26
Exhibit 2
[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
Floating Rate Note due September 26, 2002
CUSIP 459200 AV3
ISIN XS0118029825
ISIN US459200 AV33
COMMON CODE 11802982
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 below), for value received, hereby promises to pay to , or
registered assigns, the principal sum as set forth in the attached Schedule of
Increases and Decreases, at the office or agency of the Company in the Borough
of Manhattan, The City and State of New York, or any other office or agency
designated by the Company for that purpose, on September 26, 2002, in such
coin or currency of the member states of the European Monetary Union that have
adopted or that adopt the single currency in accordance with the Treaty
establishing the European Community, as amended by the Treaty on European
Union as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay interest, quarterly on March 26, June 26,
September 26 and December 26 of each year, on said principal sum at said
office or agency, in like coin or currency, at the floating rate of interest
described below, from the March 26, June 26, September 26 or December 26, 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 below), in which case from September 26, 2000, until
payment of said principal sum has been made or duly
<PAGE>
27
provided for. Notwithstanding the foregoing, if the date hereof is after March
1, June 1, September 1 or December 1, as the case may be, and before the
following March 26, June 26, September 26 or December 26, as the case may be,
this Note shall bear interest from such March 26, June 26, September 26 or
December 26; provided, however, that if the Company shall default in the
payment of interest due on such March 26, June 26, September 26 or December
26, then this Note shall bear interest from the next preceding March 26, June
26, September 26 or December 26 to which interest has been paid, or, if no
interest has been paid on the Notes, from September 26, 2000. The interest so
payable on any March 26, June 26, September 26 or December 26 will, subject to
certain exceptions provided in the Indenture referred to below, be paid to the
person in whose name this Note is registered at the close of business on such
March 1, June 1, September 1 or December 1, as the case may be, next preceding
such March 26, June 26, September 26 or December 26, 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.
This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication
<PAGE>
28
hereon shall have been signed by the Trustee under the Indenture.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: 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.
THE CHASE MANHATTAN BANK, as Trustee
by ______________________________
Authorized Signatory
This Security 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, duly executed and
delivered by the Company to The Chase Manhattan Bank, a New York banking
corporation, as trustee (hereinafter called the "Trustee"), as supplemented by
the First Supplemental Indenture dated as of December 15, 1995, between the
Company and the Trustee, as trustee (hereinafter called the "Indenture") 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 security is one of a
<PAGE>
29
series designated as the Floating Rate Notes due September 26, 2002 of the
Company (hereinafter called the "Notes") issued under the Indenture.
The rate of interest payable from time to time in respect of this Note
(the "Rate of Interest") will be a floating rate subject to adjustment on a
quarterly basis and determined by reference to EURIBOR for three-month euro
deposits, determined as described below, plus a spread of 0.125% per annum.
All percentages resulting from any calculation on the Notes will be rounded to
the nearest one hundred-thousandth of a percentage point, with five one
millionths of a percentage point rounded upwards. For example, 9.876545% (or
.09876545) would be rounded to 9.87655% (or .0987655), and all currency
amounts used in or resulting from such calculation on this Note will be
rounded to the nearest available currency unit, with one-half unit being
rounded upward.
The first "Interest Period" will begin on, and include, September 26,
2000 and end on, but exclude, the first interest payment date. Subsequent
Interest Periods will begin on, and include, each interest payment date and
end on, but exclude, the following interest payment date.
(1) At approximately 11:00 a.m. (Brussels time) on the second day on
which the Trans-European Automated Real-Time Gross Settlement Express
Transfer System is open, a "TARGET Settlement Date", prior to the
commencement of the Interest Period for which such rate will apply (each
such day an "Interest Determination Date"), The Chase Manhattan Bank, as
the calculation agent or its successors in this capacity (the
"Calculation Agent"), will calculate the Rate of Interest for such
Interest Period as, subject to the provisions described below, the rate
per annum equal to 0.125% above the rate appearing on the Bridge Telerate
Page 248 (or such other page as may replace that page on the Bridge
Telerate Service) for three-month euro deposits in the Euro-zone
inter-bank market on such Interest Determination Date.
