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Exhibit 1
EXECUTION COPY
$12,107,437,190
International Business Machines Corporation
U.S. Medium-Term Notes
AGENCY AGREEMENT
JUNE 22, 2000
Chase Securities Inc.
270 Park Avenue
New York, New York 10017-2070
Credit Suisse First Boston Corporation
11 Madison Avenue
5th Floor
New York, New York 10010
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Merrill Lynch, Pierce, Fenner & Smith Incorporated
World Financial Center
North Tower
New York, New York 10281-1315
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
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1. INTRODUCTION. International Business Machines Corporation, a New
York corporation (the "Issuer"), confirms its agreement with each of you
(individually an "Agent" and collectively the "Agents") with respect to the
issue and sale from time to time by the Issuer on or after the date hereof of up
to $12,107,437,190 in aggregate initial offering price of its Medium-Term Debt
Securities (or for Medium-Term Debt Securities denominated in currencies or
currency units other than U.S. dollars, the equivalent thereof based on the
prevailing exchange rates at the respective times such Medium-Term Securities
are first offered) (the "Securities") issued under Article Three of the
Indenture dated as of October 1, 1993, as supplemented by the First Supplemental
Indenture thereto dated as of December 15, 1995 (the "Indenture"), between the
Issuer and The Chase Manhattan Bank, as trustee (the "Trustee"). The Securities
will be issued, and the terms thereof established, from time to time by the
Issuer in accordance with the Indenture and the Procedures (as defined in
Section 3(d) hereof).
2. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer represents
and warrants to, and agrees with, each Agent as follows:
(a) Registration statements of the Issuer (Nos. 333-37034 and
333-70521), relating to securities of the Issuer (collectively the
"Registered Securities"), including the Securities, have been filed with
the Securities and Exchange Commission (the "Commission") and have become
effective (such registration statements, as amended as of the Closing Date
(as defined in Section 3(e) hereof), including all material incorporated
by reference therein, being hereinafter collectively referred to as the
"Registration Statement," and the prospectus dated JUNE 20, 2000, a form
of which is included in Registration Statement No. 333-37034, as
supplemented as of the Closing Date, including all material incorporated
by reference therein, being hereinafter referred to as the "Prospectus").
Any reference in this Agreement to amending or supplementing the
Prospectus shall be deemed to include the filing of materials incorporated
by reference in the Prospectus after the Closing Date and any reference in
this Agreement to any amendment or supplement to the Prospectus shall be
deemed to include any such materials incorporated by reference in the
Prospectus after the Closing Date.
(b) On the effective date of each registration statement included in
the definition of Registration Statement, such registration statement
conformed, and on the Closing Date, the Prospectus as then amended or
supplemented will conform, in all material respects to the requirements of
the Securities Act of 1933 (the "Act"), the Securities Exchange Act of
1934 (the "Exchange Act"), the Trust Indenture Act of 1939 (the "Trust
Indenture Act") and the rules and regulations of the Commission thereunder
(the "Rules and Regulations"), and on its effective date each registration
statement did not, and such Prospectus will not, include any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading, except that the foregoing does not apply to statements in or
omissions from any of such documents based upon written information
furnished to the Issuer by any Agent specifically for use therein.
3. APPOINTMENT AS AGENT; SOLICITATIONS AS AGENT.
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(a) Subject to the terms and conditions stated herein, the Issuer
hereby appoints each of the Agents an agent of the Issuer for the purpose
of soliciting or receiving offers to purchase the Securities from the
Issuer by others. Nothing contained in this Agreement shall be construed
to prevent the Issuer from selling at any time to any person any
Registered Securities, including the Securities, directly on its own
behalf or in a firm commitment underwriting pursuant to an underwriting
agreement that does not provide for a continuous offering of such
Securities. Each Agent agrees to use its reasonable efforts to solicit
purchases of the Securities on the terms and subject to the conditions set
forth herein and in the Procedures (as defined below).
(b) On the basis of the representations and warranties contained
herein, but subject to the terms and conditions herein set forth, each
Agent agrees, as agent of the Issuer, to solicit offers to purchase the
Securities upon the terms and conditions set forth in the Prospectus, as
from time to time amended or supplemented.
Upon receipt of notice from the Issuer as contemplated by Section
4(b) hereof, the Agents shall suspend solicitation of offers to purchase
the Securities until such time as the Issuer shall have furnished them
with an amendment or supplement to the Registration Statement or the
Prospectus, as the case may be, contemplated by Section 4(b) and shall
have advised the Agents that such solicitation may be resumed.
The Issuer reserves the right, in its sole discretion, to suspend
solicitation of offers to purchase the Securities commencing at any time
for any period of time or permanently. Upon receipt of notice from the
Issuer, the Agents will forthwith suspend solicitation of offers to
purchase the Securities from the Issuer until such time as the Issuer has
advised the Agents that such solicitation may be resumed. During any such
suspension, the Issuer's obligations under Sections 6(a), 6(b), 6(c) and
6(d) shall be suspended, except with respect to Notes held by an Agent for
resale during the first 180 days after the Agent's purchase thereof and
identified in a notice from the Agent to the Issuer as being held by such
Agent for resale during such period.
Unless otherwise mutually agreed upon between the Issuer and the
Agent soliciting such offer, the Agents are authorized to solicit offers
to purchase Securities only in fully registered form in denominations of
$1,000 or any multiple thereof. The authorized denominations of Securities
not denominated in U.S. dollars will be determined by the Issuer at the
time of sale. Each Agent shall communicate to the Issuer, orally or in
writing, each reasonable offer to purchase the Securities received by it
as Agent. The Issuer shall have the sole right to accept offers to
purchase the Securities and may reject any such offer, in whole or in
part. Each Agent shall have the right, in its discretion reasonably
exercised, without notice to the Issuer, to reject any offer to purchase
the Securities received by it, in whole or in part, and any such rejection
shall not be deemed a breach of its agreement contained herein.
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No Security which the Issuer has agreed to sell pursuant to this
Agreement shall be deemed to have been purchased and paid for, or sold, by
the Issuer until such Security shall have been delivered to the purchaser
thereof against payment by such purchaser.
(c) At the time of delivery of, and payment for, any Securities sold
by the Issuer as a result of a solicitation made by, or offer to purchase
received by, an Agent, the Issuer agrees to pay such Agent a commission in
accordance with the schedule set forth in Exhibit A hereto, unless
otherwise agreed.
(d) Administrative procedures respecting the sale of Securities (the
"Procedures") shall be agreed upon from time to time by the Agents and the
Issuer. The initial Procedures, which are set forth in Exhibit B hereto,
shall remain in effect until changed by agreement among the Issuer and the
Agents. Each Agent and the Issuer agree to perform the respective duties
and obligations specifically provided to be performed by each of them
herein and in the Procedures. The Issuer will furnish to the Trustee a
copy of the Procedures as from time to time in effect.
(e) The documents required to be delivered by Section 5 hereof shall
be delivered at the offices of the Issuer in Armonk, New York, or counsel
for the Issuer in New York City, not later than 10:00 A.M., New York City
time, on the date of this Agreement or at such other place, and at such
later time and date as may be mutually agreed by the Issuer and the
Agents, such time and date being herein called the "Closing Date."
4. CERTAIN AGREEMENTS OF THE ISSUER. The Issuer agrees with the Agents
that, in connection with each offering of Securities,
(a) The Issuer will advise each Agent promptly of any proposal to
amend or supplement the Registration Statement or the Prospectus (other
than an amendment or supplement (i) providing solely for a change in the
terms of the Securities, (ii) by means of the filing of materials
incorporated by reference in the Prospectus, (iii) relating to an offering
by the Issuer of Registered Securities other than the Securities or (iv)
that is a pricing amendment or supplement relating to Securities the
purchase of which was not solicited by any Agent) and will afford the
Agents a reasonable opportunity to comment on any such proposed amendment
or supplement; and the Issuer will also advise each Agent of the filing of
any such amendment or supplement and of the institution by the Commission
of any stop order proceedings in respect of the Registration Statement or
of any part thereof and will use its best efforts to prevent the issuance
of any such stop order and to obtain as soon as possible its lifting, if
issued.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or if it is necessary at any time to amend the
Registration Statement or the
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Prospectus to comply with the Act, the Exchange Act or the Rules and
Regulations (other than as contemplated in the parenthetical clause of
Section 4(a) hereof), the Issuer will promptly notify each Agent to
suspend solicitation of offers to purchase the Securities; and if the
Issuer shall decide so to amend or supplement the Registration Statement
or the Prospectus, it will promptly advise each Agent by telephone (with
confirmation in writing) and will promptly prepare and file with the
Commission an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance.
Notwithstanding the foregoing, if, at the time of any notification to
suspend solicitations, any Agent shall own any of the Securities with the
intention of reselling them as contemplated by Section 11 hereof, or the
Issuer has accepted an offer to purchase Securities but the related
settlement has not occurred, the Issuer, subject to the provisions of
subsection (a) of this Section, will promptly prepare and file with the
Commission an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance.
(c) The Issuer, during the period when a prospectus relating to the
Securities is required to be delivered under the Act, will file promptly
all documents required to be filed with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act. The Issuer will promptly
furnish each Agent with copies of all material press releases or
announcements to the general public which are not filed with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act and are not otherwise available on the IBM home page on the Internet,
at "http://www.ibm.com." The Issuer will also immediately notify each
Agent of any downgrading in the rating of the Securities or any other debt
securities of the Issuer, or any proposal to downgrade the rating of the
Securities or any other debt securities of the Issuer, by any "nationally
recognized statistical rating organization" (as defined for purposes of
Rule 436(g) under the Act), as soon as the Issuer learns of such
downgrading or proposal to downgrade.
(d) The Issuer will furnish to each Agent copies of the Prospectus
and all amendments and supplements thereto, and all amendments to the
Registration Statement after the date hereof (other than an amendment or
supplement (i) relating to an offering by the Issuer of Registered
Securities other than the Securities or (ii) that solely specifies the
terms of the Securities the purchase of which was not solicited by any
Agent), in each case as soon as available and in such quantities as are
reasonably requested.
(e) The Issuer will arrange for the qualification of the Securities
for sale and the termination of their eligibility for investment under the
laws of such jurisdictions as the Agents designate and will continue such
qualifications in effect so long as required for the distribution of the
Securities.
(f) So long as any Securities are outstanding, if so requested by
the Agents, the Issuer will furnish to the Agents, (i) as soon as
practicable after the end of each fiscal year, a copy of its annual report
to stockholders for such year, (ii) as soon as available, a copy of each
report or definitive proxy statement of the Issuer, if any, filed with the
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Commission under the Exchange Act or mailed to stockholders, and (iii)
from time to time, such other information concerning the Issuer as the
Agents may reasonably request.
(g) Unless otherwise agreed, the Issuer will pay all expenses
incident to the performance of its obligations under this Agreement and
will reimburse each Agent for any expenses (including fees and
disbursements of counsel) incurred by it in connection with qualification
of the Securities for sale and determination of their eligibility for
investment under the laws of such jurisdictions as such Agent may
designate and the printing of memoranda relating thereto, for any fees
charged by investment rating agencies for the rating of the Securities,
for expenses incurred in distributing the Prospectus and all supplements
thereto, any preliminary prospectuses and any preliminary prospectus
supplements, to each Agent and for the reasonable fees and disbursements
of counsel to the Agents.
