<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 15, 2000
REGISTRATION NO. 333- (1)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
INTERNATIONAL BUSINESS MACHINES CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
NEW YORK 13-0871985
(State or other jurisdiction (I.R.S. employer identification number)
of incorporation or organization)
</TABLE>
------------------------------
ARMONK, NEW YORK 10504
(914) 499-1900
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------------
ANDREW BONZANI
ASSISTANT SECRETARY AND SENIOR COUNSEL
INTERNATIONAL BUSINESS MACHINES CORPORATION
ARMONK, NEW YORK 10504
(914) 499-6118
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
------------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box: /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C>
<CAPTION>
PROPOSED MAXIMUM
AMOUNT TO BE AGGREGATE OFFERING AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTERED (A) PRICE (A)(B) REGISTRATION FEE
<S> <C> <C> <C>
Debt Securities.............................................
Preferred Stock(c)..........................................
Depositary Shares(c)........................................
$10,000,000,000(1) 100% $2,640,000
Capital Stock(c)............................................
Warrants....................................................
</TABLE>
(a) Subject to Rule 462(b) under the Securities Act, in no event will the
aggregate initial offering price of the securities issued under this
Registration Statement (which includes securities issued hereunder pursuant
to Rule 429 under the Securities Act) exceed $12,107,437,190, or if any
securities are issued in any foreign currency units, the U.S. dollar
equivalent of $12,107,437,190. For Debt Securities issued with an original
issue discount, the amount to be registered is calculated as the initial
accreted value of such Debt Securities.
(b) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(o).
(c) In addition to any Preferred Stock, Depositary Shares or Capital Stock that
may be issued directly under this Registration Statement, there are being
registered hereunder an indeterminate number of shares of Preferred Stock,
Depositary Shares or Capital Stock as may be issued upon conversion or
exchange of Debt Securities, Preferred Stock or Depositary Shares, as the
case may be. No separate consideration will be received for any shares of
Preferred Stock, Depositary Shares or Capital Stock so issued upon
conversion or exchange.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- ------------------------------
(1) PURSUANT TO RULE 429 OF THE RULES AND REGULATIONS OF THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, THE PROSPECTUS
INCLUDED IN THIS REGISTRATION STATEMENT ALSO RELATES TO $2,107,437,190 OF
SECURITIES PREVIOUSLY REGISTERED UNDER THE REGISTRANT'S REGISTRATION
STATEMENT ON FORM S-3 (FILE NO. 333-70521). THIS REGISTRATION STATEMENT ALSO
CONSTITUTES POST-EFFECTIVE AMENDMENT NO. 1 WITH RESPECT TO THE REGISTRANT'S
REGISTRATION STATEMENT ON FORM S-3 (FILE NO. 333-70521).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION MAY 15, 2000
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
PROSPECTUS
INTERNATIONAL BUSINESS MACHINES CORPORATION
NEW ORCHARD ROAD
ARMONK, NEW YORK 10504
(914) 499-1900
$12,107,437,190
DEBT SECURITIES
PREFERRED STOCK
DEPOSITARY SHARES
CAPITAL STOCK
WARRANTS
------------------
WE WILL PROVIDE SPECIFIC TERMS OF THESE SECURITIES
IN SUPPLEMENTS TO THIS PROSPECTUS.
YOU SHOULD READ THIS PROSPECTUS AND ANY SUPPLEMENT CAREFULLY
BEFORE YOU INVEST.
------------------------
These securities have not been approved by the Securities and Exchange
Commission or any state securities commission, nor have these organizations
determined that this prospectus is accurate or complete. Any representation to
the contrary is a criminal offense.
The date of this prospectus is , 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Summary..................................................... 3
Ratio of Earnings to Fixed Charges and Earnings to Combined
Fixed Charges and Preferred Stock Dividends................ 4
Where You Can find More Information......................... 5
Description of The Company.................................. 6
Use of Proceeds............................................. 6
Description of The Debt Securities.......................... 6
Description of the Preferred Stock.......................... 18
Description of the Depositary Shares........................ 19
Description of the Capital Stock............................ 22
Description of the Warrants................................. 22
Plan of Distribution........................................ 24
Legal Opinions.............................................. 24
Experts..................................................... 24
</TABLE>
<PAGE>
SUMMARY
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the terms
of our securities, you should carefully read this document with the attached
prospectus supplement. Together these documents will give the specific terms of
the securities we are offering. You should also read the documents we have
incorporated by reference into this prospectus for information on us and our
financial statements. Certain capitalized terms used in this summary are defined
elsewhere in this prospectus.
THE SECURITIES WE MAY OFFER
This prospectus is part of a registration statement (No. 333- ) that we
filed with the SEC utilizing a "shelf" registration process. Under this shelf
process, we may offer from time to time up to $12,107,437,190 of any of the
following securities, either separately or in units: DEBT, PREFERRED STOCK,
DEPOSITARY SHARES, CAPITAL STOCK AND WARRANTS. This prospectus provides you with
a general description of the securities we may offer. Each time we offer
securities, we will provide you with a prospectus supplement that will describe
the specific amounts, prices and terms of the securities being offered. The
prospectus supplement may also add, update or change information contained in
this prospectus.
DEBT SECURITIES
We may offer unsecured general obligations of our company, which may be
senior or subordinate. The senior debt securities and the subordinated debt
securities are together referred to in this prospectus as the "debt securities".
The senior debt securities will have the same rank as all of our other
unsecured, unsubordinated debt. The subordinated debt securities will be
entitled to payment only after payment on our senior indebtedness. Senior
indebtedness includes all indebtedness for money borrowed by us, except
indebtedness that is stated to be not superior to, or to have the same rank as,
the subordinated debt securities. In addition, the subordinated debt securities
will be effectively subordinated to creditors and preferred stockholders of our
subsidiaries.
The senior debt securities will be issued under an indenture between us and
The Chase Manhattan Bank, as the trustee. The subordinated debt securities will
be issued under an indenture between us and the trustee we name in the
prospectus supplement. We have summarized general features of the debt
securities from the indentures. We encourage you to read the indentures which
are exhibits to the registration statement and our recent periodic and current
reports that we file with the SEC.
GENERAL INDENTURE PROVISIONS THAT APPLY TO SENIOR AND SUBORDINATED DEBT
SECURITIES
Neither indenture limits the amount of debt that we may issue. In addition,
neither indenture provides holders any protection should there be a
recapitalization or restructuring involving our company.
The indentures allow us to merge or consolidate with another company, or to
sell all or most of our assets to another company. If these events occur, the
other company will be required to assume our responsibilities relating to the
debt securities, and we will be released from all liabilities and obligations.
The indentures provide that holders of a majority of the outstanding
principal amount of any series of debt securities may vote to change our
obligations or your rights concerning that series. However, to change the amount
or timing of principal, interest or other payments under the debt securities,
every holder in the series must consent.
We may discharge our obligations under the indenture relating to the senior
debt securities by depositing with the trustee sufficient funds or government
obligations to pay the senior debt securities when due.
EVENTS OF DEFAULT. Each indenture provides that the following are events of
default:
- If we do not pay interest for 30 days after its due date.
3
<PAGE>
- If we do not pay principal or premium when due.
- If we do not make any sinking fund payment for 30 days after its due date.
- If we continue to breach a covenant for 90 days after notice.
- If we enter bankruptcy or become insolvent.
If an event of default occurs under any series of debt securities, the
trustee or holders of 25% of the outstanding principal amount of that series may
declare the principal amount of the series immediately payable. However, holders
of a majority of the principal amount may rescind this action.
GENERAL INDENTURE PROVISIONS THAT APPLY ONLY TO SENIOR DEBT SECURITIES
The indenture relating to the senior debt securities contains covenants
restricting our ability to incur secured indebtedness and enter into sale and
leaseback transactions.
GENERAL INDENTURE PROVISIONS THAT APPLY ONLY TO SUBORDINATED DEBT SECURITIES
The subordinated debt securities will be subordinated to all senior
indebtedness. In addition, claims of our subsidiaries' creditors and preferred
stockholders generally will have priority with respect to the subsidiaries'
assets and earnings over the claims of our creditors, including holders of the
subordinated debt securities. The subordinated debt securities, therefore, will
be effectively subordinated to creditors and preferred stockholders of our
subsidiaries.
The indenture relating to the subordinated debt securities does not provide
holders any protection in the event of a highly leveraged transaction.
PREFERRED STOCK AND DEPOSITARY SHARES
We may issue our preferred stock, par value $0.01 per share, in one or more
series. Our Board of Directors will determine the dividend, voting, conversion
and other rights of the series being offered and the terms and conditions
relating to its offering and sale at the time of the offer and sale. We may also
issue fractional shares of preferred stock that will be represented by
depositary shares and depositary receipts.
CAPITAL STOCK
We may issue our capital stock, par value $0.20 per share. Holders of
capital stock are entitled to receive dividends if and when those dividends are
declared by our Board of Directors, subject to rights of preferred stockholders.
Each holder of capital stock is entitled to one vote per share. The holders of
capital stock have no preemptive rights or cumulative voting rights.
WARRANTS
We may issue warrants for the purchase of debt securities, preferred stock
or capital stock. We may issue warrants independently or together with other
securities.
RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
The ratio of earnings to fixed charges and the ratio of earnings to combined
fixed charges and preferred stock dividends for each of the periods indicated
are as follows:
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges.......... 5.71 5.37 7.0 5.3 5.4 5.3 5.0
Ratio of earnings to
combined fixed charges
and preferred stock
dividends.............. 5.63 5.29 6.9 5.3 5.4 5.3 4.9
</TABLE>
We compute the ratio of earnings to fixed charges by dividing earnings,
which includes income before taxes and fixed charges, by fixed charges. This
calculation excludes the effects of accounting changes which have been made over
time. We compute the ratio of earnings to combined fixed charges and preferred
stock dividends by dividing earnings by the sum of fixed charges and dividends
on preferred stock.
4
<PAGE>
For purposes of calculating this ratio, the preferred stock dividend
requirements were assumed to be equal to the pre-tax earnings that would be
required to cover such dividend requirements based on our effective income tax
rates for the respective periods. "Fixed charges" consist of interest on debt
and a portion of rentals determined to be representative of interest.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference room in Washington, D.C. Please call the SEC at
1-800-SEC-0330 for further information on their public reference room. Our SEC
filings are also available to the public at the SEC's web site at
(http://www.sec.gov).
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with it. This means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and later
information that we file with the SEC will automatically update and supersede
this information. We incorporate by reference the documents listed below and any
future filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until our offering is completed:
i. Annual Report on Form 10-K for the year ended December 31, 1999;
ii. Quarterly report on Form 10-Q for the quarter ended March 31, 2000; and
iii. Current Reports on Form 8-K, filed on January 20, 2000, April 13, 2000,
April 19, 2000 and May 5, 2000.