(2) If on any Interest Determination Date an appropriate rate cannot
be determined from the Bridge Telerate Service, the Rate of Interest for
the next Interest Period shall, subject to the provisions described
below, be the rate per annum that the Calculation Agent certifies to be
0.125% per annum above the arithmetic mean of the offered quotations, as
communicated to and at the request of the Calculation Agent by not less
than two major banks in the Euro-zone selected by the Calculation Agent
(the "Reference Banks"), which term shall include any successors
nominated by the Calculation Agent, to leading banks in the Euro-zone by
the principal Euro-zone offices of the Reference Banks for three-month
euro deposits in the
<PAGE>
30
Euro-zone inter-bank market as at 11:00 a.m. (Brussels time) on such
Interest Determination Date.
(3) If on any Interest Determination Date fewer than two of such
offered rates are available, the Rate of Interest for the next Interest
Period shall be the Reserve Interest Rate. The "Reserve Interest Rate"
refers to the rate per annum which the Calculation Agent determines to be
0.125% per annum above either:
o The arithmetic mean of the euro offered rates which at least
two Reference Banks are or were quoting, on the relevant Interest
Determination Date at 11:00 a.m., London time, for three-month
deposits to prime banks in the London interbank market or those of
them (being at least two in number) to which such quotations are or
were, in the opinion of the Calculation Agent, being so made, or
o In the event that the Calculation Agent can determine no such
arithmetic mean, the arithmetic mean of the euro offered rates which
at least two London banks selected by the Calculation Agent are or
were quoting on such Interest Determination Date at 11:00 a.m.,
London time to leading European banks for a period of three months;
provided, however, that if the banks selected as aforesaid by the Calculation
Agent are not quoting as mentioned above, the Rate of Interest shall be the
Rate of Interest in effect for the preceding Interest Period.
The Calculation Agent shall, as soon as practicable after 11:00 a.m.
(Brussels time) on each Interest Determination Date, determine the Rate of
Interest and calculate the amount of interest payable in respect of the
following Interest Period (the "Interest Amount"). The Interest Amount shall
be calculated by applying the Rate of Interest to the principal amount of this
Note outstanding at the commencement of the Interest Period, multiplying each
such amount by the actual number of days in the Interest Period concerned
(which actual number of days shall include the first day but exclude the last
day of such Interest Period) divided by 360 and rounding the resultant figure
upwards to the nearest available currency unit. The determination of the Rate
of Interest and the Interest Amount by the Calculation Agent shall, in the
absence of willful default, bad faith or manifest error, be final and binding
on all parties. In no event will the rate of interest on the Notes be higher
than the maximum rate permitted by New York law, as the same may be modified
by United States law of general application.
In case an Event of Default with respect to the Notes, as defined in the
Indenture, shall have occurred and be
<PAGE>
31
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, or the currency of payment of, 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 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
<PAGE>
32
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 Foreign Government Securities 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.
