to the
undersigned, on , 199 , (the "Delivery Date"), $
principal amount of the Company's (the "Securities") offered by the
Company's Final Prospectus dated , 199 , receipt of a copy of which is
hereby acknowledged, at a purchase price of % of the principal amount
thereof, plus accrued , if any, thereon from , 19 ,
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 A.M. on the Delivery Date to or upon the order of
the Company in New York Clearing House (next day) funds, at your office or
at such other place as shall be agreed between the Company and the
undersigned upon delivery to the undersigned of the Securities in
definitive, fully registered form and in such authorized denominations and
registered in such names as the undersigned may request by written or
telegraphic communication addressed to the Company not less than five full
business days prior to the Delivery Date. If no request is received, the
Securities will be registered in the name of the undersigned and issued in
a denomination equal to the aggregate principal amount 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
underwriters (the "Underwriters") such principal amount of the Securities
as is to be sold to them pursuant to the Underwriting Agreement referred to
in the Final Prospectus 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.
<PAGE>
This agreement shall be governed by and construed in accordance with the
laws of the State of New York.
Very truly yours,
(Name of Purchaser)
By
(Signature and Title)
(Address)
Accepted:
INTERNATIONAL BUSINESS MACHINES
CORPORATION
By
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the
issuer or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.
INTERNATIONAL BUSINESS MACHINES CORPORATION
5.375% Note due 2009
CUSIP 459200 AT8
No.: R- $
INTERNATIONAL BUSINESS MACHINES CORPORATION, a corporation duly
organized and existing under the laws of the State of New York (herein
called the "Company", which term includes any successor corporation under
the Indenture referred to on the reverse hereof), for value received,
hereby promises to pay to , or registered assigns, the principal sum of
Dollars ($ ), at the office or agency of the Company in the Borough of
Manhattan, The City and State of New York, on February 1, 2009, in such
coin or currency of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts, and to
pay interest, semi-annually on February 1 and August 1 of each year, on
said principal sum at said office or agency, in like coin or currency, at
the rate of 5.375% per annum, from the February 1 or August 1, as the case
may be, next preceding the date of this Note to which interest has been
paid, unless the date hereof is a date to which interest has been paid, in
which case from the date of this Note, or unless no interest has been paid
on the Notes (as defined on the reverse hereof), in which case from
February 1, 1999, until payment of said principal sum has been made or duly
provided for. Notwithstanding the foregoing, if the date hereof is after
January 15 or July 15, as the case may be, and before the following
February 1 or August 1, this Note shall bear interest from such February 1
or August 1; provided, however, that if the Company shall default in the
payment of interest due on such February 1 or August 1, then this Note
shall bear interest from the next preceding February 1 or August 1 to which
interest has been paid, or, if no interest has been paid on the Notes, from
February 1,
<PAGE>
1999. The interest so payable on any February 1 or August 1 will, subject
to certain exceptions provided in the Indenture referred to on the reverse
hereof, be paid to the person in whose name this Note is registered at the
close of business on such January 15 or July 15, as the case may be, next
preceding such February 1 or August 1, unless the Company shall default in
the payment of interest due on such interest payment date, in which case
such defaulted interest, at the option of the Company, may be paid to the
person in whose name this Note is registered at the close of business on a
special record date for the payment of such defaulted interest established
by notice to the registered holders of Notes not less than ten days
preceding such special record date or may be paid in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Notes may be listed. Payment of interest may, at the option of
the Company, be made by check mailed to the registered address of the
person entitled thereto.
Reference is made to the further provisions of this Note set forth on
the reverse hereof. Such further provisions shall for all purposes have the
same effect as though fully set forth at this place.
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication
<PAGE>
hereon shall have been signed by the Trustee under the Indenture referred
to on the reverse hereof.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: February 1, 1999 INTERNATIONAL BUSINESS MACHINES
CORPORATION
[SEAL]
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION by
------------------------------
This is one of the
Securities of the Series
designated herein issued
under the within-
mentioned Indenture. by
------------------------------
THE CHASE MANHATTAN BANK, as Trustee
by
------------------------------
Authorized Signatory
This Note is one of a duly authorized issue of unsecured debentures,
notes or other evidences of indebtedness of the Company (hereinafter called
the "Securities"), of the series hereinafter specified, all issued or to be
issued under an indenture dated as of October 1, 1993 (hereinafter called
the "Indenture"), duly executed and delivered by the Company to The Chase
Manhattan Bank, a New York banking corporation, as trustee (hereinafter
called the "Trustee"), to which Indenture and all indentures supplemental
thereto reference is hereby made for a description of the respective rights
and duties thereunder of the Trustee, the Company and the holders of the
Securities. The Securities may be issued in one or more series, which
different series may be issued in various aggregate principal amounts, may
mature at different times, may bear interest at different rates, may have
different conversion prices (if any), may be subject to different
redemption provisions, may be subject to different sinking, purchase or
analogous funds, may be subject to different covenants and Events of
Default and may otherwise vary as in the Indenture provided. This Note is
one of a series
<PAGE>
designated as the 5.375% Notes due 2009 of the Company (hereinafter called
the "Notes") issued under the Indenture.