5. CONDITIONS OF OBLIGATIONS. The obligation of each Agent, whether
acting as agent of the Issuer or as principal under this Agreement, at any time
to solicit offers to purchase the Securities is subject to the accuracy, on the
date hereof, on the Closing Date, on the date of each such solicitation, and at
each of the times of acceptance and of delivery referred to in Section 6(a)
hereof and at each Representation Date (as defined in Section 6(b)), of the
representations and warranties of the Issuer herein, to the accuracy, on each
such date, of the statements of the Issuer's officers in any certificates made
pursuant to the provisions hereof, to the performance, on or prior to each such
date, by the Issuer of its obligations hereunder, and to each of the following
additional conditions precedent:
(a) No stop order suspending the effectiveness of the Registration
Statement or of any part thereof shall have been issued and no proceedings
for that purpose shall have been instituted or, to the knowledge of the
Issuer or any Agent, shall be contemplated by the Commission.
(b) The Prospectus, as amended or supplemented as of the Closing
Date, the date of such solicitation or any Representation Date, shall not
contain any untrue statement of fact which, in the opinion of any Agent,
is material or omits to state a fact which, in the opinion of any Agent,
is material and is required to be stated therein or is necessary to make
the statements therein not misleading.
(c) There shall not have occurred between each trade and settlement
date (i) any change, or any development involving a prospective change, in
or affecting particularly the business or properties of the Issuer or its
subsidiaries which, in the judgment of such Agent, materially impairs the
investment quality of the Securities; (ii) any downgrading in the rating
of the Issuer's debt securities or public announcement that such debt
securities are under surveillance or review, with possible negative
implications, by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act);
(iii) any suspension or limitation of trading in securities generally on
the New York Stock Exchange, or any setting of minimum prices for trading
on such exchange, or any suspension of trading of any securities of the
Issuer on any exchange or
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in the over-the-counter market; (iv) any banking moratorium declared by
Federal or New York authorities; or (v) any outbreak or escalation of
major hostilities in which the United States is involved, any declaration
of war by Congress or any other substantial national or international
calamity or emergency if, in the judgment of such Agent, the effect of any
such outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with solicitations of purchases of,
or sales of, Securities.
(d) At the Closing Date, the Agents shall have received:
(i) the opinion of the General Counsel of the Issuer (or any
Assistant General Counsel, Associate General Counsel, or other
internal Counsel of or representing the Issuer having knowledge of
and competence in securities or other financial matters; the "Issuer
Counsel"), or, at the election of the Issuer, the opinion of
Cravath, Swaine & Moore, outside counsel for the Issuer, dated the
Closing Date, to the effect that:
(A) the Issuer (x) has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the State of New York, with full corporate power and authority
to own its properties and conduct its business as described in
the Prospectus and (y) is duly qualified to do business as a
foreign corporation and is in good standing under the laws of
each jurisdiction within the United States which requires such
qualification wherein it owns or leases material properties or
conducts material business where such failure so to qualify may
have a material adverse effect on the financial condition,
earnings, business or properties of the Issuer;
(B) to the knowledge of opining counsel, there is no
pending or threatened action, suit or proceeding before any court
or governmental agency, authority or body or any arbitrator
involving the Issuer or any of its subsidiaries, of a character
required to be disclosed in the Registration Statement which is
not adequately disclosed in the Prospectus, and there is no
franchise, contract or other document of a character required to
be described in the Registration Statement or Prospectus, or to
be filed as an exhibit, which is not described or filed as
required; and the statements in the Prospectus describing the
terms of the Securities and the provisions of the Indenture
fairly summarize the matters therein described; and
(C) none of the issue and sale of the Securities, the
consummation of any other of the transactions contemplated herein
or the fulfillment of the terms hereof will conflict with, result
in a breach of, or constitute a default under, (x) the charter or
by-laws of the Issuer; (y) the terms of any indenture or other
agreement or instrument known to such counsel and to which the
Issuer or any of its subsidiaries is a party or bound, or (z) any
order or regulation known to such counsel to be applicable to the
Issuer or any of its
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subsidiaries of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over
the Issuer or any of its subsidiaries.
(D) the authorized Securities conform in all material
respects to the description thereof contained in the Prospectus;
(E) the Indenture has been duly authorized, executed and
delivered by the Issuer, has been duly qualified under the Trust
Indenture Act and constitutes a valid and binding instrument
enforceable against the Issuer in accordance with its terms
(subject to applicable bankruptcy, reorganization, insolvency,
fraudulent transfer, moratorium or other similar laws affecting
creditors' rights generally from time to time in effect and to
general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at
law); and the Securities have been duly authorized by resolutions
of the Board of Directors of the Issuer for issuance for a period
beginning on the effective date of the Registration Statement and
ending upon sale of all Securities authorized thereunder (the
"Period"), subject to the establishment of certain terms of the
Securities by officers of the Issuer authorized by such
resolutions to establish such terms, and, when the terms of any
such Security have been established as provided in such
resolutions and in the Indenture and such has been executed and
authenticated during such period in accordance with the
provisions of the Indenture and delivered to and paid for by the
purchaser thereof in accordance with the terms of this Agreement,
each such Security, assuming it does not violate any applicable
law then binding on the Issuer, will constitute a valid and
binding obligation of the Issuer entitled to the benefits of the
Indenture;
(F) the Registration Statement and any amendments
thereto have become effective under the Act, and, to the
knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement, as amended, has been
issued, and no proceedings for that purpose have been instituted
or threatened;
(G) this Agreement has been duly authorized, executed
and delivered by the Issuer; and
(H) no consent, approval, authorization or order of any
United States Federal or New York governmental agency or
regulatory body is required for the consummation of the
transactions contemplated herein, except such as have been
obtained under the Act and such as may be required under the blue
sky laws of any jurisdiction in connection with the issue and
sale of the Securities and such other approvals (specified in
such opinion) as have been obtained.
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(ii) such opining counsel shall also furnish a
letter, dated the Closing Date, that shall state that such
counsel has no reason to believe that: (A) the Registration
Statement or any amendment thereof at the time it became
effective contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that
the Prospectus, as amended or supplemented, includes an untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading
(in each case, except for the financial statements and other
information of an accounting or financial nature included
therein, and the Statement of Eligibility (Form T-1), included as
an exhibit to the Registration Statement, as to which such
counsel need express no view); and (B) the Registration Statement
and the Prospectus as amended or supplemented (except the
financial statements and other information of an accounting or
financial nature included therein, and the Statement of
Eligibility (Form T-1), included as an exhibit to the
Registration Statement, as to which such counsel need express no
view), were not appropriately responsive in all material respects
to the requirements of the Act and the Trust Indenture Act and
the applicable rules and regulations thereunder.
(e) At the Closing Date, the Agents shall have received a
certificate, dated the Closing Date, of the President or any Vice
President, and by the Treasurer, Controller, or Secretary or any Assistant
Treasurer, Assistant Controller or Assistant Secretary of the Issuer in
which such officers, to the best of their knowledge after reasonable
investigation, shall state that (i) the representations and warranties of
the Issuer in this Agreement are true and correct, (ii) the Issuer has
complied with all agreements and satisfied all conditions on its part to
be performed or satisfied hereunder at or prior to the Closing Date, (iii)
no stop order suspending the effectiveness of the Registration Statement
or of any part thereof has been issued and no proceedings for that purpose
have been instituted or are threatened by the Commission, and (iv)
subsequent to the date of the most recent financial statements in the
Prospectus, there has been no material adverse change in the financial
position or results of operations of the Issuer and its subsidiaries,
except as set forth in or contemplated by the Prospectus or as described
in such certificate.
(f) At the Closing Date, the Agents shall have received a letter,
dated such date, of PricewaterhouseCoopers LLP ("PWC"), confirming that
they are independent public accountants within the meaning of the Act and
the Exchange Act and the respective applicable published Rules and
Regulations thereunder, that the response, if any, to Item 10 of the
Registration Statement is correct insofar as it relates to them and
stating in effect that:
(i) in their opinion, the audited financial statements and
schedules thereto included or incorporated in the Registration
Statement and Prospectus and
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reported on by them comply as to form in all material respects with
the applicable accounting requirements of the Exchange Act and the
related published Rules and Regulations thereunder with respect to
financial statements and financial statement schedules included or
incorporated in annual reports on Form 10-K under the Exchange Act;
(ii) on the basis of a reading of the unaudited financial
statements included or incorporated in the Registration Statement
and Prospectus and of the latest unaudited financial statements made
available by the Issuer and its subsidiaries; carrying out certain
specified procedures (but not an examination in accordance with
generally accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments set
forth in such letter; a reading of the minutes of the Board of
Directors of the Issuer and the Pricing Committee appointed by the
Board of Directors of the Issuer, IF ANY; and inquiries of certain
officials of the Issuer who have responsibility for financial and
accounting matters as to transactions and events subsequent to the
date of the most recent financial statements included or
incorporated in the Registration Statement and the Prospectus,
nothing came to their attention that caused them to believe that:
(A) any unaudited financial statements included or
incorporated in the Registration Statement and Prospectus do not
comply as to form in all material respects with applicable
accounting requirements and with the published rules and
regulations of the Commission with respect to financial
statements included or incorporated in quarterly reports on Form
10-Q under the Exchange Act; or said unaudited financial
statements are not fairly presented (except as permitted by Form
10-Q) in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the
audited financial statements included or incorporated in the
Registration Statement and Prospectus; or
(B) any unaudited capsule information included or
incorporated in the Registration Statement and Prospectus does
not agree with the amounts set forth in the unaudited
consolidated financial statements from which it was derived or
was not determined on a basis substantially consistent with that
of the audited financial statements included or incorporated in
the Registration Statement and Prospectus; and
(iii) they have performed certain other procedures as a result
of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general
accounting records of the Issuer) set forth in the Registration
Statement and the Prospectus, including the information included or
incorporated in Items 1 and 7 of the Issuer's Annual Report on Form
10-K incorporated therein or in "Management's Discussion and
Analysis of Financial Condition and Results
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of Operations" included or incorporated in any of the Issuer's
Quarterly Reports on Form 10-Q incorporated therein, agrees with the
accounting records of the Issuer and its subsidiaries, excluding any
questions of legal interpretation.
References to the Registration Statement and the Prospectus in this
subsection (f) are to such documents as amended and supplemented at the
date of the letter.
(g) The Agents shall have received from Davis Polk & Wardwell,
counsel for the Agents, such opinion or opinions, dated the Closing Date,
with respect to the validity of the Securities, the Registration
Statement, the Prospectus and other related matters as they may require,
and the Issuer shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(h) With respect to any Security denominated in a currency other
than the U.S. dollar, more than one currency or a composite currency or
any Security the principal or interest of which is indexed to such
currency, currencies or composite currency, there shall not have occurred
a suspension or material limitation in foreign exchange trading in such
currency, currencies or composite currency by a major international bank,
a general moratorium on commercial banking activities in the country or
countries issuing such currency, currencies or composite currency, the
outbreak or escalation of hostilities involving, the occurrence of any
material adverse change in the existing financial, political or economic
conditions of, or the declaration of war or a national emergency by, the
country or countries issuing such currency, currencies or composite
currency or the imposition or proposal of exchange controls by any
governmental authority in the country or countries issuing such currency,
currencies or composite currency.