The Notes are issuable in registered form without coupons in
denominations of euro 1,000 and any integral multiple of euro1,000. 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 Company will, subject to the exceptions and limitations set forth
below, pay as additional interest on this Note such additional amounts as are
necessary in order that the net payment by the Company or a paying agent of
the principal of and interest on the Notes to a holder who is not a United
States person (as defined below), after deduction for any present or future
tax, assessment or other governmental charge of the United States or a
political subdivision or taxing authority of or in the United States, imposed
by withholding with respect to the payment, will not be less than the amount
provided in this Note to be then due and payable; provided, however, that the
foregoing obligation to pay additional amounts shall not apply:
(1) to any tax, assessment or other governmental charge that is
imposed or withheld solely by reason of
<PAGE>
33
the holder, or a fiduciary, settlor, beneficiary, member or shareholder
of the holder if the holder is an estate, trust, partnership or
corporation, or a person holding a power over an estate or trust
administered by a fiduciary holder, being considered as:
(a) being or having been present or engaged in a trade or
business in the United States or having had a permanent
establishment in the United States;
(b) having a current or former relationship with the United
States, including a relationship as a citizen or resident of the
United States;
(c) being or having been a foreign or domestic personal holding
company, a passive foreign investment company or a controlled
foreign corporation with respect to the United States or a
corporation that has accumulated earnings to avoid United States
federal income tax;
(d) being or having been a "10-percent shareholder" of the
Company as defined in section 871(h)(3) of the United States
Internal Revenue Code or any successor provision; or
(e) being a bank receiving payments on an extension of credit
made pursuant to a loan agreement entered into the ordinary course
of its trade or business;
(2) to any holder that is not the sole beneficial owner of this
Note, or a portion of this Note, or that is a fiduciary or partnership,
but only to the extent that a beneficiary or settlor with respect to the
fiduciary, a beneficial owner or member of the partnership would not have
been entitled to the payment of an additional amount had the beneficiary,
settlor, beneficial owner or member received directly its beneficial or
distributive share of the payment;
(3) to any tax, assessment or other governmental charge that is
imposed otherwise or withheld solely by reason of a failure of the holder
or any other person to comply with certification, identification or
information reporting requirements concerning the nationality, residence,
identity or connection with the United States of the holder or beneficial
owner of this Note, if compliance is required by statute, by regulation
of the United States Treasury Department or by an applicable income tax
treaty to which the United States is a party as a precondition to
exemption from such tax, assessment or other governmental charge;
<PAGE>
34
(4) to any tax, assessment or other governmental charge that is
imposed otherwise than by withholding by the Company or a paying agent
from the payment;
(5) to any tax, assessment or other governmental charge that is
imposed or withheld solely by reason of a change in law, regulation, or
administrative or judicial interpretation that becomes effective more
than 15 days after the payment becomes due or is duly provided for,
whichever occurs later;
(6) to any estate, inheritance, gift, sales, excise, transfer,
wealth or personal property tax or similar tax, assessment or other
governmental charge;
(7) to any tax, assessment or other governmental charge required to
be withheld by any paying agent from any payment of principal of or
interest on this Note, if such payment can be made without such
withholding by any other paying agent; or
(8) in the case of any combination of items (1), (2), (3), (4), (5),
(6) and (7).
This Note is subject in all cases to any tax, fiscal or other law or
regulation or administrative or judicial interpretation applicable to this
Note. Except as specifically provided in this Note, the Company shall not be
required to make any payment with respect to any tax, assessment or other
governmental charge imposed by any government or a political subdivision or
taxing authority of or in any government or political subdivision.
As used in this Note, the term "United States" means the United States of
America (including the states and the District of Columbia) and its
territories, possessions and other areas subject to its jurisdiction, "United
States person" means any individual who is 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, any state of the United States or the
District of Columbia (other than a partnership that is not treated as a United
States person under any applicable Treasury regulations), or any estate or
trust the income of which is subject to United States federal income taxation
regardless of its source.
If, as a result of any change in, or amendment to, the laws (or any
regulations or rulings promulgated under the laws) of the United States (or
any political subdivision or taxing authority of or in the United States), or
any change in, or amendments to, an official position regarding the
application or interpretation of such laws, regulations or rulings, which
change or amendment is announced or becomes effective on or after September
13, 2000, the Company becomes or, based upon a written opinion of independent
counsel selected by the Company, will become obligated to
<PAGE>
35
pay additional amounts as described above with respect to this Note, then the
Company may at its option redeem, in whole, but not in part, this Note on not
less than 30 nor more than 60 days prior notice, at a redemption price equal
to 100% of its principal amount, together with interest accrued but unpaid on
this Note to the date fixed for redemption.
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, or any other office or agency
designated by the Company for such purpose, 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.
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.
<PAGE>
36
SCHEDULE OF INCREASES OR DECREASES
The initial principal amount of this Global Note is euro. The
following increases or decreases in this Global Note have been made:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Date of Amount of decrease Amount of increase Principal amount Signature of
Exchange in Principal in Principal of this Global authorized
Amount of this Amount of this Note following signatory of
Global Note Global Note such decrease or Trustee or
increase Securities
Custodian
</TABLE>