In case an Event of Default with respect to the Notes, as defined in
the Indenture, shall have occurred and be continuing, the principal hereof
together with interest accrued thereon, if any, may be declared, and upon
such declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Securities at the time outstanding of all
series to be affected (acting as one class) to execute supplemental
indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
indenture or modifying in any manner the rights of the holders of the
Securities of such series to be affected; provided, however, that no such
supplemental indenture shall, among other things, (i) change the fixed
maturity of the principal of, or any installment of principal of or
interest on, any Security; (ii) reduce the principal amount thereof or the
rate of interest thereon or any premium payable upon the redemption
thereof; (iii) impair the right to institute suit for the enforcement of
any such payment on or after the fixed maturity thereof (or, in the case of
redemption, on or after the redemption date); (iv) reduce the percentage in
principal amount of the outstanding Securities of any series, the consent
of whose holders is required for any such supplemental indenture, or the
consent of whose holders is required for any waiver (of compliance with
certain provisions of the Indenture or certain defaults thereunder and
their consequences) provided for in the Indenture; (v) change any
obligation of the Company, with respect to outstanding 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 (vi) modify any of the
foregoing provisions or the provisions for the waiver of certain covenants
and defaults, except to increase any applicable percentage of the aggregate
principal amount of outstanding Securities the consent of the holders of
which is required or to provide with respect to any particular series the
right to condition the effectiveness of any supplemental indenture as to
that series on the consent of the holders of a specified
<PAGE>
percentage of the aggregate principal amount of outstanding Securities of
such series or to provide that certain other provisions of the Indenture
cannot be modified or waived without the consent of the holder of each
outstanding Security affected thereby. It is also provided in the Indenture
that the holders of a majority in aggregate principal amount of the
Securities of a series at the time outstanding may on behalf of the holders
of all the Securities of such series waive any past default under the
Indenture with respect to such series and its consequences, except a
default in the payment of the principal of, premium, if any, or interest,
if any, on any Security of such series or in respect of a covenant or
provision which cannot be modified without the consent of the Holder of
each outstanding Security of the series affected. Any such consent or
waiver by the holder of this Note shall be conclusive and binding upon such
holder and upon all future holders and owners of this Note and any Notes
which may be issued in exchange or substitution herefor, irrespective of
whether or not any notation thereof is made upon this Note or such other
Notes.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of, if any, and
interest on this Note at the place, at the respective times, at the rate
and in the coin or currency herein prescribed.
The Indenture permits the Company to Discharge its obligations with
respect to the Notes on the 91st day following the satisfaction of the
conditions set forth in the Indenture, which include the deposit with the
Trustee of money or U.S. Government Obligations or a combination thereof
sufficient to pay and discharge each installment of principal of (including
premium, if any, on) and interest, if any, on the outstanding Notes.
If the Company shall, in accordance with Section 901 of the Indenture,
consolidate with or merge into any other corporation or convey or transfer
its properties and assets substantially as an entirety to any Person, the
successor shall succeed to, and be substituted for, the Person named as the
"Company" on the face of this Note, all on the terms set forth in the
Indenture.
<PAGE>
The Notes are issuable in registered form without coupons in
denominations of $1,000 and any integral multiple of $1,000. In the manner
and subject to the limitations provided in the Indenture, but without the
payment of any service charge, Notes may be exchanged for an equal
aggregate principal amount of Notes other authorized denominations at the
office or agency of the Company maintained for such purpose in the Borough
of Manhattan, The City and State of New York.
The Notes may be redeemed as a whole or in part, at the option of the
Company at any time, upon mailing a notice of such redemption not less than
30 nor more than 60 days prior to the date fixed for redemption to the
holders of the Notes at their last registered addresses, all as provided in
the Indenture, at a redemption price equal to the greater of (i) 100% of
the principal amount of the Notes to be redeemed and (ii) the sum of the
present values of the Remaining Scheduled Payments thereon discounted to
the redemption date on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Treasury Rate plus ten basis
points, plus in either case accrued interest on the principal amount being
redeemed to the date of redemption.