We encourage you to read our periodic and current reports. Not only do we
think these items are interesting reading, we think these reports provide
additional information about our company which prudent investors find important.
You may request a copy of these filings at no cost, by writing to or telephoning
our transfer agent at the following address:
EquiServe, the First Chicago Trust Division
Mail Suite 4688
P.O. Box 2530
Jersey City, New Jersey 07303-2530
(201) 324-0405
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of the
document.
5
<PAGE>
DESCRIPTION OF THE COMPANY
We were originally incorporated in the State of New York on June 16, 1911,
as the Computing-Tabulating-Recording Co. (C-T-R). C-T-R was a consolidation of
the Computing Scale Co. of America, the Tabulating Machine Co., and The
International Time Recording Co. of New York. In 1924, C-T-R adopted the name
International Business Machines Corporation, also known more simply as IBM.
We use advanced information technology to provide customer solutions. We
operate primarily in a single industry using several segments that create value
by offering a variety of solutions that include, either singularly or in some
combination, technologies, systems, products, services, software and financing.
Organizationally, our major operations comprise three hardware products
segments--Technology, Personal Systems and Enterprise Systems; a Global Services
segment; a Software segment; a Global Financing segment and an Enterprise
Investment segment. The segments are determined based on several factors,
including customer base, homogeneity of products, technology and delivery
channels.
We offer our products through our global sales and distribution
organization. The sales and distribution organization has both a geographic
focus (in the Americas, Europe/Middle East/ Africa, and Asia Pacific) and a
specialized and global industry focus. In addition, this organization includes a
global sales and distribution effort devoted exclusively to small and medium
businesses. We also offer our products through a variety of third party
distributors and resellers, as well as through our on-line channels.
USE OF PROCEEDS
Unless we otherwise specify in the applicable prospectus supplement, the net
proceeds we receive from the sale of the securities offered by this prospectus
and the accompanying prospectus supplement will be used for general corporate
purposes. General corporate purposes may include the repayment of debt,
investments in or extensions of credit to our subsidiaries, redemption of
preferred stock, or the financing of possible acquisitions or business
expansion. The net proceeds may be invested temporarily or applied to repay
short-term debt until they are used for their stated purpose.
DESCRIPTION OF THE DEBT SECURITIES
The following description of the terms of the debt securities sets forth
general terms that may apply to the debt securities. The particular terms of any
debt securities will be described in the prospectus supplement relating to those
debt securities.
The debt securities will be either our senior debt securities or our
subordinated debt securities. The senior debt securities will be issued under an
indenture dated as of October 1, 1993, as supplemented on December 15, 1995,
between us and The Chase Manhattan Bank, as trustee. This indenture is referred
to as the "senior indenture". The subordinated debt securities will be issued
under an indenture to be entered into between us and the trustee named in a
prospectus supplement. This indenture is referred to as the "subordinated
indenture". The senior indenture and the subordinated indenture are together
called the "indentures".
The following is a summary of the most important provisions of the
indentures. Copies of the entire indentures are exhibits to the registration
statement of which this prospectus is a part. Section references below are to
the section in the applicable indenture. The referenced sections of the
indentures are incorporated by reference. We encourage you to read our
indentures.
GENERAL
Neither indenture limits the amount of debt securities that we may issue.
Each indenture provides that debt securities may be issued up to the principal
amount authorized by us from time to time. The senior debt securities will be
unsecured and will have the same rank as all of our other unsecured and
unsubordinated debt. The subordinated debt securities will be unsecured and will
be subordinated and junior to all senior indebtedness.
6
<PAGE>
The debt securities may be issued in one or more separate series of senior
debt securities and/or subordinated debt securities. The prospectus supplement
relating to the particular series of debt securities being offered will specify
the particular amounts, prices and terms of those debt securities. These terms
may include:
- the title of the debt securities;
- any limit upon the aggregate principal amount of the debt securities;
- the maturity date or dates, or the method of determining the maturity
dates;
- the interest rate or rates, or the method of determining those rates;
- the interest payment dates and, for debt securities in registered form,
the regular record dates;
- the places where payments may be made;
- any mandatory or optional redemption provisions;
- any sinking fund or analogous provisions;
- any conversion or exchange provisions;
- any terms for the attachment to the debt securities of warrants, options
or other rights to purchase or sell our securities;
- the portion of principal amount of the debt security payable upon
acceleration of maturity if other than the full principal amount;
- any deletions of, or changes or additions to, the events of default or
covenants;
- if other than U.S. dollars, the currency or currencies, including the euro
and other composite currencies, in which payments on the debt securities
will be payable and whether the holder may elect payment to be made in a
different currency;
- the method of determining the amount of any payments on the debt
securities which are linked to an index;
- whether the debt securities will be issued in fully registered form
without coupons or in bearer form, with or without coupons, or any
combination of these, and whether they will be issued in the form of one
or more global securities in temporary or definitive form;
- any terms relating to the delivery of the debt securities if they are to
be issued upon the exercise of warrants;
- whether and on what terms we will pay additional amounts to holders of the
debt securities that are not U.S. persons for any tax, assessment or
governmental charge withheld or deducted and, if so, whether and on what
terms we will have the option to redeem the debt securities rather than
pay the additional amounts; and
- any other specific terms of the debt securities.
(Sections 202 and 301)
Unless we otherwise specify in the prospectus supplement:
- the debt securities will be registered debt securities;
- registered debt securities denominated in U.S. dollars will be issued in
denominations of $1,000 or an integral multiple of $1,000; and
- bearer debt securities denominated in U.S. dollars will be issued in
denominations of $5,000.
Debt securities may bear legends required by United States Federal tax law
and regulations. (Section 401)
If any of the debt securities are sold for any foreign currency or currency
unit, or if any payments on the debt securities are payable in any foreign
currency or currency unit, the prospectus supplement will contain any
restrictions, elections, tax consequences, specific terms and other information
relating to the debt securities and the foreign currency or currency unit.
Some of the debt securities may be issued as original issue discount debt
securities. Original issue discount securities bear no interest
7
<PAGE>
or bear interest at below-market rates. These are sold at a discount below their
stated principal amount. If we issue these securities, the prospectus supplement
will describe any special tax, accounting or other information which we think is
important.
EXCHANGE, REGISTRATION AND TRANSFER
Debt securities may be transferred or exchanged at the corporate trust
office of the security registrar or at any other office or agency which is
maintained for these purposes. No service charge will be payable upon the
transfer or exchange, except for any applicable tax or governmental charge.
The designated security registrar in the United States for the senior debt
securities is The Chase Manhattan Bank, located at 450 West 33rd Street, New
York, New York 10001. The security registrar for the subordinated debt
securities will be designated in a prospectus supplement.
If debt securities are issuable in both registered and bearer form, the
bearer securities will be exchangeable for registered securities. If a bearer
security with related coupons is surrendered in exchange for a registered
security between a record date and the date set for the payment of interest, the
bearer security will be surrendered without the coupon relating to that interest
payment. That interest payment will be made only to the holder of the coupon
when due.
In the event of any redemption in part of any series of debt securities, we
will not be required to:
- issue, register the transfer of, or exchange, debt securities of any
series between the opening of business 15 business days before any
selection of debt securities of that series to be redeemed and the close
of business on:
- the day of mailing of the relevant notice of redemption (if debt
securities of the series are issuable only in registered form), and
- the day of the first publication of the relevant notice of redemption
(if the debt securities of the series are issuable in bearer form) or,
- the day of mailing of the relevant notice of redemption (if the debt
securities of the series are issuable in bearer and registered form)
and there is no publication;
- register the transfer of, or exchange, any registered security selected
for redemption, in whole or in part, except the unredeemed portion of any
registered security being redeemed in part; or
- exchange any bearer security selected for redemption, except to exchange
it for a registered security which is simultaneously surrendered for
redemption.
(Section 404)
PAYMENT AND PAYING AGENT
We will pay principal, interest and any premium on fully registered
securities in the designated currency or currency unit at the office of the
paying agent. Payment of interest on fully registered securities may be made by
check mailed to the persons in whose names the debt securities are registered on
days specified in the indentures or any prospectus supplement. (Sections 406 and
410)
We will pay principal, interest and any premium on bearer securities in the
designated currency or currency unit at the office of the paying agent or agents
outside of the United States. Payments will be made at the offices of the paying
agent in the United States only if the designated currency is U.S. dollars and
payment outside of the United States is illegal or effectively precluded.
(Sections 410 and 1102)
If any amount payable on any debt security or coupon remains unclaimed at
the end of two years after the amount became due and payable, the paying agent
will release any unclaimed amounts to us. (Section 1103)
Our paying agent in the United States for the senior debt securities is The
Chase Manhattan Bank, located at 450 West 33rd
8
<PAGE>
Street, New York, New York 10001. If and when we issue subordinated debt
securities, we'll designate the paying agent for those subordinated debt
securities in the applicable prospectus supplement.
GLOBAL SECURITIES
The debt securities of a series may be issued in whole or in part in the
form of one or more global certificates. Those certificates will be deposited
with a depositary that we will identify in a prospectus supplement. Global debt
securities may be issued in either registered or bearer form and can be in
either temporary or definitive form. All global securities in bearer form will
be deposited with a depositary outside of the United States. We will describe
the specific terms of the depositary arrangement relating to a series of debt
securities in the prospectus supplement.
Other than for payments, we can treat a person having a beneficial interest
in a definitive global security as the holder of the principal amount of
outstanding debt securities represented by the global security. For these
purposes, we can rely upon a written statement delivered to the trustee by the
holder of the definitive global security, or, in the case of a definitive global
security in bearer form, by Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System, and Clearstream Banking, societe
anonyme (Clearstream, Luxembourg). (Section 411)
Neither we, the trustee nor any of our respective agents will be responsible
for any aspect of the records relating to or payments made on account of
beneficial ownership interests in a global security or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests. (Section 411)
Unless we otherwise specify in a prospectus supplement, we anticipate that
the following provisions will apply to our depositary arrangements:
TEMPORARY GLOBAL SECURITIES
All or any portion of the debt securities of a series that are issuable in
bearer form initially may be represented by one or more temporary global
securities, without interest coupons. The temporary global securities will be
deposited with a depositary in London for Euroclear and Clearstream for credit
to the accounts of the beneficial owners of the debt securities or to such other
accounts as they may direct.
On and after an exchange date provided in the applicable prospectus
supplement, each temporary global security will be exchangeable for definitive
debt securities in bearer form, registered form, definitive global bearer form
or a combination of these, as will be specified in the prospectus supplement.
No bearer security delivered in exchange for a portion of a temporary global
security will be mailed or delivered to any location in the United States.