The obligation of each Agent, as agent of the Issuer, under this
Agreement to solicit offers to purchase Securities at any time after the
end of the Period is also subject to the delivery to the Agents before
that date and thereafter, periodically as appropriate, of an opinion from
either Issuer Counsel or Cravath, Swaine & Moore, to the effect of
subparagraph (d)(i)(E) above with respect to the Securities to be issued
during the period set forth therein (which shall include the period of
contemplated solicitation) and such other documents and certificates
(including an opinion of Davis Polk & Wardwell to the effect of
subparagraph (g) above) as the Agents may reasonably request before that
date and the Issuer shall have furnished to Davis Polk & Wardwell such
documents as they may reasonably request before that date for the purpose
of enabling them to render such opinion.
The Issuer will furnish the Agents with such conformed copies of
such opinions, certificates, letters and documents as they reasonably
request.
6. ADDITIONAL COVENANTS OF THE ISSUER. The Issuer agrees that:
(a) Each acceptance by the Issuer of an offer for the purchase of
Securities (whether through an Agent as agent or to one or more Agents as
principal) and each
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delivery of Securities (whether through an Agent as agent or to one or
more Agents as principal) shall be deemed to be an affirmation that its
representations and warranties contained in this Agreement are true and
correct at the time of such acceptance and a covenant that such
representations and warranties will be true and correct at the time of
delivery to the purchaser of the Securities relating to such acceptance as
though made at and as of each such time, it being understood that such
representations and warranties shall relate to the Prospectus as amended
or supplemented at each such time. Each such acceptance by the Issuer of
an offer for the purchase of Securities shall be deemed to constitute an
additional representation, warranty and agreement by the Issuer that, as
of the settlement date for the sale of such securities, after giving
effect to the issuance of such Securities, of any other Securities to be
issued on or prior to such settlement date and of any other Registered
Securities to be issued and sold by the Issuer on or prior to such
settlement date, the aggregate amount of Registered Securities (including
any Securities) which have been issued and sold by the Issuer will not
exceed the amount of Registered Securities registered pursuant to the
Registration Statement.
(b) Each time that the Registration Statement or the Prospectus
shall be amended or supplemented (other than by an amendment or supplement
(i) that relates to an offering by the Issuer of Registered Securities
other than the Securities or (ii) that solely specifies the terms of the
Securities) (each such time being herein referred to as a "Representation
Date"), the Issuer shall, concurrently with such amendment or supplement,
furnish the Agents with a certificate, dated the date of delivery thereof,
of the President or any Vice President, and by the Treasurer, the
Controller, the Secretary or any Assistant Treasurer, Assistant Controller
or Assistant Secretary of the Issuer, in form satisfactory to the Agents,
to the effect that the statements contained in the certificate covering
the matters set forth in Section 5(e) hereof which was last furnished to
the Agents are true and correct at the time of such amendment or
supplement as though made at and as of such time (except that such
statements shall be deemed to relate to the Registration Statement and the
Prospectus as amended or supplemented at such time and except that the
statements contained in the certificate covering the matters set forth in
clause (ii) of Section 5(e) shall be deemed to relate to the time of
delivery of such certificate) or, in lieu of such certificate, a
certificate of the same tenor as the certificate referred to in Section
5(e), modified as necessary to relate to the Registration Statement and
the Prospectus as amended or supplemented at the time of delivery of such
certificate and, in the case of the matters set forth in clause (ii) of
Section 5(e), to the time of delivery of such certificate; provided,
however, that the Issuer shall deliver such certificate with respect to a
Representation Date arising from the incorporation by reference into the
Prospectus of a current report on Form 8-K or a quarterly report on Form
10-Q only upon the reasonable request of the Agents.
(c) At each Representation Date, the Issuer shall, if reasonably
requested by the Agents, concurrently furnish the Agents with a written
opinion or opinions, dated the date of such Representation Date, of Issuer
Counsel or Cravath, Swaine & Moore, in form satisfactory to the Agents, to
the effect set forth in Section 5(d) hereof, but modified, as necessary,
to relate to the Registration Statement and the Prospectus as amended or
<PAGE>
supplemented at such Representation Date; provided, however, that in lieu
of such opinion or opinions, counsel may furnish the Agents with a letter
or letters to the effect that the Agents may rely on a prior opinion
delivered under Section 5(d) or this Section 6(c) to the same extent as if
it were dated the date of such letter (except that statements in such
prior opinion shall be deemed to relate to the Registration Statement and
the Prospectus as amended or supplemented at such Representation Date).
(d) At each Representation Date on which the Registration Statement
or the Prospectus shall be amended or supplemented to include additional
financial information as a result of filing of the Issuer's Annual Report
on Form 10-K, and upon the reasonable request of the Agents, the Issuer
shall cause PWC concurrently to furnish the Agents with a letter,
addressed jointly to the Issuer and the Agents and dated the date of such
Representation Date, in form and substance satisfactory to the Agents, to
the effect set forth in Section 5(f) hereof but modified to relate to the
Registration Statement and the Prospectus as amended or supplemented at
such Representation Date, with such changes as may be necessary to reflect
changes in the financial statements and other information derived from the
accounting records of the Issuer; provided, however, that if the
Registration Statement or the Prospectus is amended or supplemented solely
to include financial information as of and for a fiscal quarter, PWC may
limit the scope of such letter to the audited financial statements
included in such amendment or supplement unless there is contained therein
any other accounting, financial or statistical information that, in the
reasonable judgment of the Agents, should be covered by such letter, in
which event such letter shall also cover such other information and
procedures as shall be agreed upon by the Agents.
(e) The Issuer agrees that any obligation of a person who has agreed
to purchase Securities as the result of solicitation by any Agent pursuant
hereto to make payment for and take delivery of such Securities shall be
subject to (i) the accuracy, on the related settlement date fixed pursuant
to the Procedures, of the Issuer's representation and warranty deemed to
be made to the Agents pursuant to the last sentence of subsection (a) of
this Section 6, and (ii) the satisfaction, on such settlement date, of
each of the conditions set forth in Sections 5(a), (b) and (c), it being
understood that under no circumstance shall any Agent have any duty or
obligation to exercise the judgment permitted under Section 5(b) or (c) on
behalf of any such person.
(f) The Issuer agrees to make generally available to its security
holders "earning statements" satisfying the provisions of Section 11(a) of
the Securities Act of 1933 and Rule 158 thereunder, which requirement is
deemed satisfied under such Rule through the Issuer's timely filing of
periodic reports under Section 13 or 15(d) of the Exchange Act of 1934.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Issuer agrees to indemnify and hold harmless each Agent and
each person who controls such Agent within the meaning of either the Act
or the Exchange Act
<PAGE>
against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject, under the Act,
the Exchange Act or other Federal or State statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact
contained in the registration statement relating to the Registered
Securities as originally filed or in any amendment thereto, or in any
preliminary prospectus or the Prospectus, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and agrees to reimburse each Agent for any legal or other
expenses reasonably incurred by such Agent in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that (i) the Issuer will not be liable in any
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any of such documents in
reliance upon and in conformity with written information furnished to the
Issuer by any Agent specifically for use in connection with the
preparation thereof and (ii) such indemnity with respect to any
preliminary prospectus or the Prospectus shall not inure to the benefit of
any Agent (or any person controlling such Agent) through which the person
asserting any such loss, claim, damage or liability purchased the
Securities which are the subject thereof if such person did not receive a
copy of the Prospectus (or the Prospectus as so amended or supplemented),
excluding documents incorporated therein by reference, at or prior to the
earlier of the confirmation of the sale of such Securities or the delivery
of the Securities to such person in any case where such delivery is
required by the Act and the untrue statement or omission of a material
fact contained in any preliminary prospectus or the Prospectus was
corrected in the Prospectus (or the Prospectus as amended or supplemented
prior to the confirmation of the sale of such Securities to such person).
This indemnity agreement will be in addition to any liability which the
Issuer may otherwise have.
(b) Each Agent agrees to indemnify and hold harmless the Issuer,
each of its directors, each of its officers who signed the Registration
Statement or any amendment thereto, and each person who controls the
Issuer within the meaning of either the Act or the Exchange Act, to the
same extent as the foregoing indemnity from the Issuer to such Agent, but
only with reference to written information relating to such Agent
furnished to the Issuer by such Agent specifically for use in the
preparation of the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which such Agent
may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may
have to any indemnified party otherwise than under this Section 7. In case
any such action is brought against any indemnified party, and it notifies
the indemnifying party of the
<PAGE>
commencement thereof, the indemnifying party will be entitled to
participate therein, and to the extent that it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof, with
counsel satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assert such legal
defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from
the indemnifying party to such indemnified party of its election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified
party under this Section 7 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the
proviso to the next preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than
one separate counsel, approved by the Agents in the case of subparagraph
(a), representing the indemnified parties under subparagraph (a) who are
parties to such action), (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of
the action or (iii) the indemnifying party has authorized the employment
of counsel for the indemnified party at the expense of the indemnifying
party; and except that, if clause (i) or (iii) is applicable, such
liability shall be only in respect of the counsel referred to in such
clause (i) or (iii).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a)
of this Section 7 is due in accordance with its terms but is for any
reason held by a court to be unavailable from the Issuer on grounds of
policy or otherwise, the Issuer and each Agent shall contribute to the
aggregate losses, claims, damages and liabilities (including legal or
other expenses reasonably incurred in connection with investigating or
defending same) to which the Issuer and such Agents may be subject in such
proportion so that each Agent is responsible for that portion represented
by the percentage that the sum of aggregate commissions received by such
Agent pursuant to Section 3(c) hereof in connection with the sale of the
Securities to which such loss, claim, damage or liability relates bears to
the aggregate principal amount of such Securities, and the Issuer is
responsible for the balance; provided, however, that (y) in no case shall
any Agent be responsible for any amount in excess of the commissions
received by it for such Securities to which such loss, claim, damage or
liability relates, and (z) no person found liable for fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall
be entitled to contribution from any person who was found not liable for
such fraudulent misrepresentation. For purposes of this Section 7, each
person who controls any Agent within the meaning of either the Act or the
Exchange Act shall have the same rights to
<PAGE>
contribution as such Agent, and each person who controls the Issuer within
the meaning of either the Act or the Exchange Act, each officer of the
Issuer who shall have signed the Registration Statement or any amendment
thereto, and each director of the Issuer shall have the same rights to
contribution as the Issuer, subject in each case to clause (y) of this
paragraph (d). Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding
against such party in respect of which a claim for contribution may be
made against another party or parties under this paragraph (d), notify
such party or parties from whom contribution may be sought, but the
omission to notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or
they may have hereunder or otherwise than under this paragraph (d).