"Treasury Rate" means, with respect to any redemption date,(i) the
yield, under the heading which represents the average for the immediately
preceding week, appearing in the most recently published statistical
release designated "H.15(519)" or any successor publication which is
published weekly by the Board of Governors of the Federal Reserve System
and which establishes yields on actively traded United States Treasury
securities adjusted to constant maturity under the caption "Treasury
Constant Maturities," for the maturity corresponding to the Comparable
Treasury Issue (if no maturity is within three months before or after the
maturity date for the Notes, yields for the two published maturities most
closely corresponding to the Comparable Treasury Issue shall be determined
and the Treasury Rate shall be interpolated or extrapolated from such
yields on a straight line basis, rounding to the nearest month) or (ii) if
such release (or any successor release) is not published during the week
preceding the calculation date or does not contain such yields, the rate
per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, calculated using a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to
the Comparable
<PAGE>
Treasury Price for such redemption date. The Treasury Rate shall be
calculated on the third business day preceding the redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity
comparable to the remaining term of the Notes to be redeemed that would be
utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of such Notes. "Independent
Investment Banker" means one of the Reference Treasury Dealers appointed by
the Trustee after consultation with the Company.
"Comparable Treasury Price" means with respect to any redemption date,
(i) the average of the Reference Treasury Dealer Quotations for such
redemption date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations, or (ii) if the Trustee obtains fewer than four
such Reference Treasury Deal Quotations, the average of all such
Quotations. "Reference Treasury Dealer Quotations" means, with respect to
each Reference Treasury Dealer and any redemption date, the average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expected in each case as a percentage of its principal
amount) quoted in writing to the Trustee by such Reference Treasury Dealer
at 5:00 p.m. on the third business day preceding such redemption date.
"Reference Treasury Dealer" means each of, Morgan Stanley & Co.
Incorporated, Bear, Stearns & Co. Inc., Chase Securities Inc., Credit
Suisse First Boston Corporation, Goldman, Sachs & Co., Lehman Brothers
Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and, Salomon Smith
Barney Inc. and their respective successors; provided, however, that if any
of the foregoing shall cease to be a primary U.S. Government securities
dealer in New York City (a "Primary Treasury Dealer"), the Company shall
substitute therefor another Primary Treasury Dealer.
"Remaining Scheduled Payments" means, with respect to any Note, the
remaining scheduled payments of the principal thereof to be redeemed and
interest thereon that would be due after the related redemption date but
for such redemption; provided, however, that, if such redemption date is
not an interest payment date with respect to such Note,
<PAGE>
the amount of the next succeeding scheduled interest payment thereon will
be reduced by the amount of interest accrued thereon to such redemption
date.
Upon due presentation for registration of transfer of this Note at the
office or agency of the Company for such registration in the Borough of
Manhattan, The City and State of New York, a new Note or Notes of
authorized denominations for an equal aggregate principal amount will be
issued to the transferee in exchange herefor, subject to the limitations
provided in the Indenture, without charge except for any tax or other
governmental charge imposed in connection therewith.
Prior to due presentment for registration of transfer of this Note,
the Company, the Trustee and any agent of the Company or the Trustee may
deem and treat the registered holder hereof as the absolute owner of this
Note (whether or not this Note shall be overdue) for the purpose of
receiving payment of the principal of, premium, if any, and interest on
this Note, as herein provided, and for all other purposes, and neither the
Company nor the Trustee nor any agent of the Company or the Trustee shall
be affected by any notice of the contrary. All payments made to or upon the
order of such registered holder shall, to the extent of the sum or sums
paid, effectually satisfy and discharge liability for moneys payable on
this Note.
No recourse for the payment of the principal of, premium, if any, or
interest on this Note, or for any claim based hereon or otherwise in
respect hereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in the Indenture or any indenture supplemental
thereto or in any Note, or because of the creation of any indebtedness
represented thereby, shall be had against any incorporator, stockholder,
officer or director, as such, past, present or future, of the Company or of
any successor corporation, either directly or through the Company or any
successor corporation, whether by virtue of any constitution, statute or
rule of law or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part
of the consideration for the issue hereof, expressly waived and released.
<PAGE>
Unless otherwise defined in this Note, all terms used in this Note
which are defined in the Indenture shall have the meanings assigned to them
in the Indenture.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