(Sections 402 and 403)
Interest on a temporary global security will be paid to Euroclear and/or
Clearstream for the portion held for its account only after a certificate is
delivered to the trustee stating that the portion:
- is not beneficially owned by a United States person;
- has not been acquired by or on behalf of a United States person or for
offer to resell or for resale to a United States person or any person
inside the United States; or
- if a beneficial interest has been acquired by a United States person,
that:
- such person is a financial institution (as defined in the Internal
Revenue Code), purchasing for its own account or has acquired the debt
security through a financial institution; and
- that the debt securities are held by a financial institution that has
agreed in writing to comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the Internal Revenue
9
<PAGE>
Code and the regulations thereunder, and that it did not purchase for
resale inside the United States.
The certificate must be based on statements provided by the beneficial
owners of interests in the temporary global security. Each of Euroclear and
Clearstream will credit the interest received by it to the accounts of the
beneficial owners of the debt security, or to other accounts as they may direct.
(Section 403)
DEFINITIVE GLOBAL SECURITIES
BEARER SECURITIES. The applicable prospectus supplement will describe the
exchange provisions, if any, of debt securities issuable in definitive global
bearer form. We will not deliver any bearer securities in exchange for a portion
of a definitive global security to any location in the United States. (Section
404)
U.S. BOOK-ENTRY SECURITIES. Debt securities of a series represented by a
definitive global registered security and deposited with or on behalf of a
depositary in the United States will be registered in the name of the depositary
or its nominee. These securities are referred to as "book-entry securities".
When a global security is issued and deposited with the depositary, the
depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts represented by that global security to the accounts
of institutions that have accounts with the depositary or its nominee.
Institutions that have accounts with the depositary or its nominee are referred
to as "participants".
The accounts to be credited shall be designated by the underwriters or
agents for the sale of such book-entry securities or by us, if we offer and sell
those securities directly.
Ownership of book-entry securities are limited to participants or persons
that may hold interests through participants. In addition, ownership of these
securities will be evidenced only by, and the transfer of that ownership will be
effected only through, records maintained by the depositary or its nominee or by
participants or persons that hold through other participants.
So long as the depositary, or its nominee, is the registered owner of a
global security, that depositary or nominee will be considered the sole owner or
holder of the book-entry securities represented by the global security for all
purposes under the indenture. Payments of principal, interest and premium on
those securities will be made to the depositary or its nominee as the registered
owner or the holder of the global security.
Owners of book-entry securities:
- will not be entitled to have the debt securities registered in their
names;
- will not be entitled to receive physical delivery of the debt securities
in definitive form; and
- will not be considered the owners or holders of those debt securities
under the indenture.
The laws of some jurisdictions require that purchasers of securities take
physical delivery of the securities in definitive form. These laws impair the
ability to purchase or transfer book-entry securities. We must comply with the
law.
We expect that the depositary for book-entry securities of a series will
immediately credit participants' accounts with payments received by the
depositary or nominee in amounts proportionate to the participants' beneficial
interests as shown on the records of such depositary.
We also expect that payments by participants to owners of beneficial
interests in a global security held through the participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name". The payments by participants to the owners of beneficial
interests will be the responsibility of those participants.
PRACTICAL IMPLICATIONS OF HOLDING DEBT SECURITIES IN STREET NAME
Investors who hold debt securities in accounts at banks or brokers will not
generally be recognized by us as the legal holders of debt
10
<PAGE>
securities. Since we recognize as the holder the bank or broker, or the
financial institution the bank or broker uses to hold its debt securities, it is
the responsibility of these intermediary banks, brokers and other financial
institutions to pass along principal, interest and other payments on the debt
securities, either because they agree to do so in their agreements with their
customers, or because they are legally required to do so. If you hold debt
securities in street name, you really ought to check with your own institution
to find out:
- How it handles securities payments and notices;
- Whether it imposes additional fees or charges;
- How it would handle voting and related issues if ever required;
- How it would pursue or enforce rights under the debt securities if there
were a default or other event triggering the need for direct holders to
act to protect their interests; and
- Whether and how it would react on other matters which are important to
persons who hold debt securities in "street name".
SATISFACTION AND DISCHARGE; DEFEASANCE
We may be discharged from our obligations on the debt securities of any
series that have matured or will mature or be redeemed within one year if we
deposit with the trustee enough cash to pay all the principal, interest and any
premium due to the stated maturity date or redemption date of the debt
securities. (Section 501)
Each indenture contains a provision that permits us to elect:
1. to be discharged after 90 days from all of our obligations (subject to
limited exceptions) with respect to any series of debt securities then
outstanding; and/or
2. to be released from our obligations under the following covenants and
from the consequences of an event of default or cross-default resulting
from a breach of these covenants:
a. the limitations on mergers, consolidations and sale of assets,
b. the limitations on sale and leaseback transactions under the senior
indenture, and
c. the limitations on secured indebtedness under the senior indenture.
To make either of the above elections, we must deposit in trust with the
trustee enough money to pay in full the principal, interest and premium on the
debt securities. This amount may be made in cash and/or U.S. government
obligations, if the debt securities are denominated in U.S. dollars. This amount
may be made in cash, and/or foreign government securities if the debt securities
are denominated in a foreign currency. As a condition to either of the above
elections, we must deliver to the trustee an opinion of counsel that the holders
of the debt securities will not recognize income, gain or loss for Federal
income tax purposes as a result of the action. (Section 503)
If either of the above events occur, the holders of the debt securities of
the series will not be entitled to the benefits of the indenture, except for
registration of transfer and exchange of debt securities and replacement of
lost, stolen or mutilated debt securities. (Sections 501 and 503)
EVENTS OF DEFAULT, NOTICE AND WAIVER
If an event of default for any series of debt securities occurs and
continues, the trustee or the holders of at least 25% in principal amount of the
debt securities of the series may declare the entire principal amount of all the
debt securities of that series to be due and payable immediately.
The declaration may be annulled and past defaults may be waived by the
holders of a majority of the principal amount of the debt securities of that
series. However, payment defaults that are not cured may only be waived
11
<PAGE>
by all holders of the debt securities. (Sections 602 and 613)
Each indenture defines an event of default in connection with any series of
debt securities as one or more of the following events:
- we fail to pay interest on any debt security of the series for 30 days
when due;
- we fail to pay the principal or any premium on any debt securities of the
series when due;
- we fail to make any sinking fund payment for 30 days when due;
- we fail to perform any other covenant in the debt securities of the series
or in the applicable indenture relating to debt securities of that series
for 90 days after being given notice; and
- we enter into bankruptcy or become insolvent.
An event of default for one series of debt securities is not necessarily an
event of default for any other series of debt securities. (Section 601)
Each indenture requires the trustee to give the holders of a series of debt
securities notice of a default for that series within 90 days unless the default
is cured or waived. However, the trustee may withhold this notice if it
determines in good faith that it is in the interest of those holders. The
trustee may not, however, withhold this notice in the case of a payment default.
(Section 702)
Other than the duty to act with the required standard of care during an
event of default, a trustee is not obligated to exercise any of its rights or
powers under the indenture at the request or direction of any of the holders of
debt securities, unless the holders have offered to the trustee reasonable
indemnification. (Section 703)
Generally, the holders of a majority in principal amount of outstanding debt
securities of any series may direct the time, method and place of conducting any
proceeding for any remedy available to the trustee, or exercising any trust or
other power conferred on the trustee. (Section 612)
Each indenture includes a covenant that we will file annually with the
trustee a certificate of no default, or specifying any default that exists.
(Section 1106)
Street name and other indirect holders should consult their banks and
brokers for information on their requirements for giving notice or taking other
actions upon a default.
MODIFICATION OF THE INDENTURES
Together with the trustee, we may modify the indentures without the consent
of the holders for limited purposes, including adding to our covenants or events
of default, establishing forms or terms of debt securities, curing ambiguities
and other purposes which do not adversely affect the holders in any material
respect. (Section 1001)
Together with the trustee, we may also make modifications and amendments to
each indenture with the consent of the holders of a majority in principal amount
of the outstanding debt securities of all affected series. However, without the
consent of each affected holder, no modification may:
- change the stated maturity of any debt security;
- reduce the principal, premium (if any) or rate of interest on any debt
security;
- change any place of payment or the currency in which any debt security is
payable;
- impair the right to enforce any payment after the stated maturity or
redemption date;
- adversely affect the terms of any conversion right;
- reduce the percentage of holders of outstanding debt securities of any
series required to consent to any modification, amendment or waiver under
the indenture;
12
<PAGE>
- change any of our obligations for any outstanding series of debt
securities to maintain an office or agency in the places and for the
purposes specified in the indenture for that series; or
- change the provisions in the indenture that relate to its modification or
amendment.
(Section 1002)
MEETINGS
The indentures contain provisions for convening meetings of the holders of
debt securities of a series. (Section 1401)
A meeting may be called at any time by the trustee, upon request by us or
upon request by the holders of at least 10% in principal amount of the
outstanding debt securities of the series. In each case, notice will be given to
the holders of debt securities of the series. (Section 1402)
Persons holding a majority in principal amount of the outstanding debt
securities of a series will constitute a quorum at a meeting. A meeting called
by us or the trustee that did not have a quorum may be adjourned for not less
than 10 days, and if there is not a quorum at the adjourned meeting, the meeting
may be further adjourned for not less than 10 days.
Generally, any resolution presented at a meeting at which a quorum is
present may be adopted by the affirmative vote of the holders of a majority in
principal amount of the outstanding debt securities of that series. However, to
change the amount or timing of payments under the debt securities, every holder
in the series must consent.
In addition, if the indenture provides that an action may be taken by the
holders of a specified percentage in principal amount of outstanding debt
securities of a series, that action may be taken at a meeting at which a quorum
is present by the affirmative vote of the holders of such specified percentage
in principal amount of the outstanding debt securities of that series. Any
resolution passed or decision taken at any meeting of holders of debt securities
of any series duly held in accordance with an indenture will be binding on all
holders of debt securities of that series and the related coupons. (Section
1404)
NOTICES TO HOLDERS
In most instances, notices to holders of bearer securities will be given by
publication at least once in a daily newspaper in The City of New York and in
London. Notices may also be published in another city or cities as may be
specified in the securities. In addition, notices to holders of bearer
securities will be mailed to those persons whose names and addresses were
previously filed with the applicable trustee. Notice to holders of registered
securities will be given by mail to the addresses of the holders as they appear
in the security register. (Section 106)
TITLE
Title to any bearer securities and any related coupons will pass by
delivery. We, the trustee and any agent of ours or the trustee may treat the
holder of any bearer security or related coupon as the absolute owner of that
security for all purposes. We may also treat the registered owner of any
registered security as the absolute owner of that security for all purposes.