8. STATUS OF EACH AGENT. In soliciting offers to purchase the
Securities from the Issuer pursuant to this Agreement and in assuming its other
obligations hereunder (other than offers to purchase pursuant to Section 11
hereof), each Agent is acting solely as agent for the Issuer and not as
principal. Each Agent will make reasonable efforts to assist the Issuer in
obtaining performance by each purchaser whose offer to purchase Securities from
the Issuer has been solicited by such Agent and accepted by the Issuer, but such
Agent shall have no liability to the Issuer in the event any such purchase is
not consummated for any reason. If the Issuer shall default on its obligations
to deliver Securities to a purchaser who has agreed to purchase Securities as a
result of solicitation by any Agent pursuant hereto, and whose offer the Issuer
has accepted, the Issuer (i) shall hold the Agents harmless against any loss,
claim or damages arising from or as a result of such default by the Issuer, and
(ii) in particular, shall pay to the Agents any commission to which they would
be entitled in connection with such sale.
9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of the
Issuer or its officers and of the Agents set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation,
or statement as to the results thereof, made by or on behalf of any Agent, the
Issuer or any of their respective representatives, officers or directors or any
controlling person and will survive delivery of and payment for the Securities.
If this Agreement is terminated pursuant to Section 10 or for any other reason,
the Issuer shall remain responsible for the expenses to be paid or reimbursed by
it pursuant to Section 4(g) and the obligations of the Issuer under Section 4(f)
and Section 6(f) and the respective obligations of the Issuer and the Agents
pursuant to Section 7 shall remain in effect. In addition, if any such
termination shall occur either (i) at a time when any Agent shall own any of the
Securities with the intention of reselling them as contemplated by Section 11
hereof or (ii) after the Issuer has accepted an offer to purchase Securities
solicited by any Agent pursuant hereto and prior to the related settlement, the
obligations of the Issuer under the last sentence of Section 4(b), under
Sections 4(a), 4(c), 4(d), 4(e) and Section 6 and, in the case of a termination
occurring as described in (ii) above, under Section 3(c) and under the last
sentence of Section 8, shall also remain in effect.
10. TERMINATION. This Agreement may be terminated for any reason at any
time by the Issuer as to any Agent or, in the case of any Agent, by such Agent
insofar as this Agreement
<PAGE>
relates to such Agent, upon the giving of one day's written notice of such
termination to the other parties hereto. Any settlement with respect to
Securities placed by an Agent occurring after termination of this Agreement
shall be made in accordance with the Procedures and each Agent agrees, if
requested by the Issuer, to take the steps therein provided to be taken by such
Agent in connection with such settlement.
11. PURCHASES AS PRINCIPAL. From time to time, any Agent may agree with
the Issuer to purchase Securities from the Issuer as principal. In such case the
purchasing Agent and the Issuer may, in their discretion, set forth the terms of
such purchase in a separate agreement (a "Purchase Agreement") to be entered
into between such Agent and the Issuer in the form attached hereto as Exhibit C.
Upon acceptance by the Issuer of an offer to purchase Securities, unless the
Issuer and the purchasing Agent otherwise agree in writing, any such Purchase
Agreement or other written confirmation or communication transmitted by the
purchasing Agent to the Issuer or, in the absence of a Purchase Agreement or
other written confirmation or communication from the purchasing Agent, the oral
agreement with respect to the terms of the Securities and of their offer and
sale evidenced by the offer communicated by the purchasing Agent and accepted by
the Issuer, in each case together with the provisions of this Agreement, shall
constitute an agreement between the purchasing Agent and the Issuer for the sale
and purchase of such Securities (whether or not any Purchase Agreement or other
written confirmation or communication shall have been executed by the Issuer or
the purchasing Agent). In connection with any resale of Securities so purchased,
such Securities may be resold by such Agent at varying prices from time to time
or at a fixed public offering price or that such Agent may use a selling or
dealer group. Such Agent may reallow to any broker or dealer any portion of the
discount or commission payable pursuant hereto. A Purchase Agreement, to the
extent set forth therein, may incorporate by reference specified provisions of
this Agreement.
12. NOTICES. Except as otherwise provided herein, all notices and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if mailed or transmitted by any standard form of telecommunication.
Except as otherwise provided in the Procedures:
To the Issuer:
Notices to International Business Machines Corporation shall be
directed to it in care of the Assistant Treasurer, Operations, New
Orchard Road, Armonk, New York 10504, Attention: Assistant Treasurer (Fax:
914-499-2883),
with a copy to:
Corporate Legal Department, New Orchard Road, Mail Stop 329, Armonk,
New York 10504, Attention: Securities Counsel-IBM Corporation (Fax:
914-499-6445).
To the Agents:
<PAGE>
Notices to Chase Securities Inc. shall be directed to it at 270 Park
Avenue, 8th Floor, New York, New York, Attention: Medium-Term Note Desk
(Fax: 212-834-6081).
Notices to Credit Suisse First Boston Corporation shall be directed
to it at 11 Madison Avenue, 5th Floor, New York, New York 10010,
Attention: Short and Medium-Term Note Department (Fax: 212-325-8183).
Notices to Goldman, Sachs & Co. shall be directed to it at 85 Broad
Street, New York, New York 10004, Attention: Credit Department, Credit
Control -- Medium Term Notes (Fax: 212-357-8680).
Notices to Merrill Lynch, Pierce, Fenner & Smith Incorporated shall be
directed to it at North Tower, 10th Floor, World Financial Center, New York, New
York 10281, Attention: MTN Product Management (Fax:
212-449-2234).
Notices to Morgan Stanley & Co. Incorporated shall be directed to it
at 1585 Broadway, 2nd Floor, New York, New York 10036, Attention: Manager
-- Continuously Offered Products (Fax: 212-761-0780), with a copy directed
to it at 1585 Broadway, 29th Floor, New York, New York 10036, Attention:
Peter Cooper -- Investment Banking Information Center (Fax: 212-761-0260).
Notices to Salomon Smith Barney Inc. shall be directed to it at 388
Greenwich Street New York, New York 10013, Attention: Medium-Term Note
Department (Fax: 212-783-2274; Phone: 212-783-5897).
In the case of any party hereto, alternatively notice may be directed to
such other address or person as such party shall specify to each other party by
a notice given in accordance given in accordance with the provisions of this
Section 12. Any such notice shall take effect at the time of receipt.
13. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto, their respective successors, the officers and
directors and controlling persons referred to in Section 7 and, to the extent
provided in Section 6(e), any person who has agreed to purchase Securities from
the Issuer as the result of solicitation by any Agent pursuant hereto, and no
other person will have any right or obligation hereunder.
14. GOVERNING LAW; COUNTERPARTS. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to the conflicts of laws principles thereof. This Agreement may be
executed in counterparts and the executed counterparts shall together constitute
a single instrument.
15. ENTIRE AGREEMENT. This Agreement incorporates the entire agreement
between the parties hereto with respect to the transactions contemplated herein.
All prior negotiations and agreements between the parties are merged in, and
superseded by, this Agreement and there are
<PAGE>
no agreements, representations or warranties between the parties other than
those set forth or provided for herein.
If the foregoing correctly sets forth our agreement, please indicate your
acceptance hereof in the space provided for that purpose below.
Very truly yours,
INTERNATIONAL BUSINESS MACHINES CORPORATION
By: /s/ Cassio A. Calil
--------------------
Title: Assistant Treasurer
<PAGE>
CONFIRMED AND ACCEPTED, as of the date first above written:
CHASE SECURITIES INC.
By: /s/ Kevin J. Kulak
------------------
Title: Vice President
CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/ Julie Keogh
---------------
Title: Authorized Signatory
GOLDMAN, SACHS & CO.
By: /s/ Goldman, Sachs & Co.
------------------------
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By: /s/ Diane Kenna
---------------
Title: Authorized Signatory
MORGAN STANLEY & CO. INCORPORATED
By: Harold J. Hendershot, III
-------------------------
Title: Vice President
SALOMON SMITH BARNEY INC.
By: /s/ Gerald Eastman
------------------
Title: Director
<PAGE>
EXHIBIT A
The Issuer agrees to pay the relevant Agent a commission which will
be no more than the following percentage of the principal amount of Securities
sold to purchasers solicited by such Agent:
Commission Rate
(as a percentage
TERM of principal amount)
---------------------- --------------------
12 months to less than 18 months .15
18 months to less than 24 months .20
24 months to less than 30 months .25
30 months to less than 3 years .30
3 years to less than 4 years .35
4 years to less than 5 years .45
5 years to less than 7 years .50
7 years to less than 10 years .55
10 years to less than 15 years .625
15 years to less than 20 years .700
20 years to 30 years .750
More than 30 years as negotiated
between the Company and
the relevant Agent at the time
of sale
<PAGE>
EXHIBIT B
ADMINISTRATIVE PROCEDURES
The Medium-Term Notes Due One Year or More from Date of Issue (the
"Notes") are to be offered on a continuing basis by International Business
Machines Corporation (the "Issuer"). Chase Securities Inc., Credit Suisse First
Boston Corporation, Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner and
Smith Incorporated, Morgan Stanley & Co. Incorporated and Salomon Smith Barney
Inc., as agents (each individually an "Agent" and collectively the "Agents"),
have agreed to use reasonable efforts to solicit purchases of the Notes pursuant
to an Agency Agreement dated as of JUNE 22, 2000 (the "Agency Agreement"), among
the Issuer and the Agents. No Agent will be obligated to purchase Notes for its
own account. The Notes will be issued pursuant to an Indenture, dated as of
October 1, 1993 between the Issuer and The Chase Manhattan Bank, as trustee (the
"Trustee"), as supplemented by the First Supplemental Indenture thereto dated as
of December 1, 1995 (collectively, the "Indenture"). The Notes will rank equally
with all other unsecured and unsubordinated indebtedness of the Issuer and have
been registered with the Securities and Exchange Commission (the "Commission").
Each Note will be represented initially by either a global security
registered in the name of a nominee of The Depository Trust Company, as
Depositary ("DTC") (a "Book Entry Note") or a certificate issued in definitive
form (a "Certificate Note"). It is currently contemplated that both Fixed Rate
Notes (as defined below) and Floating Rate Notes (as defined below) may be
issued as Book-Entry Notes.
Administrative procedures and specific terms of the Notes and the
offering, to the extent Notes are offered and sold through the Agents, are
explained below. Administrative and record-keeping responsibilities will be
handled for the Issuer by its Treasury Department. The Issuer will advise each
Agent in writing of those persons handling administrative responsibilities with
whom each Agent is to communicate regarding offers to purchase Notes and the
details of their delivery. To the extent that the following procedures conflict
with the provisions of the Notes, the Indenture or the Letter (as defined
below), the relevant provisions of the Note, the Indenture or the Letter shall
control.
<PAGE>
I. CERTIFICATE NOTES AND GENERAL TERMS
Unless otherwise agreed by the Issuer and the relevant agent, the
following administrative procedures and specific terms are applicable to
Certificate Notes and, except to the extent otherwise specified under II below,
Book-Entry Notes.
ORIGINAL ISSUE DATE: Each Note will be dated the date of its
authentication. Each Note will also bear
an original issue date which, with respect
to any Note (or portion thereof), shall
mean the date of its original issuance and
shall be specified therein. The original
issue date shall remain the same for all
Notes subsequently issued upon transfer,
exchange or substitution of a Note,
regardless of their dates of
authentication.
MATURITIES: Each Note will mature on a date, selected
by the purchaser and agreed to by the
Issuer, which will be at least twelve
months after the date of issue; PROVIDED,
HOWEVER, that each Floating Rate Note (as
defined below) will mature on an Interest
Payment Date (as defined below) for such
Note.
REDEMPTION: The Floating Rate Notes will not be
redeemable prior to maturity, unless
otherwise specified in the applicable
Pricing Supplement. The Fixed Rate Notes
(as defined below) either (i) will not be
redeemable prior to maturity, or (ii) will
be redeemable at the option of the Issuer
on or after a specified date prior to
maturity at par or at prices which will
decline annually by a fixed percentage
from a specified initial premium to par.
Unless otherwise specified in the
applicable pricing supplement, Redemption
Dates for redeemable Fixed Rate Notes will
correspond with the Interest Payment Dates
for such Notes.
PRICE TO PUBLIC: Each Note will be issued at 100% of
principal amount, unless otherwise agreed
between the Issuer and the relevant Agent.
<PAGE>
DENOMINATIONS: Unless otherwise agreed between the Issuer
and the relevant Agent, the denominations
of the Notes will be $100,000 and any
amount in excess thereof which is $1,000
or any multiple thereof. The
denominations of Notes denominated in
currencies or currency units other than
U.S. dollars will be as agreed between the
Issuer and the relevant Agent.
REGISTRATION: Notes will be issued only in fully
registered form.
INTEREST PAYMENT: Unless otherwise specified in a Pricing
Supplement, each Note will bear interest
from and including its original issue date
or, in the case of Notes issued upon
replacement, transfer or exchange, from
the most recent Interest Payment Date to
which interest has been paid or provided
for, to but excluding the maturity date of
such Note; PROVIDED, HOWEVER, that a
Floating Rate Note which has a rate of
interest that is reset weekly will bear
interest from and including its original
issue date or the day following the most
recent Record Date (as defined below) for
the most recent Interest Payment Date to
which interest on such Note has been paid
or provided for. Each Note will bear
interest (i) in the case of Notes bearing
interest at a Fixed Rate (the "Fixed Rate
Notes"), at the annual rate stated on the
face thereof, payable semiannually in
arrears on APRIL 1 AND OCTOBER 1 (each an
"Interest Payment Date" with respect to
such Fixed Rate Note) and at maturity and
(ii) in the case of Notes bearing interest
at a rate or rates determined by reference
to an interest rate formula (the "Floating
Rate Notes"), at a rate determined
pursuant to the formula stated on the face
thereof, payable in arrears on such dates
as are specified therein and in the
related Pricing Supplement (each an
"Interest Payment Date" with respect to
such Floating Rate Note). Interest
payable on a Fixed Rate Note (including
payments for partial periods) will be
calculated and paid on the basis of a
360-day year of 12 30-day months.
Interest payable on a Floating Rate Note
will be calculated and paid on the basis
of the actual number of days elapsed in
the interest period and a year of
360 days; PROVIDED, HOWEVER, that interest
payable on a Floating Rate
<PAGE>
Note which has a rate of interest determined in
accordance with the Treasury Rate will be calculated
on the basis of the actual number of days in the
year. Interest will be payable on each Interest
Payment Date to the person in whose name the Note is
registered at the close of business 15 calendar days
prior to such Interest Payment Date whether or not
such day is a Business Day (as defined in the
Indenture) (the "Record Date") except that (a) on
any Note originally issued after a Record Date and
prior to the next succeeding Interest Payment Date,
the first payment of interest on such Note will be
made on the Interest Payment Date following the next
succeeding Regular Record Date to the registered
owner on such next Regular Record Date and (b)
interest payable at maturity (or, in the case of a
Fixed Rate Note, upon redemption) will be payable to
the person to whom principal shall be payable. With
respect to Fixed Rate Notes, each payment of
interest shall include interest accrued to but
excluding the date of such payment. All interest
payments (excluding interest payments made at
maturity) will be made by check mailed to the person
entitled thereto as provided above.
ACCEPTANCE OF OFFERS: Each Agent will promptly advise the Issuer
of each reasonable offer to purchase Notes
received by it, other than those rejected
by such Agent. Each Agent may, in its
discretion reasonably exercised, without
notice to the Issuer, reject any offer
received by it, in whole or in part. The
Issuer will have the sole right to accept
offers to purchase Notes and may reject
any such offer, in whole or in part. If
the Issuer rejects an offer solicited by
an Agent, the Issuer will promptly notify
the Agent involved.
SETTLEMENT: All offers accepted by the Issuer will be
settled on the third Business Day next
succeeding the date of acceptance unless
otherwise agreed by any purchaser and the
Issuer. Prior to 3:00 p.m., New York City
time, on the Business Day next preceding
the settlement date, the Issuer will
instruct the Trustee to authenticate and
deliver the Notes no later than 2:15 p.m.,
New York City time, on the settlement date.
<PAGE>
DETAILS FOR SETTLEMENT: For each offer solicited by an Agent that
is accepted by the Issuer, the Agent who
presented the offer (the "Presenting
Agent") shall communicate to the Issuer's
Treasury Department by telephone,
facsimile transmission or other acceptable
means the following information (the
"Purchase Information"):
1. Exact name in which the Note or Notes are
to be registered ("registered owner").
2. Exact address of registered owner.
3. Taxpayer identification number of
registered owner.
4. Principal amount of each Note to be
delivered to the registered owner.
5. Issue price, interest rate if fixed or
initial interest rate if floating, interest rate
basis, spread or spread multiplier, maximum or
minimum interest rates, index maturity, Interest
Determination Dates, Interest Reset Dates (as such
terms are defined in the applicable Prospectus
Supplement) interest reset period, interest payment
period and Interest Payment Dates of Notes, in each
case, to the extent applicable.
6. The currency, currencies, currency unit or
currency units in which the Note or Notes are to be
denominated and (if not the same) payable.
7. Maturity date of Notes.
8. Initial redemption date of Notes, if any.
9. Optional redemption price (including the
fixed percentage by which the premium, if any,
annually declines) of Notes, if any.
10. Original issue date of Notes.
11. Settlement date for Notes.
<PAGE>
12. Presenting Agent's commission (to be paid
in the form of a discount from the proceeds remitted
to the Issuer upon settlement).
The original issue date of, and the settlement date
for, Notes will be the same. Before accepting any
offer to purchase Notes to be settled in less than
three days, the Issuer shall verify that the Trustee
will have adequate time to prepare and authenticate
the Notes. After receiving the details for each
offer from the Presenting Agent, the Issuer will,
after recording the details and any necessary
calculations, communicate the Purchase Information
by telephone, facsimile transmission or other
acceptable means, to the Trustee. Prior to preparing
the Notes for delivery, the Trustee will confirm the
Purchase Information by telephone with the
Presenting Agent. The Trustee will assign to and
enter on each Note a transaction number.
Special provisions relating to Certificate Notes
denominated or payable in a currency, currencies, a
currency unit or currency units other than U.S.
dollars may be agreed by the Issuer and the Agents
at a later time.
CONFIRMATION: For each accepted offer solicited by an
Agent, the Presenting Agent will issue a
confirmation to the purchaser, with a copy
to the Issuer's Treasury Department and
the Trustee, setting forth the Purchase
Information and delivery and payment
instructions.
NOTE DELIVERIES Upon the receipt of appropriate
AND CASH PAYMENT: documentation and instructions, which may
be by telephone to be confirmed in writing from the
Issuer, and verification thereof, the Trustee will
cause the Notes to be prepared and authenticated and
hold the Notes for delivery against payment.
The Trustee will deliver the Notes, in accordance
with instructions from the Issuer, to the Presenting
Agent, as the Issuer's agent, for the benefit of the
purchaser only against delivery of a receipt
therefor.
<PAGE>
Agents' addresses for delivery of Certificate Notes:
Chase Securities Inc.
55 Water Street
Room 226
New York, New York 10041
Attention: Window 17 or Window 18
(tel: 212-638-6787)
(fax: 212-638-5618)
Credit Suisse First Boston Corporation
MTN Department
5 World Trade Center, 7th Floor
New York, NY 10048
Attention: Paul Riley/Bill Ahearn
(tel: 212-322-1606)
Goldman, Sachs & Co.
Medium-Term Notes Desk
85 Broad Street, 26th Floor
New York, NY 10004
Attention: Karen Robertson
(fax: 212-902-0658)
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Money Markets Clearance
55 Water Street
3rd Floor
N.S.C.C. Window
New York, NY 10041
Attention: Al Mitchell
(tel: 212-558-2405)
(fax: 212-558-2457)
Morgan Stanley & Co. Incorporated in care of:
The Bank of New York
Dealer Clearance Department
1 Wall Street-3rd Floor-Window 3B
New York, NY 10005
Attention: For the account of Morgan
Stanley & Co. Incorporated
Salomon Smith Barney, Inc., in care of:
The Bank of New York
<PAGE>
1 Wall Street-3rd Floor
New York, NY 10005
Attention: Dealer Clearance
The Presenting Agent, as the Issuer's agent, will
deliver the Notes (with the written confirmation
provided for above) to the purchaser thereof against
payment by such purchaser in immediately available
funds and will give instructions for payment to be
made to the Issuer of an amount equal to the face
amount of the Notes less the Presenting Agent's
commission. Delivery of any confirmation or Note
will be made in compliance with "Delivery of
Prospectus" below.
FAILS: In the event that a purchaser shall fail
to accept delivery of and make payment for
a Note on the settlement date, the
Presenting Agent will notify the Trustee
and the Issuer by telephone, confirmed in
writing. If the Note has been delivered
to the Presenting Agent, as the Issuer's
agent, the Presenting Agent shall return
such Note to the Trustee. If funds have
been advanced by the Presenting Agent for
the purchase of such Note, the Issuer
will, immediately upon receipt of such
notice, refund the payment previously made
to it by the Presenting Agent in
immediately available funds. Such
payments will be made on the settlement
date, if possible, and in any event not
later than the Business Day following the
settlement date. If such failure shall
have occurred for any reason other than
the failure of the Presenting Agent to
provide the Purchase Information to the
Issuer or to provide a confirmation to the
purchaser, the Issuer will reimburse the
Presenting Agent on an equitable basis for
its loss of the use of funds during the
period when they were credited to the
account of the Issuer.
Immediately upon receipt of the Note in respect of
which the failure occurred, the Trustee will cause
the Security Registrar to make appropriate entries
to reflect the fact that the Note was never issued
and will destroy the Note.
<PAGE>
PROCEDURE FOR The Issuer and the Agents will discuss
RATE CHANGES: from time to time the rates to be borne by
the Notes that may be sold as a result of the
solicitation of offers by the Agents. Once any Agent
has recorded any indication of interest in Notes
upon certain terms, and communicated with the
Issuer, if the Issuer plans to accept an offer to
purchase Notes upon such terms, it will prepare a
pricing sticker reflecting the terms of such Notes
and, after approval from the Agents, will arrange to
have the required number of copies of the sticker
filed with the Commission within two Business Days
following such acceptance and will supply at least
five copies of such sticker to the Presenting Agent.