(Section 407)
REPLACEMENT OF SECURITIES AND COUPONS
We think it's very important for you to keep your securities safe. If you
don't, you'll have to follow these procedures. We'll replace debt securities or
coupons that have been mutilated, but you'll have to pay for the replacement,
and you'll have to surrender the mutilated debt security or coupon to the
security registrar first. Debt securities or coupons that become destroyed,
stolen or lost will only be replaced by us, again at your expense, upon your
providing evidence of destruction, loss or theft which we and the security
registrar think is good. In the case of a destroyed, lost or stolen debt
security or coupon, we may also require you, as the holder of the debt security
or coupon, to indemnify the security registrar and us before we'll go about
issuing any replacement debt security or coupon. (Section 405)
13
<PAGE>
GOVERNING LAW
The indentures, the debt securities and the coupons will be governed by, and
construed under, the laws of the State of New York.
OUR RELATIONSHIP WITH THE TRUSTEE
We may from time to time maintain lines of credit, and have other customary
banking relationships, with the trustee under the senior indenture or the
trustee under the subordinated indenture.
SENIOR DEBT SECURITIES
The senior debt securities will be unsecured and will rank equally with all
of our other unsecured and non-subordinated debt.
COVENANTS IN THE SENIOR INDENTURE
COVENANTS ARE PROMISES. We must keep our promises or we could be placed in
default.
LIMITATION ON MERGER, CONSOLIDATION AND CERTAIN SALES OF ASSETS. We may,
without the consent of the holders of the debt securities, merge into or
consolidate with any other corporation, or convey or transfer all or
substantially all of our properties and assets to another person provided that:
- the successor is a U.S. corporation;
- the successor assumes on the same terms and conditions all the obligations
under the debt securities and the indentures; and
- immediately after giving effect to the transaction, there is no default
under the applicable indenture. (Section 901)
The remaining or acquiring corporation will take over all of our rights and
obligations under the indentures. (Section 902)
LIMITATION ON SECURED INDEBTEDNESS. Neither we nor any Restricted Subsidiary
will create, assume, incur or guarantee any Secured Indebtedness without
securing the senior debt securities equally and ratably with, or prior to, that
Secured Indebtedness, unless the sum of the following amounts would not exceed
10% of Consolidated Net Tangible Assets:
- the total amount of all Secured Indebtedness that the senior debt
securities are not secured equally and ratably with, and
- the discounted present value of all net rentals payable under leases
entered into in connection with sale and leaseback transactions entered
into after July 15, 1985.
You should note that we don't include in this calculation any leases entered
into by a Restricted Subsidiary before the time it became a Restricted
Subsidiary. (Section 1104)
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS. Neither we nor any
Restricted Subsidiary will enter into any lease longer than three years covering
any of our Principal Property or any Restricted Subsidiary that is sold to any
other person in connection with that lease unless either:
1. the sum of the following amounts does not exceed 10% of Consolidated Net
Tangible Assets:
- the discounted present value of all net rentals payable under all
these leases entered into after July 15, 1985; and
- the total amount of all Secured Indebtedness that the senior debt
securities are not secured equally and ratably with.
We don't include in this calculation any leases entered into by a Restricted
Subsidiary before the time it became a Restricted Subsidiary.
or
2. an amount equal to the greater of the following amounts is applied
within 180 days to the retirement of our long-term
14
<PAGE>
debt or the debt of a Restricted Subsidiary:
- the net proceeds to us or a Restricted Subsidiary from the sale; and
- the discounted present value of all net rentals payable under the
lease.
Amounts applied to debt which is subordinated to the senior debt securities
or which is owing to us or a Restricted Subsidiary will not be included in
this calculation. (Section 1105)
We think it's important for you to be aware that this limitation on sale and
leaseback transactions won't apply to any leases that we may enter into relating
to newly acquired, improved or constructed property.
We think it's also important for you to note that the holders of a majority
in principal amount of all affected series of outstanding debt securities may
waive compliance with each of the above covenants. (Section 1107)
DEFINITIONS
"Secured Indebtedness" means our indebtedness or indebtedness of a
Restricted Subsidiary for borrowed money secured by any lien on, or any
conditional sale or other title retention agreement covering, any Principal
Property or any stock or indebtedness of a Restricted Subsidiary. Excluded from
this definition is all indebtedness:
- outstanding on July 15, 1985, secured by liens, or arising from
conditional sale or other title retention agreements, existing on that
date;
- incurred after July 15, 1985 to finance the acquisition, improvement or
construction of property, and either secured by purchase money mortgages
or liens placed on the property within 180 days of acquisition,
improvement or construction or arising from conditional sale or other
title retention agreements;
- secured by liens on Principal Property or on the stock or indebtedness of
Restricted Subsidiaries, and, in either case, existing at the time of its
acquisition;
- owing to us or any Restricted Subsidiary;
- secured by liens, or conditional sale or other title retention devices,
existing at the time a corporation became or becomes a Restricted
Subsidiary after July 15, 1985;
- arising from any sale and leaseback transaction;
- incurred to finance the acquisition or construction of property secured by
liens in favor of any country or any political subdivision; and
- constituting any replacement, extension or renewal of any indebtedness to
the extent the amount of indebtedness is not increased.
"Principal Property" means land, land improvements, buildings and associated
factory, laboratory and office equipment constituting a manufacturing,
development, warehouse, service or office facility owned by or leased to us or a
Restricted Subsidiary which is located within the United States and which has an
acquisition cost plus capitalized improvements in excess of 0.15% of
Consolidated Net Tangible Assets as of the date of such determination. Principal
Property does not include:
- products marketed by us or our subsidiaries;
- any property financed through the issuance of tax-exempt governmental
obligations;
- any property which our Board of Directors determines is not of material
importance to us and our Restricted Subsidiaries taken as a whole; or
- any property in which the interest of us and all of our subsidiaries does
not exceed 50%.
"Consolidated Net Tangible Assets" means the total assets of us and our
subsidiaries, less current liabilities and intangible assets. We
15
<PAGE>
include in intangible assets the balance sheet value of:
- all trade names, trademarks, licenses, patents, copyrights and goodwill;
- organizational and development costs;
- deferred charges other than prepaid items such as insurance, taxes,
interest, commissions, rents and similar items and tangible items we are
amortizing; and
- unamortized debt discount and expense minus unamortized premium.
We don't include in intangible assets any program products.
"Restricted Subsidiary" means:
1. any of our subsidiaries:
a. which has substantially all its property in the United States;
b. which owns or is a lessee of any Principal Property; and,
c. in which our investment and the investment of our subsidiaries
exceeds 0.15% of Consolidated Net Tangible Assets as of the date of
such determination; and
2. any other subsidiary the Board of Directors may designate as a
Restricted Subsidiary.
"Restricted Subsidiary" doesn't include financing subsidiaries and
subsidiaries formed or acquired after July 15, 1985 for the purpose of acquiring
the stock, business or assets of another person and that have not and do not
acquire all or any substantial part of our business or assets or the business or
assets of any Restricted Subsidiary. (Section 101 of Senior Indenture)
SUBORDINATED DEBT SECURITIES
The subordinated debt securities will be unsecured. The subordinated debt
securities will be subordinate in right of payment to all senior indebtedness.
(Section 1501 of Subordinated Indenture)
In addition, claims of our subsidiaries' creditors and preferred
stockholders generally will have priority with respect to the assets and
earnings of the subsidiaries over the claims of our creditors, including holders
of the subordinated debt securities, even though those obligations may not
constitute senior indebtedness. The subordinated debt securities, therefore,
will be effectively subordinated to creditors, including trade creditors, and
preferred stockholders of our subsidiaries.
The subordinated indenture defines "senior indebtedness" to mean the
principal of, premium, if any, and interest on:
- all indebtedness for money borrowed or guaranteed by us other than the
subordinated debt securities, unless the indebtedness expressly states to
have the same rank as, or to rank junior to, the subordinated debt
securities; and
- any deferrals, renewals or extensions of any senior indebtedness.
However, the term "senior indebtedness" will not include:
- any of our obligations to our subsidiaries;
- any liability for Federal, state, local or other taxes owed or owing by
us;
- any accounts payable or other liability to trade creditors arising in the
ordinary course of business, including guarantees of instruments
evidencing those liabilities;
- any indebtedness, guarantee or obligation of ours which is expressly
subordinate or junior in right of payment in any respect to any other
indebtedness, guarantee or obligation of ours, including any senior
subordinated indebtedness and any subordinated obligations;
- any obligations with respect to any capital stock; or
- any indebtedness incurred in violation of the Subordinated Indenture.
There is no limitation on our ability to issue additional senior
indebtedness. The senior debt securities constitute senior indebtedness under
the subordinated indenture. The subordinated debt securities will rank equally
with our other subordinated indebtedness.
16
<PAGE>
Under the subordinated indenture, no payment may be made on the subordinated
debt securities and no purchase, redemption or retirement of any subordinated
debt securities may be made in the event:
- any senior indebtedness is not paid when due, or
- the maturity of any senior indebtedness is accelerated as a result of a
default, unless the default has been cured or waived and the acceleration
has been rescinded or that senior indebtedness has been paid in full.
We may, however, pay the subordinated debt securities without regard to the
above restriction if the representatives of the holders of the applicable senior
indebtedness approve the payment in writing to us and the trustee.
The representatives of the holders of senior indebtedness may notify us and
the trustee in writing of a default which can result in the acceleration of that
senior indebtedness' maturity without further notice or the expiration of any
grace periods. In this event, we may not pay the subordinated debt securities
for 179 days after receipt of that notice. If the holders of senior indebtedness
or their representatives have not accelerated the maturity of the senior
indebtedness at the end of the 179 day period, we may resume payments on the
subordinated debt securities. Not more than one such notice may be given in any
consecutive 360-day period, irrespective of the number of defaults with respect
to senior indebtedness during that period. (Section 1503 of Subordinated
Indenture)
In the event we pay or distribute our assets to creditors upon a total or
partial liquidation, dissolution or reorganization of us or our property, the
holders of senior indebtedness will be entitled to receive payment in full of
the senior indebtedness before the holders of subordinated debt securities are
entitled to receive any payment. Until the senior indebtedness is paid in full,
any payment or distribution to which holders of subordinated debt securities
would be entitled but for the subordination provisions of the subordinated
indenture will be made to holders of the senior indebtedness. (Section 1502 of
Subordinated Indenture)
If a distribution is made to holders of subordinated debt securities that,
due to the subordination provisions, should not have been made to them, those
holders of subordinated debt securities are required to hold it in trust for the
holders of senior indebtedness, and pay it over to them as their interests may
appear. (Section 1505 of Subordinated Indenture)
If payment of the subordinated debt securities is accelerated because of an
event of default, either we or the trustee will promptly notify the holders of
senior indebtedness or their representatives of the acceleration. We may not pay
the subordinated debt securities until five business days after the holders of
senior indebtedness or their representatives receive notice of the acceleration.