No settlements with respect to Notes upon such terms
may occur prior to such filing and the Agents will
not, prior to such filing, mail confirmations to
customers who have offered to purchase Notes upon
such terms. After such filing, sales, mailing of
confirmations and settlements may occur with respect
to Notes upon such terms, subject to the provisions
of "Delivery of Prospectus" below.
If the Issuer decides to "post" fixed interest rates
and a decision has been reached to change interest
rates, the Issuer will promptly notify each Agent.
Each Agent will forthwith suspend solicitation of
purchases. At that time, the Agents will recommend
and the Issuer will establish fixed interest rates
to be so posted. Following establishment of posted
fixed interest rates and prior to the filing of the
pricing sticker described in the preceding
paragraph, the Agents may only record indications of
interest in purchasing Fixed Rate Notes at the
posted fixed interest rates. After such filing,
sales, mailing of confirmations and settlements at
the posted rates may resume, subject to the
provisions of "Delivery of Prospectus" below.
Outdated stickers, and copies of the Prospectus to
which they are attached (other than those retained
for files), will be destroyed.
SUSPENSION OF As provided in the Agency Agreement, the
SOLICITATION Issuer may suspend Amendment or
AMENDMENT OR solicitation of purchases at any time and,
upon receipt of notice
<PAGE>
SUPPLEMENT: from the Issuer, each Agent will forthwith suspend
solicitation until such time as the Issuer has
advised them that solicitation of purchases may be
resumed.
If the Agents receive the notice from the Issuer
contemplated by Section 4(b) of the Agency
Agreement, they will promptly suspend solicitation
and will only resume solicitation as provided in the
Agency Agreement. If the Issuer decides to amend or
supplement the Registration Statement or the
Prospectus relating to the Notes (other than by an
amendment or supplement that (i) only specifies the
terms of the Securities or (ii) relates to an
offering by the Issuer of Registered Securities
other than the Securities), it will promptly advise
each Agent and will furnish each Agent with the
proposed amendment or supplement in accordance with
the terms of the Agency Agreement. The Issuer will
promptly file or mail to the Commission for filing
such amendment or supplement, provide the Agents
with copies of any such amendment or supplement,
confirm to the Agents that such amendment or
supplement has been filed with the Commission and
advise the Agents that solicitation may be resumed.
Any such suspension shall not affect the Issuer's
obligations under the Agency Agreement; and in the
event that at the time the Issuer suspends
solicitation of offers to purchase Notes there shall
be any offers already accepted by the Issuer
outstanding for settlement, the Issuer will have the
sole responsibility for fulfilling such obligations.
The Issuer will in addition promptly advise the
Agents and the Trustee if such offers are not to be
settled and if copies of the Prospectus as in effect
at the time of the suspension may not be delivered
in connection with the settlement of such offers.
DELIVERY OF With respect to each purchase resulting
PROSPECTUS: from a solicitation by any Agent, a copy
of the Prospectus, as most recently amended or
supplemented on the date of delivery thereof (except
as provided below), but excluding materials
incorporated by reference therein, must be delivered
to a purchaser prior to or together with the earlier
of delivery of (i) the written
<PAGE>
confirmation provided for above, and (ii) any Note
purchased by such purchaser as a result of such
solicitation. The Issuer shall ensure that the
Presenting Agent receives the required number of
copies of the Prospectus and each amendment or
supplement thereto (including appropriate pricing
stickers), but excluding materials incorporated by
reference therein, by telecopy or overnight express
(for delivery not later than 11:00 a.m. on the
Business Day next following the trade date) to
enable the Presenting Agent to deliver such
confirmation or Note to such purchaser as
contemplated by these procedures and in compliance
with the preceding sentence. If, since the date of
acceptance of such purchaser's offer, the Prospectus
shall have been supplemented solely to reflect any
sale of Notes on terms different from those agreed
to between the Issuer and such purchaser or a change
in posted rates not applicable to such purchaser,
such purchaser shall not receive the Prospectus as
supplemented by such new supplement, but shall
receive the Prospectus as supplemented to reflect
the terms of the Notes being purchased by such
purchaser and otherwise as most recently amended or
supplemented on the date of delivery of the
Prospectus.
AGENTS' ADDRESSES FOR DELIVERY OF PRICING
SUPPLEMENTS:
Chase Securities Inc.
270 Park Avenue
New York, NY 10017-2070
Attention: Medium-Term Note Desk
(tel: 212-834-3150 - Mr. Kevin Kulak
or 212-834-4421 - Mr. Peter Todd)
(fax: 212-834-6170)
Credit Suisse First Boston Corporation
Prospectus Department
5 World Trade Center, 7th Floor
New York, NY 10048
Attention: Joan Bryan
(tel: 212-322-5105)
(fax: 212-803-4096)
<PAGE>
with a copy to:
Credit Suisse First Boston Corporation
11 Madison Avenue, 5th Floor
New York, NY 10010
Attention: Short and Medium-Term Finance
Department (Ms. Helena Wilner)
(tel: 212-325-7198)
(fax: 212-325-8183)
Goldman, Sachs & Co.
Medium-Term Notes Desk
85 Broad Street, 26th Floor
New York, NY 10004
Attention: Karen Robertson
(fax: 212-902-0658)
Merrill Lynch, Pierce, Fenner & Smith
Incorporated, for overnight, express or
special delivery packages
ONLY:
Tritech Services
44B Colonial Drive
Piscataway, NJ 08854
Attention: Prospectus Operations/Nachman
Kimerling
(tel: 908-885-2768)
(fax: 908-885-2774/2775/2776)
For other types of deliveries, use address:
Tritech Services
#4 Corporate Place
Corporate Park 287
Piscataway, NJ 08854
For all deliveries, with a copy to:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center, North Tower
New York, NY 10281-1310
Attention: MTN Product Management; Mr.
Scott Primrose, 15th Floor
(tel: 212-449-7476)
(fax: 212- 449-2234)
Morgan Stanley & Co. Incorporated
1585 Broadway, 2nd Floor
<PAGE>
New York, NY 10036
Attention: Medium-Term Note Trading Desk,
Mr. Charles Corso
(tel: 212-761-1327)
(fax: 212-761-0780)
Salomon Smith Barney Inc.
Brooklyn Army Terminal
140 58th Street, 5th Floor
New York, NY 11220
Attention: Diane Graham
(tel: 718-765-6744)
(fax: 718-765-6734)
AUTHENTICITY OF The Issuer will cause the Trustee to
SIGNATURES: furnish the Agents from time to time with
the specimen signatures of each of the Trustee's
officers, employees or agents who have been
authorized by the Trustee to authenticate Notes, but
the Agents will have no obligation or liability to
the Issuer or the Trustee in respect of the
authenticity of the signature of any officer,
employee or agent of the Issuer or the Trustee on
any Note.
ADVERTISING COST: The Issuer will determine with the Agents
the amount of advertising that may be
appropriate in offering the Notes. Unless
otherwise agreed, advertising expenses
will be paid by the Issuer.
<PAGE>
II. BOOK-ENTRY NOTES
The following procedures supplement and, to the extent inconsistent
therewith, replace the procedures set forth above with respect to the offering
of Book-Entry Notes. In connection with the qualification of the Book-Entry
Notes for eligibility in the book-entry system maintained by DTC, the Trustee
will perform the custodial, document control and administrative functions
described below, in accordance with its respective obligations under a Letter of
Representation (the "Letter") from the Issuer and the Trustee to be entered into
with DTC and a Medium-Term Note Certificate Agreement between the Trustee and
DTC dated as of March 10, 1989, and its obligations as a participant in DTC,
including DTC's Same-Day Funds Settlement System ("SDFS"). Both Fixed and
Floating Rate Notes may be issued in book-entry form.
ISSUANCE: On any date of settlement (as defined
under "Settlement" below) for one or more
Book-Entry Notes, the Issuer will issue a
single global security in fully registered
form without coupons (a "Global Security")
representing up to $400,000,000 principal
amount of all such Notes that have the
same maturity date, redemption provisions,
if any, repayment provisions, if any,
Interest Payment Dates, interest rate
basis, spread or spread multiplier,
maximum or minimum interest rates, index
maturity, Interest Determination Dates,
Interest Reset Dates (as such terms are
defined in the applicable Prospectus
Supplement), interest reset period,
original issue date and original issue
discount provisions, in each case, to the
extent applicable (collectively, the
"Terms"). Each Global Security will be
dated and issued as of the date of its
authentication by the Trustee. Each
Global Security will bear an "Issue Date",
which will be (i) with respect to an
original Global Security (or any portion
thereof), its original issue date, and
(ii) following a consolidation of Global
Securities, the most recent Interest
Payment Date to which interest has been
paid or duly provided for on the
predecessor Global Securities, regardless
of the date of authentication of such
subsequently issued Global Security. No
Global Security will represent any
Certificated Note.
IDENTIFICATION NUMBERS: The Issuer will arrange with the CUSIP
Service Bureau of Standard & Poor's
Corporation (the "CUSIP Service Bureau")
for the reservation of a series of CUSIP
numbers, consisting of approximately 50
CUSIP numbers relating to Global
<PAGE>
Securities representing Book-Entry Notes.
The Issuer will obtain from the CUSIP
Service Bureau a written list of such
series of reserved CUSIP numbers and will
deliver to the Trustee and DTC a written
list of CUSIP numbers of such series. The
Trustee will assign CUSIP numbers to
Global Securities as described below under
Settlement Procedure "C". DTC will notify
the CUSIP Service Bureau periodically of
the CUSIP numbers that the Trustee has
assigned to Global Securities. The
Trustee will notify the Issuer at any time
when fewer than 25 of the reserved CUSIP
numbers remain unassigned to Global
Securities, and if it deems necessary, the
Issuer will reserve additional CUSIP
numbers for assignment to Global
Securities representing Book-Entry Notes.
Upon obtaining such additional CUSIP
numbers, the Issuer shall deliver a list
of such additional CUSIP numbers to the
Trustee and DTC.
REGISTRATION: Each Global Security will be registered in
the name of Cede & Co., as nominee for
DTC, on the Securities Register maintained
under the Indenture. The beneficial owner
of a Book-Entry Note (or one or more
indirect participants in DTC designated by
such owner) will designate one or more
participants in DTC (with respect to such
Note, the "Participants") to act as agent
or agents for such owner in connection
with the book-entry system maintained by
DTC, and DTC will record in book-entry
form, in accordance with instructions
provided by such Participants, a credit
balance with respect to such Note in the
account of such Participants. The
ownership interest of such beneficial
owner in such Note will be recorded
through the records of such Participants
or through the separate records of such
Participants and one or more indirect
participants in DTC.
TRANSFERS: Transfers of a Book-Entry Note will be
accomplished by book entries made by DTC
and, in turn, by Participants (and, in
certain cases, one or more indirect
participants in DTC) acting on behalf of
beneficial transferors and transferees of
such Note.
<PAGE>
EXCHANGES: The Trustee may deliver to DTC and the
CUSIP Service Bureau at any time a written
notice of consolidation (a copy of which
shall be attached to the Global Security
resulting from such consolidation)
specifying (i) the CUSIP numbers of two or
more Outstanding Global Securities that
represent Book-Entry Notes having the same
Terms (other than original issue date) and
for which interest has been paid to the
same date, (ii) a date, occurring at least
30 days after such written notice is
delivered and at least 30 days before the
next Interest Payment Date for such
Book-Entry Notes, on which such Global
Securities shall be exchanged for a single
replacement Global Security and (iii) a
new CUSIP number to be assigned to such
replacement Global Security. Upon receipt
of such a notice, DTC will send to its
Participants (including the Trustee) a
written reorganization notice to the
effect that such exchange will occur on
such date. Prior to the specified
exchange date, the Trustee will deliver to
the CUSIP Service Bureau a written notice
setting forth such exchange date and the
new CUSIP number and stating that, as of
such exchange date, the CUSIP numbers of
the Global Securities to be exchanged will
no longer be valid. On the specified
exchange date, the Trustee will exchange
such Global Securities for a single Global
Security bearing the new CUSIP number and
a new original issue date and the CUSIP
numbers of the exchanged Global Securities
will, in accordance with CUSIP Service
Bureau procedures, be canceled and not
immediately reassigned. Notwithstanding
the foregoing, if the Global Securities to
be exchanged exceed $400,000,000 in
aggregate principal amount, one Global
Security will be authenticated and issued
to represent each $400,000,000 of
principal amount of the exchanged Global
Securities and an additional Global
Security will be authenticated and issued
to represent any remaining principal
amount of such Global Securities (see
"Denominations" below).
NOTICE OF REPAYMENT With respect to each Book-Entry Note that
TERMS: is repayable at the option of the Holder,
the Trustee will furnish DTC on or not more than 60
days prior
<PAGE>
to the settlement date pertaining to such Book-Entry
Note a notice setting forth the terms of such
repayment option. Such terms shall include the start
date and end dates of the first exercise period, the
purchase date following such first exercise period,
the frequency that such exercise periods occur
(I.E., quarterly, semiannually, annually, etc.) and,
if the repayment option expires before maturity, the
same information (except frequency) concerning the
last exercise period. It is understood that the
exercise period shall be at least 15 calendar days
long and that the purchase date shall be at least 7
calendar days after the last day of the exercise
period.
REDEMPTION AND REPAYMENT: The Trustee will comply with the terms of
the Letter with regard to redemptions and
repayments of the Notes. If a Global
Security is to be redeemed or repaid in
part, the Trustee will exchange such
Global Security for two Global Securities,
one of which shall represent the portion
of the Global Security being redeemed or
repaid and shall be canceled immediately
after issuance and the other of which
shall represent the remaining portion of
such Global Security and shall bear the
CUSIP number of the surrendered Global
Security.
DENOMINATIONS: Unless otherwise agreed between the Issuer
and the relevant Agent, Book-Entry Notes
will be issued in principal amounts of
$1,000 or any multiple thereof. Global
Securities will be denominated in
principal amounts not in excess of
$400,000,000. If one or more Book-Entry
Notes having an aggregate principal amount
in excess of $400,000,000 would, but for
the preceding sentence, be represented by
a single Global Security, then one Global
Security will be issued to represent each
$400,000,000 principal amount of such
Book-Entry Note or Notes and an additional
Global Security will be issued to
represent any remaining principal amount
of such Book-Entry Note or Notes. In such
a case, each of the Global Securities
representing such Book-Entry Note or Notes
shall be assigned the same CUSIP number.
INTEREST: PUBLICATION. Standard & Poor's
Corporation will use the information
received in the pending deposit
<PAGE>
message described under the Settlement Procedure "C"
below in order to include the amount of any interest
payable and certain other information regarding the
related Global Security in the appropriate weekly
bond report published by Standard & Poor's
Corporation.
NOTICE OF INTEREST On the first Business Day of January,
PAYMENT AND REGULAR April, July and October of each year, the
RECORD DATES: Trustee will deliver to the Issuer and DTC
a written list of Regular Record Dates and Interest
Payment Dates that will occur with respect to
Book-Entry Notes during the six-month period
beginning on such first Business Day. Promptly after
each Interest Determination Date or Calculation
Date, as applicable (as defined in the applicable
Note) for Floating Rate Notes, the Company, upon
receiving notice thereof, will notify Standard &
Poor's Corporation of the interest rate determined
on such Interest Determination Date or Calculation
Date, as applicable.
PAYMENTS OF PRINCIPAL AND PAYMENTS OF INTEREST ONLY. Promptly after
INTEREST: each Regular Record Date, the Trustee will
deliver to the Issuer and DTC a written notice
specifying by CUSIP number the amount of interest to
be paid on each Global Security on the following
Interest Payment Date (other than an Interest
Payment Date coinciding with maturity) and the total
of such amounts. The Issuer will confirm with the
Trustee the amount payable on each Global Security
on such Interest Payment Date. DTC will confirm the
amount payable on each Global Security on such
Interest Payment Date by reference to the daily or
weekly bond reports published by Standard & Poor's
Corporation. The Issuer will pay to the Trustee the
total amount of interest due on such Interest
Payment Date (other than at maturity), and the
Trustee will pay such amount to DTC at the times and
in the manner set forth below under "Manner of
Payment". If any Interest Payment Date for a
Book-Entry Note is not a Business Day, the payment
due on such day shall be made on the next succeeding
Business Day and no interest shall accrue on such
payment for the period from and after such Interest
Payment Date.
<PAGE>
PAYMENTS AT MATURITY. On or about the first Business
Day of each month, the Trustee will deliver to the
Issuer and DTC a written list of principal and
interest to be paid on each Global Security maturing
either at stated maturity or on a redemption or
repayment date in the following month. The Issuer,
the Trustee and DTC will confirm the amounts of such
principal and interest payments with respect to each
such Global Security on or about the fifth Business
Day preceding the maturity of such Global Security.
The Issuer will pay to the Trustee, as the paying
agent, the principal amount of such Global Security,
together with interest due at such maturity. The
Trustee will pay such amounts to DTC at the times
and in the manner set forth below under "Manner of
Payment". If any maturity of a Global Security
representing Book-Entry Notes is not a Business Day,
the payment due on such day shall be made on the
next succeeding Business Day and no interest shall
accrue on such payment for the period from and after
such maturity. Promptly after payment to DTC of the
principal and interest due at the maturity of such
Global Security, the Trustee will cancel and destroy
such Global Security in accordance with the terms of
the Indenture and deliver a certificate of
destruction to the Issuer.
MANNER OF PAYMENT. The total amount of any principal
and interest due on Global Securities on any
Interest Payment Date or at Maturity shall be paid
by the Issuer to the Trustee in funds available for
use by the Trustee as of 9:30 a.m. (New York City
time), or as soon as practicable thereafter on such
date. The Issuer will make such payment on such
Global Securities by wire transfer to the Trustee.
The Issuer will confirm instructions regarding
payment in writing to the Trustee. Prior to 10:00
a.m. (New York City time) on each maturity date or
as soon as possible thereafter, following receipt of
such funds from the Issuer, the Trustee will pay by
separate wire transfer (using Fedwire message entry
instructions in a form previously specified by DTC)
to an account at the Federal Reserve Bank of New
York previously specified by
<PAGE>
DTC, in funds available for immediate use by DTC,
each payment of principal (together with interest
thereon) due on Global Securities on any maturity
date. On each Interest Payment Date, interest
payment shall be made to DTC in same-day funds in
accordance with existing arrangements between the
Trustee and DTC. Thereafter, on each such date, DTC
will pay, in accordance with its SDFS operating
procedures then in effect, such amounts in funds
available for immediate use to the respective
Participants in whose names the Book-Entry Notes
represented by such Global Securities are recorded
in the book-entry system maintained by DTC. Neither
of the Issuer or the Trustee shall have any direct
responsibility or liability for the payment by DTC
to such Participants of the principal of and
interest on the Book-Entry Notes.
WITHHOLDING TAXES. The amount of any taxes required
under applicable law to be withheld from any
interest payment on a Book-Entry Note will be
determined and withheld by the Participant, indirect
participant in DTC or other Person responsible for
forwarding payments and materials directly to the
beneficial owner of such Note.
SETTLEMENT: The receipt by the Issuer of immediately
available funds in payment for a
Book-Entry Note and the authentication and
issuance of the Global Security or Global
Securities representing such Note shall
constitute "settlement" with respect to
such Note. All orders accepted by the
Issuer will be settled on the fifth
Business Day from the date of the sale
pursuant to the timetable for settlement
set forth below unless the Issuer and the
purchaser agree to settlement on another
day.
SETTLEMENT PROCEDURES: Settlement Procedures with regard to each
Book-Entry Note sold by the Issuer through
a Presenting Agent as agent shall be as
follows:
A. The Presenting Agent shall communicate to the
Issuer's Treasury Department by telephone,
facsimile transmission or other acceptable
means the Purchase Information.
<PAGE>
B. After receiving the details for each
offer from the Presenting Agent, the
Issuer will, after recording the
details and any necessary
calculations, communicate the
Purchase Information by telephone,
facsimile transmission or other
acceptable means, to the Trustee.
C. The Trustee will assign a CUSIP
number to the Global Security
representing such Note and will
telephone the Issuer and advise the
Issuer of such CUSIP number. The
Trustee will enter a pending deposit
message through DTC's Participant
Terminal System, providing the
following settlement information to
DTC (which shall route such
information to Standard & Poor's
Corporation and Interactive Data
Services) and the Presenting Agent:
1. The applicable information set
forth in Settlement Procedure "A".
2. Identification as a
Fixed Rate Book-Entry Note or
a Floating Rate Book-Entry
Note.
3. Interest payment period.
4. Initial Interest Payment Date for
such Note, number of days by which such
date succeeds the related DTC record
date (which, in the case of Floating
Rate Notes which reset weekly shall be
the date five calendar days immediately
preceding the applicable Interest
Payment Date and in the case of all
other Notes shall be the Regular Record
Date as defined in the Note) and amount
of interest payable on such Interest
Payment Date per $1,000 principal amount
of Notes.
<PAGE>
5. Participants' account numbers
maintained by DTC on behalf of the
Trustee and the Presenting Agent.
6. CUSIP number of the Global
Security representing such Note.
7. Whether such Global Security will
represent any other Book-Entry Note (to
the extent known at such time).
D. The Issuer will deliver to the Trustee a
Global Security representing such Note.
E. The Trustee will complete and authenticate the
Global Security representing such Note. Prior
to preparing the Global Security for delivery,
the Trustee will confirm the Purchase
Information by telephone with the Presenting
Agent.
F. DTC will credit such Note to the Trustee's
participant account at DTC.
G. The Trustee will enter an SDFS
deliver order through DTC's
Participant Terminal System
instructing DTC to (i) debit such
Note to the Trustee's participant
account and credit such Note to the
Presenting Agent's participant
account and (ii) debit the
Presenting Agent's settlement
account and credit the Trustee's
settlement account for an amount
equal to the price of such Note less
the Presenting Agent's commission.