Thereafter, we may pay the subordinated debt securities only if the
subordination provisions of the subordinated indenture otherwise permit payment
at that time. (Section 1505 of Subordinated Indenture)
As a result of the subordination provisions contained in the subordinated
indenture, in the event of insolvency, our creditors who are holders of senior
indebtedness may recover more, ratably, than the holders of subordinated debt
securities. In addition, our creditors who are not holders of senior
indebtedness may recover less, ratably, than holders of senior indebtedness and
may recover more, ratably, than the holders of subordinated indebtedness. It's
important to keep this in mind if you decide to hold our subordinated debt
securities.
17
<PAGE>
DESCRIPTION OF THE PREFERRED STOCK
The following is a description of general terms and provisions of the
preferred stock. The particular terms of any series of preferred stock will be
described in the applicable prospectus supplement.
All of the terms of the preferred stock are, or will be, contained in our
Certificate of Incorporation and the certificate of amendment relating to each
series of the preferred stock, which will be filed with the Securities and
Exchange Commission at or before the time we issue a series of the preferred
stock.
We are authorized to issue up to 150,000,000 shares of preferred stock, par
value $.01 per share. As of March 31, 2000, 2,546,011 shares of Series A 7 1/2%
Preferred Stock, liquidation preference $100 per share, were outstanding.
Subject to limitations prescribed by law, the Board of Directors is authorized
at any time to:
- issue one or more series of preferred stock;
- determine the designation for any series by number, letter or title that
shall distinguish the series from any other series of preferred stock; and
- determine the number of shares in any series.
The Board of Directors is authorized to determine, for each series of
preferred stock, and the prospectus supplement will set forth with respect to
the series the following information:
- whether dividends on that series of preferred stock will be cumulative,
noncumulative or partially cumulative;
- the dividend rate (or method for determining the rate);
- the liquidation preference per share of that series of preferred stock, if
any;
- any conversion provisions applicable to that series of preferred stock;
- any redemption or sinking fund provisions applicable to that series of
preferred stock;
- the voting rights of that series of preferred stock, if any; and
- the terms of any other preferences or rights, if any, applicable to that
series of preferred stock.
The preferred stock, when issued, will be fully paid and nonassessable.
DIVIDENDS
Holders of preferred stock will be entitled to receive, when, as and if
declared by our Board of Directors, cash dividends at the rates and on the dates
as set forth in the prospectus supplement. Generally, no dividends will be
declared or paid on any series of preferred stock unless full dividends for all
series of preferred stock, including any cumulative dividends still owing, have
been or contemporaneously are declared and paid. When those dividends are not
paid in full, dividends will be declared pro-rata so that the amount of
dividends declared per share on each series of preferred stock will bear to each
other series the same ratio that accrued dividends per share for each respective
series of preferred stock bear to aggregate accrued dividends for all
outstanding shares of preferred stock. In addition, generally, unless all
dividends on the preferred stock have been paid, no dividends will be declared
or paid on the capital stock and we may not redeem or purchase any capital
stock.
Payment of dividends on any series of preferred stock may be restricted by
loan agreements, indentures and other transactions we may enter into.
CONVERTIBILITY
No series of preferred stock will be convertible into, or exchangeable for,
other securities or property except as set forth in the applicable prospectus
supplement.
18
<PAGE>
REDEMPTION AND SINKING FUND
No series of preferred stock will be redeemable or receive the benefit of a
sinking fund except as set forth in the applicable prospectus supplement.
Shares of preferred stock that we redeem or otherwise reacquire will resume
the status of authorized and unissued shares of preferred stock undesignated as
to series, and will be available for subsequent issuance. There are no
restrictions on repurchase or redemption of the preferred stock while there is
any arrearage on sinking fund installments except as may be set forth in a
prospectus supplement.
LIQUIDATION
In the event we voluntarily or involuntarily liquidate, dissolve or wind up
our affairs, the holders of each series of preferred stock will be entitled to
receive the liquidation preference per share specified in the prospectus
supplement, plus any accrued and unpaid dividends. Holders of preferred stock
will be entitled to receive these amounts before any distribution is made to the
holders of capital stock.
If the amounts payable to preferred stockholders are not paid in full, the
holders of preferred stock will share ratably in any distribution of assets
based upon the aggregate liquidation preference for all outstanding shares for
each series. After the holders of shares of preferred stock are paid in full,
they will have no right or claim to any of our remaining assets.
Neither the par value nor the liquidation preference is indicative of the
price at which the preferred stock will actually trade on or after the date of
issuance.
VOTING
Generally, the holders of preferred stock will not be entitled to vote.
However, if the equivalent of six quarterly dividends payable on any series of
preferred stock is in default, the number of directors constituting our Board of
Directors will be increased by two and the holders of such series of preferred
stock, voting together as a class with all other series of preferred stock
entitled to vote on such election of directors, will be entitled to elect those
additional directors. In the event of this type of default, the Board of
Directors will call a special meeting for the holders of all affected series
within 10 business days of the default for the purpose of electing the
additional directors. Alternatively, the holders of record of a majority of the
outstanding shares of all affected series who are entitled to participate in the
election of directors may elect those additional directors by written consent.
If all accumulated dividends on any series of preferred stock have been paid in
full, the holders of shares of that series will no longer have the right to vote
on directors, the term of office of each director so elected will terminate, and
the number of our directors will, without further action, be reduced by two.
Unless we otherwise specify in a prospectus supplement, the vote of the
holders of a majority of the outstanding shares of each series of preferred
stock voting together as a class, is required to authorize any amendment,
alteration or repeal of our Certificate of Incorporation or any certificate of
amendment which would adversely affect the powers, preferences, or special
rights of the preferred stock including authorizing any class of stock with
superior dividend and liquidation preferences.
NO OTHER RIGHTS
The shares of a series of preferred stock will not have any preemptive
rights, preferences, voting powers or relative, participating, optional or other
special rights except as set forth above or in the prospectus supplement, the
Certificate of Incorporation or certificate of amendment or as otherwise
required by law.
TRANSFER AGENT AND REGISTRAR
We'll designate the transfer agent for each series of preferred stock in the
prospectus supplement.
DESCRIPTION OF THE DEPOSITARY SHARES
We may, at our option, elect to offer fractional shares of preferred stock,
rather than full shares of preferred stock. If we do, we will issue to the
public receipts for depositary shares,
19
<PAGE>
and each of these depositary shares will represent a fraction of a share of a
particular series of preferred stock. Each owner of a depositary share will be
entitled, in proportion to the applicable fractional interest in shares of
preferred stock underlying that depositary share, to all rights and preferences
of the preferred stock underlying that depositary share. Those rights include
dividend, voting, redemption and liquidation rights.
The shares of preferred stock underlying the depositary shares will be
deposited with a depositary under a deposit agreement between us, the depositary
and the holders of the depositary receipts evidencing the depositary shares. The
depositary will be a bank or trust company selected by us. The depositary will
also act as the transfer agent, registrar and dividend disbursing agent for the
depositary shares.
Holders of depositary receipts agree to be bound by the deposit agreement,
which requires holders to take certain actions such as filing proof of residence
and paying certain charges.
The following is a summary of the most important terms of the depositary
shares. The deposit agreement, our Certificate of Incorporation and the
certificate of amendment for the applicable series of preferred stock that are,
or will be, filed with the SEC will set forth all of the terms relating to the
depositary shares.
DIVIDENDS
The depositary will distribute all cash dividends or other cash
distributions received relating to the series of preferred stock underlying the
depositary shares, to the record holders of depositary receipts in proportion to
the number of depositary shares owned by those holders on the relevant record
date. The record date for the depositary shares will be the same date as the
record date for the preferred stock.
In the event of a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary receipts
that are entitled to receive the distribution. However, if the depositary
determines that it is not feasible to make the distribution, the depositary may,
with our approval, adopt another method for the distribution. The method may
include selling the property and distributing the net proceeds to the holders.
LIQUIDATION PREFERENCE
In the event of our voluntary or involuntary liquidation, dissolution or
winding up, the holders of each depositary share will be entitled to receive the
fraction of the liquidation preference accorded each share of the applicable
series of preferred stock, as set forth in the applicable prospectus supplement.
REDEMPTION
If a series of preferred stock underlying the depositary shares is subject
to redemption, the depositary shares will be redeemed from the proceeds received
by the depositary resulting from the redemption, in whole or in part, of
preferred stock held by the depositary. Whenever we redeem any preferred stock
held by the depositary, the depositary will redeem, as of the same redemption
date, the number of depositary shares representing the preferred stock so
redeemed. The depositary will mail the notice of redemption to the record
holders of the depositary receipts promptly upon receiving the notice from us
and not less than 35 nor more than 60 days prior to the date fixed for
redemption of the preferred stock and the depositary shares.
VOTING
Upon receipt of notice of any meeting at which the holders of preferred
stock are entitled to vote, the depositary will mail the information contained
in the notice of meeting to the record holders of the depositary receipts
underlying the preferred stock. Each record holder of those depositary receipts
on the record date will be entitled to instruct the depositary as to the
exercise of the voting rights pertaining to the amount of preferred stock
underlying that holder's depositary shares. The record date for the depositary
shares will be the same date as the record date for the preferred stock. The
depositary will try, as far as practicable, to vote the preferred stock
underlying the depositary
20
<PAGE>
shares in a manner consistent with the instructions of the holders of the
depositary receipts. We will agree to take all action which may be deemed
necessary by the depositary in order to enable the depositary to do so. The
depositary will not vote the preferred stock to the extent that it does not
receive specific instructions from the holders of depositary receipts.
WITHDRAWAL OF PREFERRED STOCK
Owners of depositary shares are entitled, upon surrender of depositary
receipts at the principal office of the depositary and payment of any unpaid
amount due the depositary, to receive the number of whole shares of preferred
stock underlying the depositary shares. Partial shares of preferred stock will
not be issued. These holders of preferred stock will not be entitled to deposit
the shares under the deposit agreement or to receive depositary receipts
evidencing depositary shares for the preferred stock.
AMENDMENT AND TERMINATION OF DEPOSIT AGREEMENT
The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may be amended at any time and from time to
time by agreement between us and the depositary. However, any amendment which
materially and adversely alters the rights of the holders of depositary shares,
other than any change in fees, will not be effective unless the amendment has
been approved by at least a majority of the depositary shares then outstanding.
The deposit agreement may be terminated by us or the depositary only if:
- all outstanding depositary shares have been redeemed; or
- there has been a final distribution relating to the preferred stock in
connection with our dissolution, and that distribution has been made to
all the holders of depositary shares.
CHARGES OF DEPOSITARY
We'll pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We'll also pay charges
of the depositary in connection with the initial deposit of the preferred stock
and the initial issuance of the depositary shares, any redemption of the
preferred stock and all withdrawals of preferred stock by owners of depositary
shares. Holders of depositary receipts will pay transfer, income and other taxes
and governmental charges and certain other charges as provided in the deposit
agreement. In certain circumstances, the depositary may refuse to transfer
depositary shares, withhold dividends and distributions, and sell the depositary
shares evidenced by the depositary receipt, if the charges are not paid.
REPORTS TO HOLDERS
The depositary will forward to the holders of depositary receipts all
reports and communications we deliver to the depositary that we are required to
furnish to the holders of the preferred stock. In addition, the depositary will
make available for inspection by holders of depositary receipts at the principal
office of the depositary--and at other places as it thinks is advisable--any
reports and communications we deliver to the depositary as the holder of
preferred stock.
LIABILITY AND LEGAL PROCEEDINGS
Neither we nor the depositary will be liable if either of us are prevented
or delayed by law or any circumstance beyond our control in performing our
obligations under the deposit agreement. Our obligations and those of the
depositary will be limited to performance in good faith of our duties under the
deposit agreement. Neither we nor the depositary will be obligated to prosecute
or defend any legal proceeding in respect of any depositary shares or preferred
stock unless satisfactory indemnity is furnished. We and the depositary may rely
on written advice of counsel or accountants, on information provided by holders
of depositary receipts or other persons believed in good faith to be competent
to give such information and on
21
<PAGE>
documents believed to be genuine and to have been signed or presented by the
proper persons.
RESIGNATION AND REMOVAL OF DEPOSITARY
The depositary may resign at any time by delivering a notice to us of its
election to do so. We may also remove the depositary at any time. Any such
resignation or removal will take effect upon the appointment of a successor
depositary and its acceptance of such appointment. The successor depositary must
be appointed within 60 days after delivery of the notice for resignation or
removal. In addition, the successor depositary must be a bank or trust company
having its principal office in the United States of America and must have a
combined capital and surplus of at least $150,000,000.
FEDERAL INCOME TAX CONSEQUENCES
Owners of the depositary shares will be treated for Federal income tax
purposes as if they were owners of the preferred stock underlying the depositary
shares. Accordingly, the owners will be entitled to take into account for
Federal income tax purposes income and deductions to which they would be
entitled if they were holders of the preferred stock. In addition:
- no gain or loss will be recognized for Federal income tax purposes upon
the withdrawal of preferred stock in exchange for depositary shares;
- the tax basis of each share of preferred stock to an exchanging owner of
depositary shares will, upon the exchange, be the same as the aggregate
tax basis of the depositary shares exchanged; and
- the holding period for preferred stock in the hands of an exchanging owner
of depositary shares will include the period during which the person owned
the depositary shares.
DESCRIPTION OF THE CAPITAL STOCK
As of the date of this prospectus, we are authorized to issue up to
4,687,500,000 shares of capital stock, $0.20 par value per share. As of
March 31, 2000, 1,772,836,653 shares of capital stock were outstanding.
DIVIDENDS. Holders of capital stock are entitled to receive dividends, in
cash, securities, or property, as may from time to time be declared by our Board
of Directors, subject to the rights of the holders of the preferred stock.
VOTING. Each holder of capital stock is entitled to one vote per share on
all matters requiring a vote of the stockholders.
RIGHTS UPON LIQUIDATION. In the event of our voluntary or involuntary
liquidation, dissolution, or winding up, the holders of capital stock will be
entitled to share equally in our assets available for distribution after payment
in full of all debts and after the holders of preferred stock have received
their liquidation preferences in full.
MISCELLANEOUS. Shares of capital stock are not redeemable and have no
subscription, conversion or preemptive rights.
DESCRIPTION OF THE WARRANTS
We may issue warrants for the purchase of debt securities, preferred stock
or capital stock. Warrants may be issued independently or together with our debt
securities, preferred stock or capital stock and may be attached to or separate
from any offered securities. Each series of warrants will be issued under a
separate warrant agreement to be entered into between us and a bank or trust
company, as warrant agent. The warrant agent will act solely as our agent in
connection with the warrants and will not have any obligation or relationship of
agency or trust for or with any holders or beneficial owners of warrants. A copy
of the warrant agreement will be filed with the SEC in connection with the
offering of warrants.
DEBT WARRANTS
The prospectus supplement relating to a particular issue of warrants to
issue debt securities will describe the terms of those warrants, including the
following:
- the title of the warrants;
22
<PAGE>
- the offering price for the warrants, if any;
- the aggregate number of the warrants;
- the designation and terms of the debt securities purchasable upon exercise
of the warrants;
- if applicable, the designation and terms of the debt securities that the
warrants are issued with and the number of warrants issued with each debt
security;
- if applicable, the date from and after which the warrants and any debt
securities issued with them will be separately transferable;
- the principal amount of debt securities that may be purchased upon
exercise of a warrant and the price at which the debt securities may be
purchased upon exercise;
- the dates on which the right to exercise the warrants will commence and
expire;
- if applicable, the minimum or maximum amount of the warrants that may be
exercised at any one time;
- whether the warrants represented by the warrant certificates or debt
securities that may be issued upon exercise of the warrants will be issued
in registered or bearer form;
- information relating to book-entry procedures, if any;
- the currency or currency units in which the offering price, if any, and
the exercise price are payable;
- if applicable, a discussion of material United States federal income tax
considerations;
- anti-dilution provisions of the warrants, if any;
- redemption or call provisions, if any, applicable to the warrants; and
- any additional terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants.
STOCK WARRANTS
The prospectus supplement relating to a particular issue of warrants to
issue capital stock or preferred stock will describe the terms of the warrants,
including the following:
- the title of the warrants;
- the offering price for the warrants, if any;
- the aggregate number of the warrants;
- the designation and terms of the capital stock or preferred stock that may
be purchased upon exercise of the warrants;
- if applicable, the designation and terms of the securities that the
warrants are issued with and the number of warrants issued with each
security;
- if applicable, the date from and after which the warrants and any
securities issued with the warrants will be separately transferable;
- the number of shares of capital stock or preferred stock that may be
purchased upon exercise of a warrant and the price at which the shares may
be purchased upon exercise;
- the dates on which the right to exercise the warrants commence and expire;
- if applicable, the minimum or maximum amount of the warrants that may be
exercised at any one time;
- the currency or currency units in which the offering price, if any, and
the exercise price are payable;
- if applicable, a discussion of material United States federal income tax
considerations;
- antidilution provisions of the warrants, if any;
- redemption or call provisions, if any, applicable to the warrants;
- any additional terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants; and
23
<PAGE>
- any other information we think is important about the warrants.
PLAN OF DISTRIBUTION
We may sell the securities:
- through underwriters;
- through agents; or
- directly to purchasers.
We'll describe in a prospectus supplement, the particular terms of the
offering of the securities, including the following:
- the names of any underwriters;
- the purchase price and the proceeds we will receive from the sale;
- any underwriting discounts and other items constituting underwriters'
compensation;
- any initial public offering price and any discounts or concessions allowed
or reallowed or paid to dealers;
- any securities exchanges on which the securities of the series may be
listed; and
- any other information we think is important.
If we use underwriters in the sale, the securities will be acquired by the
underwriters for their own account and may be resold from time to time in one or
more transactions, including negotiated transactions, either at a fixed public
offering price, or at varying prices determined at the time of sale.
The securities may be either offered to the public through underwriting
syndicates represented by managing underwriters or by underwriters without a
syndicate. The obligations of the underwriters to purchase securities will be
subject to conditions precedent, and the underwriters will be obligated to
purchase all the securities of a series if any are purchased. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
Securities may be sold directly by us or through agents designated by us
from time to time. Any agent involved in the offer or sale of the securities for
which this prospectus is delivered will be named, and any commissions payable by
us to that agent will be set forth, in the prospectus supplement. Unless
otherwise indicated in the prospectus supplement, any agent will be acting on a
best efforts basis for the period of its appointment.
We may authorize agents or underwriters to solicit offers by certain types
of institutions to purchase securities from us at the public offering price set
forth in the prospectus supplement pursuant to delayed delivery contracts. These
contracts will provide for payment and delivery on a specified date in the
future. The conditions to these contracts and the commissions payable for
solicitation of such contracts will be set forth in the applicable prospectus
supplement.
Agents and underwriters may be entitled to indemnification by us against
civil liabilities arising out of this prospectus, including liabilities under
the Securities Act of 1933, or to contribution for payments which the agents or
underwriters may be required to make relating to those liabilities. Agents and
underwriters may be customers of, engage in transactions with, or perform
services for, us in the ordinary course of business.
Each series of securities will be a new issue of securities with no
established trading market. Any underwriter may make a market in the securities,
but won't be obligated to do so, and may discontinue any market making at any
time without notice. We can't and won't give any assurances as to the liquidity
of the trading market for any of our securities.
LEGAL OPINIONS
The legality of the securities will be passed upon by Mr. David S.
Hershberg, our Vice President and Assistant General Counsel. Mr. Hershberg,
together with members of his family, owns, has options to purchase and has other
interests in shares of our common stock.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K for the year ended December 31, 1999
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
24
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following statement sets forth the estimated amounts of expenses, other
than underwriting discounts, to be borne by us in connection with the offerings
described in this Registration Statement:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $2,640,000
Trustee's Fees.............................................. 80,000
Printing and Engraving Expenses............................. 150,000
Rating Agency Fees.......................................... 700,000
Accounting Fees and Expenses................................ 350,000
Legal Fees and Expenses..................................... 200,000
Blue Sky Fees and Expenses.................................. 10,000
Listing Fees................................................ 20,000
Miscellaneous Expenses...................................... 150,000
----------
Total Expenses.......................................... $4,300,000
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our By-Laws (Article VI, Section 6) provide the following:
"The Corporation shall, to the fullest extent permitted by applicable
law as in effect at any time, indemnify any person made, or threatened to be
made, a party to an action or proceeding whether civil or criminal
(including an action or proceeding by or in the right of the Corporation or
any other corporation of any type or kind, domestic or foreign, or any
partnership, joint venture, trust, employee benefit plan or other
enterprise, for which any director or officer of the Corporation served in
any capacity at the request of the Corporation), by reason of the fact that
such person or such person's testator or intestate was a director or officer
of the Corporation, or served such other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise in any capacity,
against judgments, fines, amounts paid in settlement and reasonable
expenses, including attorneys' fees actually and necessarily incurred as a
result of such action or proceeding, or any appeal therein. Such
indemnification shall be a contract right and shall include the right to be
paid advances of any expenses incurred by such person in connection with
such action, suit or proceeding, consistent with the provisions of
applicable law in effect at any time. Indemnification shall be deemed to be
"permitted" within the meaning of the first sentence hereof if it is not
expressly prohibited by applicable law as in effect at the time."