The entry of such a delivery order
shall constitute a representation
and warranty by the Trustee to DTC
that (i) the Global Security
representing such Book-Entry Note
has been executed, delivered and
authenticated and (ii) the Trustee
is holding such Global Security
pursuant to the Medium-Term Note
Certificate Agreement between the
Trustee and DTC.
<PAGE>
H. The Presenting Agent will enter an
SDFS deliver order through DTC's
Participant Terminal System
instructing DTC (i) to debit such
Note to the Presenting Agent's
participant account and credit such
Note to the participant accounts of
the Participants with respect to
such Note and (ii) to debit the
settlement accounts of such
Participants and credit the
settlement account of The Presenting
Agent for an amount equal to the
price of such Note.
I. Transfers of funds in accordance with SDFS
deliver orders described in Settlement
Procedures "G" and "H" will be settled in
accordance with SDFS operating procedures in
effect on the settlement date.
J. The Trustee, upon confirming receipt
of such funds, will wire transfer to
the account of the Issuer maintained
at Chase Manhattan Bank, New York
N.Y., Account of INTERNATIONAL
BUSINESS MACHINES CORPORATION, Cash
Concentration Account , ABA Number
021000021, ACCOUNT NUMBER 323 213
499, in funds available for
immediate use in the amount
transferred to the Trustee in
accordance with Settlement Procedure
"G".
K. The Presenting Agent will confirm
the purchase of such Note to the
purchaser either by transmitting to
the Participants with respect to
such Note a confirmation order or
orders through DTC's institutional
delivery system or by mailing a
written confirmation to such
purchaser.
SETTLEMENT PROCEDURES For orders of Book-Entry Notes solicited by
TIMETABLE: an Agent and accepted by the Issuer for
settlement on the first Business Day after the sale
date, Settlement Procedures "A" through "K" set
forth above shall be completed as soon as possible
but not later than the respective times (New York
City time) set forth below:
<PAGE>
Settlement
Procedure Time
----------------------
A 11:00 a.m. on the sale date
B 12:00 noon on the sale date
C 2:00 p.m. on the sale date
D 3:00 p.m. on the sale date
E 9:00 a.m. on settlement date
F 10:00 a.m. on settlement date
G-H 2:00 p.m. on settlement date
I 4:45 p.m. on settlement date
J-K 5:00 p.m. on settlement date
If a sale is to be settled two Business Days after
the sale date, Settlement Procedures "A", "B" and
"C" shall be completed as soon as practicable but no
later than 11:00 a.m., 12:00 noon and 2:00 p.m., as
the case may be, on the first Business Day after the
sale date.
If a sale is to be settled more than two Business
Days after the sale date, Settlement Procedure "A"
shall be completed as soon as practicable but no
later than 11:00 a.m. on the first Business Day
after the sale date and Settlement Procedures "B"
and "C" shall be completed as soon as practicable
but no later than 12:00 noon and 2:00 p.m., as the
case may be, on the second Business Day after the
sale date. If the initial interest rate for a
Floating Rate Book-Entry Note has not been
determined at the time that Settlement Procedure "A"
is completed, Settlement Procedures "B" and "C"
shall be completed as soon as such rate has been
determined but no later than 12:00 noon and 2:00
p.m., respectively, on the Business Day before the
settlement date. Settlement Procedure "I" is subject
to extension in accordance with any extension of
Fedwire closing deadlines and in the other events
specified in the SDFS operating procedures in effect
on the settlement date.
If settlement of a Book-Entry Note is rescheduled or
canceled, the Trustee, upon receipt of notice, will
deliver to DTC, through DTC's Participant Terminal
System, a cancellation message to such effect by no
<PAGE>
later than 2:00 p.m. on the Business Day immediately
preceding the scheduled settlement date.
FAILURE TO SETTLE: If the Trustee fails to enter an SDFS
deliver order with respect to a Book-Entry
Note pursuant to Settlement Procedure "G",
the Trustee may deliver to DTC, through
DTC's Participant Terminal System, as soon
as practicable, a withdrawal message
instructing DTC to debit such Note to the
Trustee's participant account. DTC will
process the withdrawal message, provided
that the Trustee's participant account
contains a principal amount of the Global
Security representing such Note that is at
least equal to the principal amount to be
debited. If a withdrawal message is
processed with respect to all the
Book-Entry Notes represented by a Global
Security, the Trustee will mark such Global
Security "canceled", make appropriate
entries in its records and send such
canceled Global Security to the Issuer.
The cusip number assigned to such Global
Security shall, in accordance with CUSIP
Service Bureau procedures, be canceled and
not immediately reassigned. If a
withdrawal message is processed with
respect to one or more, but not all, the
Book-Entry Notes represented by a Global
Security, the Trustee will exchange such
Global Security for two Global Securities,
one of which shall represent such
Book-Entry Note or Notes and shall be
canceled immediately after issuance and the
other of which shall represent the
remaining Book-Entry Notes previously
represented by the surrendered Global
Security and shall bear the CUSIP number of
the surrendered Global Security.
If the purchase price for any Book-Entry Note is not
timely paid to the Participants with respect to such
Note by the beneficial purchaser thereof (or a
Person, including an indirect participant in DTC,
acting on behalf of such purchaser), such
Participants and, in turn, the Presenting Agent may
enter SDFS deliver orders through DTC's Participant
Terminal System reversing the orders entered
pursuant to Settlement Procedures "H" and "G",
respectively. Thereafter, the Trustee will deliver
the withdrawal message and take the applicable
related actions described in the
<PAGE>
preceding paragraph. If such failure shall have
occurred for any reason other than the failure of
the Presenting Agent to provide the Purchase
Information to the Issuer or to provide a
confirmation to the purchaser, the Issuer will
reimburse the Presenting Agent on an equitable basis
for its loss of the use of funds during the period
when they were credited to the account of the
Issuer.
Notwithstanding the foregoing, upon any failure to
settle with respect to a Book-Entry Note, DTC may
take any actions in accordance with its SDFS
operating procedures then in effect. In the event of
a failure to settle with respect to one or more, but
not all, the Book-Entry Notes to have been
represented by a Global Security, the Trustee will
provide, in accordance with Settlement Procedure
"E", for the authentication and issuance of a Global
Security representing the other Book-Entry Notes to
have been represented by such Global Security and
will make appropriate entries in its records.
<PAGE>
EXHIBIT C
[Official Letterhead of Purchaser]
PURCHASE AGREEMENT
, 200_
International Business Machines Corporation
Office of the Treasurer
New Orchard Road
Armonk, NY 10504
Ladies and Gentlemen:
The undersigned agrees to purchase the following principal amount of
the Securities described in the Agency Agreement dated JUNE 22, 2000 (the
"Agency Agreement"):
Principal Amount $______________________
Interest Rate _______________________
Maturity Date _______________, 20____
Discount ________% of Principal Amount
Price to be paid
to Issuer
(in immediately
available funds) $______________________
Settlement Date ______________________
Except as otherwise expressly provided herein, all terms used herein
which are defined in the Agency Agreement shall have the same meanings as in the
Agency Agreement. The terms Agent or Agents, as used in the Agency Agreement,
shall be deemed to refer to the undersigned for purposes of this Agreement.
This Agreement incorporates by reference Sections 3(c), 4, 6, 7, 12
and 13 of the Agency Agreement, the first and last sentences of Section 9
thereof and, to the extent applicable, the Procedures. You and we agree to
perform, to the extent applicable, our respective duties and obligations
specifically provided to be performed by each of us in the Procedures.
Our obligation to purchase Securities hereunder is subject to the
accuracy on the above Settlement Date of your representations and warranties
contained in Section 2 of the Agency Agreement (it being understood that such
representations and warranties shall relate to
<PAGE>
the Registration Statement and the Prospectus as amended at such Settlement
Date) and to your performance and observance of all covenants and agreements
contained in Sections 4 and 6 thereof. Our obligation hereunder is also subject
to the following conditions:
(a) the satisfaction, at such Settlement Date, of each of the
conditions set forth in subsections (a) and (b) and (d) through (g) of Section 5
of the Agency Agreement (it being understood that each document so required to
be delivered shall be dated such Settlement Date and that each such condition
and the statements contained in each such document that relate to the
Registration Statement or the Prospectus shall be deemed to relate to the
Registration Statement or the Prospectus, as the case may be, as amended or
supplemented at the time of settlement on such Settlement Date and except that
the opinion described in Section 5(d) of the Agency Agreement shall be modified
so as to state that the Securities being sold on such Settlement Date, when
delivered against payment therefor as provided in the Indenture and this
Agreement, will have been duly executed, authenticated, issued and delivered and
will constitute valid and legally binding obligations of the Issuer enforceable
in accordance with their terms, subject only to the exceptions as to enforcement
set forth in clause (ii) of Section 5(d) of the Agency Agreement, and will
conform to the description thereof contained in the Prospectus as amended or
supplemented at such Settlement Date); and
(b) there shall not have occurred (i) any change, or any development
involving a prospective change, in or affecting particularly the business or
properties of the Issuer or its subsidiaries which, in our judgment, materially
impairs the investment quality of the Securities; (ii) any downgrading in the
rating of the Issuer's debt securities or public announcement that such debt
securities are under surveillance or review, with possible negative
implications, by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Act); (iii) any suspension or
limitation of trading in securities generally on the New York Stock Exchange, or
any setting of minimum prices for trading on such exchange, or any suspension of
trading of any securities of the Issuer on any exchange or in the
over-the-counter market; (iv) any banking moratorium declared by Federal or New
York authorities; or (v) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by Congress or any
other substantial national or international calamity, emergency or pestilence
if, in our judgment, the effect of any such substantial national or
international outbreak, escalation, declaration, calamity, emergency or
pestilence makes it impractical or inadvisable to proceed with completion of the
sale of and payment for the Securities.
[In further consideration of our agreement hereunder, you agree that
between the date hereof and the above Settlement Date, you will not offer or
sell, or enter into any agreement to sell, any debt securities of the Issuer in
the United States, other than sales of Securities, borrowings under your
revolving credit agreements and lines of credit, the private placement of
securities and issuances of your commercial paper.]
If for any reason our purchase of the above Securities is not
consummated, you shall remain responsible for the expenses to be paid or
reimbursed by you pursuant to Section 4 of the Agency Agreement and the
respective obligations of you and the undersigned pursuant to Section 7 shall
remain in effect. If for any reason our purchase of the above Securities is not
<PAGE>
consummated other than because of our default or a failure to satisfy a
condition set forth in clause (iii), (iv) or (v) of paragraph (b) above, you
shall reimburse us, severally, for all out-of-pocket expenses reasonably
incurred by us in connection with the offering of the above Securities and not
otherwise required to be reimbursed pursuant to Section 4 of the Agency
Agreement.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York. This Agreement may be executed in
counterparts and the executed counterparts shall together constitute a single
instrument.
[Type in Full "Legal" Name of the Purchaser]
By______________________________
(officer signs here)
Title:__________________________
(type in the title of signing
officer)
CONFIRMED AND ACCEPTED, as of
the date first above written:
International Business Machines Corporation
By:_________________________
Title:________________________