Our Certificate of Incorporation (Article ELEVEN) provides the following:
"Pursuant to Section 402(b) of the Business Corporation Law of the State
of New York, the liability of the Corporation's directors to the Corporation
or its stockholders for damages for breach of duty as a director shall be
eliminated to the fullest extent permitted by the Business Corporation Law
of the State of New York, as it exists on the date hereof or as it may
hereafter be amended. No amendment to or repeal of this Article shall apply
to or have any effect on the liability or alleged liability of any director
of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment or repeal."
With certain limitations, Sections 721 through 726 of the New York Business
Corporation Law permit a corporation to indemnify a director or officer made a
party to an action (i) by a corporation or in its right in order to procure a
judgment in its favor unless he shall have breached his duties, or
II-1
<PAGE>
(ii) other than an action by or in the right of the corporation in order to
procure a judgment in its favor, if such director or officer acted in good faith
and in a manner he reasonably believed to be in or, in certain cases not opposed
to such corporation's interest and additionally, in criminal actions, had no
reasonable cause to believe his conduct was unlawful.
In addition, we maintain directors' and officers' liability insurance
policies.
ITEM 16. EXHIBITS.
<TABLE>
<S> <C>
(1)(a) Proposed Form of Underwriting Agreement.*
(1)(b) Proposed Form of Agency Agreement.*
(3)(a) By-laws*********
(4)(a) Certificate of Incorporation.***
(4)(b) Indenture dated as of October 1, 1993, between us and The
Chase Manhattan Bank (National Association) as Trustee.**
(4)(c) First Supplemental Indenture dated as of December 15, 1995,
to Indenture dated as of October 1, 1993, between us and The
Chase Manhattan Bank (National Association).******
(4)(d) Form of Subordinated Indenture.******
(4)(h) Form of Temporary Global Fixed Rate Bearer Medium-Term
Note.**
(4)(i) Form of Definitive Global Fixed Rate Bearer Medium-Term
Note.**
(4)(j) Form of Definitive Fixed Rate Bearer Medium-Term Note.**
(4)(k) Form of Fixed Rate Debt Security with Optional Redemption.**
(4)(l) Form of Fixed Rate Debt Security with Optional Redemption
and Sinking Fund.**
(4)(m) Form of Extendible Debt Security with Optional Redemption.**
(4)(n) Form of Zero Coupon Debt Security with Optional
Redemption.**
(4)(o) Form of Original Issue Discount Debt Security with Optional
Redemption.**
(4)(p) Form of Certificate of Amendment.****
(4)(q) Form of Preferred Stock Certificate.****
(4)(r) Form of Deposit Agreement.****
(4)(s) Form of Depositary Receipt (included as Exhibit A to the
Form of Deposit Agreement).****
(4)(t) Form of Warrant Agreement.*****
(4)(u) Form of Warrant Certificate.*****
(4)(aa) Form of Floating Rate Non-Redeemable Medium Term Note*******
(4)(bb) Form of Floating Rate Redeemable Medium Term Note*******
(4)(cc) Form of Fixed Rate Redeemable Medium Term Note*******
(4)(dd) Form of Floating Rate Non-Redeemable Medium Term Note*******
(4)(ee) Form of Fixed Rate Redeemable Medium Term Note*******
(5) Opinion of IBM Legal Counsel (David S. Hershberg, Esq.)*
(12) Computation of Ratios of Earnings to Fixed Charges and
Earnings to Combined Fixed Charges and Preferred Stock
Dividends.********
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C>
(23)(a) Consent of Independent Accountants.*
(23)(b) Consent of Counsel (included in Exhibit 5).*
(24)(a) Powers of Attorney.*
(24)(b) Certified copy of a resolution adopted by our Board of
Directors authorizing execution of the registration
statement by power of attorney.*
(25)(a) Statement of Eligibility and Qualification on Form T-1 of
The Chase Manhattan Bank to act as Trustee under the Senior
Indenture dated October 1, 1993.*
(25)(b) Statement of Eligibility and Qualification on Form T-1 of
the Subordinated Trustee to act as Trustee under the
Subordinated Indenture.*****
</TABLE>
- ------------------------
<TABLE>
<S> <C>
* Filed herewith.
** Incorporated by reference to our Registration Statement on
Form S-3 (Registration No. 33-50537).
*** Incorporated by reference to Exhibit 3(i) of our Form 8-K
filed April 28, 1999.
**** Incorporated by reference to our Registration Statement on
Form S-3 (Registration No. 33-49475).
***** To be filed as an Exhibit to a report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934.
****** Incorporated by reference to our Registration Statement on
Form S-3 (Registration No. 33-65119).
******* Incorporated by reference to our Current Report on Form 8-K
dated March 8, 1996.
******** Incorporated by reference to Exhibit I of our Form 10-K for
the fiscal year ended December 31, 1999, and to exhibit 12
of our Form 10-Q for the fiscal quarter ended March 31,
2000.
********* Incorporated by reference to Exhibit 3 of our Form 10-Q for
the fiscal quarter ended September 30, 1998.
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement (other than as
provided in the proviso and instructions to Item 512(a) of Regulation S-K)
(i) to include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933; (ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that
is incorporated by reference in the registration statement shall be
II-3
<PAGE>
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(5) To file an application for the purpose of determining the
eligibility of the trustee to act under subsection (a) of Section 310 of the
Trust Indenture Act in accordance with the rules and regulations prescribed
by the Commission under Section 305(b)(2) of the Trust Indenture Act.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 15 above, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person in the successful defense of any action, suit or proceeding) is asserted
by such officer, director or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether or not such indemnification
by it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 15th day of May, 2000.
<TABLE>
<S> <C> <C>
INTERNATIONAL BUSINESS MACHINES CORPORATION
By: *
-----------------------------------------
Louis V. Gerstner, Jr.
CHAIRMAN OF THE BOARD OF DIRECTORS
AND CHIEF EXECUTIVE OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chairman of the Board and Chief
------------------------------------------- Executive Officer (Principal May 15, 2000
Louis V. Gerstner, Jr. Executive Officer)
* Senior Vice President and Chief
------------------------------------------- Financial Officer (Principal May 15, 2000
John R. Joyce Financial Officer)
* Vice President and Controller
------------------------------------------- (Principal Accounting Officer) May 15, 2000
Mark Loughridge
* Director
------------------------------------------- May 15, 2000
Cathleen Black
* Director
------------------------------------------- May 15, 2000
Kenneth I. Chenault
* Director
------------------------------------------- May 15, 2000
Juergen Dormann
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Director
------------------------------------------- May 15, 2000
Nannerl O. Keohane
* Director
------------------------------------------- May 15, 2000
Charles F. Knight
* Director
------------------------------------------- May 15, 2000
Minoru Makihara
* Director
------------------------------------------- May 15, 2000
Lucio A. Noto
* Director
------------------------------------------- May 15, 2000
John B. Slaughter
* Director
------------------------------------------- May 15, 2000
Alex Trotman
* Director
------------------------------------------- May 15, 2000
Lodewijk C. van Wachem
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ ANDREW BONZANI
--------------------------------------
Andrew Bonzani
ATTORNEY-IN-FACT
</TABLE>
II-6
<PAGE>
EXHIBIT (1)(a)
INTERNATIONAL BUSINESS MACHINES CORPORATION
Debt Securities
UNDERWRITING AGREEMENT
New York, New York
To the Representatives named in Schedule I hereto
of the Underwriters named in Schedule II hereto
Dear Sirs:
International Business Machines Corporation, a New York corporation (the
"Company"), proposes to sell to the underwriters named in Schedule II hereto
(the "Underwriters"), for whom you are acting as representatives (the
"Representatives"), the principal amount of its Securities identified in
Schedule I hereto (the "Securities"), to be issued under an indenture dated as
of October 1, 1993 (the "Indenture"), between the Company and The Chase
Manhattan Bank, as trustee (the "Trustee"), as supplemented by the First
Supplemental Indenture dated as of December 15, 1995. If the firm or firms
listed in Schedule II hereto include only the firm or firms listed in Schedule I
hereto, then the terms "Underwriters" and "Representatives", as used herein
shall each be deemed to refer to such firm or firms.
1. Representations and Warranties. The Company represents and warrants
to, and agrees with each Underwriter that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933 (the "Act") and has filed with the Securities and
Exchange Commission (the "Commission") a registration statement or statements
(the file number or numbers of which is or are set forth in Schedule I hereto),
including a related preliminary prospectus, on such Form for the registration
under the Act of the offering and sale of the Securities. The Company may have
filed one or more amendments thereto, including the related preliminary
prospectus, and has filed a preliminary prospectus in accordance with Rules 415
and 424(b)(5), each of which has previously been furnished to you. The Company
will next file with the Commission one of the following: (i) prior to
effectiveness of such registration statement, a further amendment thereto,
including the form of final prospectus, (ii) a final prospectus
<PAGE>
in accordance with Rules 430A and 424(b)(1) or (4), or (iii) a final prospectus
in accordance with Rules 415 and 424(b)(2) or (5). In the case of clause (ii),
the Company has included in such registration statement or statements, as
amended at the Effective Date, all information (other than Rule 430A
Information) required by the Act and the rules thereunder to be included in the
Prospectus with respect to the Securities and the offering thereof. As filed,
such amendment and form of final prospectus, or such final prospectus, shall
include all Rule 430A Information and, except to the extent the Representatives
shall agree in writing to a modification, shall be in all substantive respects
in the form furnished to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific additional
information and other changes (beyond that contained in the latest Preliminary
Prospectus) as the Company has advised you, prior to the Execution Time, will be
included or made therein. If the Registration Statement contains the undertaking
specified by Regulation S-K Item 512(a), the Registration Statement, at the
Execution Time, meets the requirements set forth in Rule 415(a)(1)(x).
The terms which follow, when used in this Agreement, shall have the
meanings indicated. The term the "Effective Date" shall mean each date that the
Registration Statement and any post-effective amendment or amendments thereto
became or become effective. "Execution Time" shall mean the date and time that
this Agreement is executed and delivered by the parties hereto. "Preliminary
Prospectus" shall mean any preliminary prospectus referred to in the preceding
paragraph and any preliminary prospectus included in the Registration Statement
at the Effective Date that omits Rule 430A Information. "Prospectus" shall mean
the prospectus relating to the Securities that is first filed pursuant to Rule
424(b) after the Execution Time or, if no filing pursuant to Rule 424(b) is
required, shall mean the form of final prospectus included in the Registration
Statement at the Effective Date. "Registration Statement" shall mean the
registration statement or statements referred to in the preceding paragraph,
including incorporated documents as of the filing of the Company's Quarterly
Report on Form 10-Q for the three month period ended __________________,
exhibits and financial statements, in the form in which it or they has or have
or shall become effective and, in the event any post-effective amendment thereto
becomes effective prior to the Closing Date (as hereinafter defined), shall also
mean such registration statement or statements as so amended. Such term shall
include Rule 430A Information deemed to be included therein at the Effective
Date as provided by Rule 430A. "Rule 415", "Rule 424", "Rule 430A" and
"Regulation S-K" refer to such rules under the Act. "Rule 430A Information"
means information with respect to the Securities and the offering thereof
permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A. Any reference herein to the Registration
Statement, a Preliminary Prospectus or the
2
<PAGE>
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed under the
Securities Exchange Act of 1934 (the "Exchange Act") on or before the effective
date of the Registration Statement or the date of such Preliminary Prospectus or
the Prospectus, as the case may be; and any reference herein to the terms
"amend", "amendment" or "supplement" with respect to the Registration Statement,
any Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act after the effective
date of the Registration Statement, or the date of any Preliminary Prospectus or
the Prospectus, as the case may be, deemed to be incorporated therein by
reference.
(b) On the Effective Date, the Registration Statement did or will, and
when the Prospectus is first filed (if required) in accordance with Rule 424(b)
and on the Closing Date, the Prospectus (and any supplements thereto) will,
comply in all material respects with the applicable requirements of the Act and
the Exchange Act and the respective rules thereunder; on the Effective Date and
on the Closing Date the Indenture did or will comply in all material respects
with the requirements of the Trust Indenture Act of 1939 (the "Trust Indenture
Act") and the rules thereunder; on the Effective Date, the Registration
Statement did not or will not contain any untrue statement of a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; and, on the Effective Date, the Prospectus, if not filed
pursuant to Rule 424(b), did not or will not, and on the date of any filing
pursuant to Rule 424(b) and on the Closing Date, the Prospectus (together with
any supplement thereto) will not, include any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no representations or
warranties as to (i) that part of the Registration Statement which shall
constitute the Statement of Eligibility and Qualification (Form T-1) under the
Trust Indenture Act of the Trustee or (ii) the information contained in or
omitted from the Registration Statement or the Prospectus (or any supplement
thereto) in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Underwriter through the
Representatives specifically for use in connection with the preparation of the
Registration Statement or the Prospectus (or any supplement thereto).
2. Purchase and Sale. Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Company agrees to
sell to each Underwriter, and each Underwriter agrees, severally and not
jointly, to purchase from the Company, at the purchase price set forth in
Schedule I hereto, the respective principal amounts
3
<PAGE>
of the Securities set forth opposite each respective Underwriter's name in
Schedule II hereto, except that, if Schedule I hereto provides for the sale of
Securities pursuant to delayed delivery arrangements, the respective principal
amounts of Securities to be purchased by the Underwriters shall be as set forth
in Schedule II hereto, less the respective amounts of Contract Securities
determined as provided below. Securities to be purchased by the Underwriters are
herein sometimes called the "Underwriters' Securities" and Securities to be
purchased pursuant to Delayed Delivery Contracts as hereinafter provided are
herein called "Contract Securities".
If so provided in Schedule I hereto, the Underwriters are authorized to
solicit offers to purchase Securities from the Company pursuant to delayed
delivery contracts ("Delayed Delivery Contracts"), substantially in the form of
Schedule III hereto but with such changes therein as the Company may authorize
or approve. The Underwriters will endeavor to make such arrangements and, as
compensation therefor, the Company will pay to the Representatives, for the
account of underwriters, on the Closing Date, the percentage set forth in
Schedule I hereto of the principal amount of the Securities for which Delayed
Delivery Contracts are made. Delayed Delivery Contracts are to be with
institutional investors, including commercial and savings banks, insurance
companies, pension funds, investment companies and educational and charitable
institutions. The Company will make Delayed Delivery Contracts in all cases
where sales of Contract Securities arranged by the Underwriters have been
approved by the Company but, except as the Company may otherwise agree, each
such Delayed Delivery Contract must be for not less than the minimum principal
amount set forth in Schedule I hereto and the aggregate principal amount of
Contract Securities may not exceed the maximum aggregate principal amount set
forth in Schedule I hereto. The Underwriters will not have any responsibility in
respect of the validity or performance of Delayed Delivery Contracts. The
principal amount of Securities to be purchased by each Underwriter as set forth
in Schedule II hereto shall be reduced by an amount which shall bear the same
proportion to the total principal amount of Contract Securities as the principal
amount of Securities set forth opposite the name of such Underwriter bears to
the aggregate principal amount set forth in Schedule II hereto, except to the
extent that you determine that such reduction shall be otherwise than in such
proportion and so advise the Company in writing; provided, however, that the
total principal amount of Securities to be purchased by all Underwriters shall
be the aggregate principal amount set forth in Schedule II hereto, less the
aggregate principal amount of Contract Securities.
3. Delivery and Payment. Delivery of and payment for the Underwriters'
Securities shall be made at the office, on the date and at the time specified in
Schedule I hereto, which date and time may be
4
<PAGE>
postponed by agreement between the Representatives and the Company or as
provided in Section 8 hereof (such date and time of delivery and payment for the
Securities being called the "Closing Date"). Delivery of the Underwriters'
Securities shall be made to the Representatives for the respective accounts of
the several Underwriters against payment by the several Underwriters through the
Representatives of the purchase price thereof to or upon the order of the
Company by certified or official bank check or checks payable, or wire
transfers, in immediately available funds. The Debentures shall be delivered in
definitive global form through the facilities of The Depository Trust Company.
4. Agreements.
(A) The Company agrees with the several Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement, and any amendment thereof, if not effective at the Execution Time, to
become effective. If the Registration Statement has become or becomes effective
pursuant to Rule 430A, or filing of the Prospectus is otherwise required under
Rule 424(b), the Company will file the Prospectus, properly completed, pursuant
to the applicable paragraph of Rule 424(b) within the time period prescribed and
will provide evidence satisfactory to the Representatives of such timely filing.
The Company will promptly advise the Representatives (i) when the Registration
Statement shall have become effective, (ii) when any amendment to the
Registration Statement relating to the Securities shall have become effective,
(iii) of any request by the Commission for any amendment of the Registration
Statement or amendment of or supplement to the Prospectus or for any additional
information, (iv) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (v) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Securities for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose. The Company will use its best efforts to
prevent the issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof. The Company will not file any amendment of the
Registration Statement or supplement to the Prospectus unless the Company has
furnished you a copy for your review prior to filing and will not file any such
proposed amendment or supplement to which you reasonably object.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein in the light of the
5
<PAGE>
circumstances under which they were made not misleading, or if it shall be
necessary to amend or supplement the Prospectus to comply with the Act or the
Exchange Act or the respective rules thereunder, the Company will give the
Representatives immediate notice of the occurrence of such event and promptly
will prepare and file with the Commission, subject to the first sentence of
paragraph (a) of this Section 4, an amendment or supplement which will correct
such statement or omission or an amendment which will effect such compliance.
(c) The Company will make generally available to its security holders and
to the Representatives as soon as practicable, but not later than 45 days after
the end of the 12-month period beginning at the end of the current fiscal
quarter of the Company, an earnings statement (which need not be audited) of the
Company and its subsidiaries, covering a period of at least 12 months beginning
after the end of the current fiscal quarter of the Company, which will satisfy
the provisions of Section 11(a) of the Act.
(d) The Company will furnish to the Representatives and counsel for the
Underwriters, without charge, copies of the Registration Statement (including
exhibits thereto) and each amendment thereto which shall become effective on or
prior to the Closing Date and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Act, as many copies of any
Preliminary Final Prospectus and the Final Prospectus and any amendments thereof
and supplements thereto as the Representatives may reasonably request.
(e) The Company will arrange for the qualification of the Securities for
sale under the laws of such jurisdictions as the Representatives may designate,
will maintain such qualifications in effect so long as required for the
distribution of the Securities and will arrange for the determination of the
legality of the Securities for purchase by institutional investors.
(f) Until the earlier of the day on which the distribution of the
Securities is completed or the business day following the Closing Date, the
Company will not, without the consent of the Representatives, offer or sell, or
announce the offering of, any debt securities covered by the Registration
Statement or any other registration statement filed under the Act.
(B) The several Underwriters agree with the Company that:
(a) The several Underwriters will pay the expenses of printing,
distributing and binding all documents relating to the offering.
6
<PAGE>
(b) The several Underwriters will pay the reasonable fees and
disbursements of outside counsel for the Company, the Underwriter and the
Trustee relating to the offering.
(c) The several Underwriters will pay the registration fees of the
Securities and Exchange Commission or other governmental agency which are
associated with the issuance of the Securities.
(d) The several underwriters will pay the pro-rata share of the Company's
annual fees, as determined by the Company, relating to the rating of the
Securities, which fees are billed by Moody's Investors Service, Inc. and
Standard & Poor's Ratings Group, a division of the McGraw-Hill Companies, Inc.
(e) The several Underwriters will pay the fees and disbursements of
PricewaterhouseCoopers LLP relating to the preparation of the letter required by
Section 5(e) of this Agreement.
(f) the several Underwriters will pay the reasonable fees and expenses of
The Chase Manhattan Bank, as Trustee.
(g) The several Underwriters will pay any and all fees associated with
listing the Securities on any United States or foreign securities exchange.
(h) The several Underwriters will pay for any and all travel expenses,
road shows, and other expenses incurred by the Company or its counsel in
connection with the marketing of the Securities, including without limitation,
tombstone advertisements, lucite or other mementos, and any other miscellaneous
expenditures reasonably determined by the Company to be appropriate in
connection with the offering of the Securities.
5. Conditions to the Obligations of the Underwriters. The obligations of
the Underwriters to purchase the Underwriters' Securities shall be subject to
the accuracy of the representations and warranties on the part of the Company
contained herein as of the Execution Time, as of the date of the effectiveness
of any amendment to the Registration Statement filed prior to the Closing Date
(including the filing of any document incorporated by reference therein) and as
of the Closing Date, to the accuracy of the statements of the Company made in
any certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
7
<PAGE>
(a) If the Registration Statement has not become effective prior to the
Execution Time, unless the Representatives agree in writing to a later time, the
Registration Statement shall have become effective not later than (i) 6:00 P.M.
New York City time, on the date of determination of the public offering price,
if such determination occurred at or prior to 3:00 P.M. New York City time on
such date or (ii) 12:00 Noon on the business day following the day on which the
public offering price was determined, if such determination occurred after 3:00
P.M. New York City time on such date; if filing of the Prospectus, or any
supplement thereto, is required pursuant to Rule 424(b), the Prospectus shall
have been filed in the manner and within the time period required by Rule
424(b); and no stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and no
proceedings for that purpose shall have been instituted or threatened.
(b) The Company shall have furnished to the Representatives:
(i) the opinion of the General Counsel, an Assistant General Counsel, an
Associate General Counsel or other Senior Counsel of the Company, dated the
Closing Date, to the effect that:
(A) the Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of New
York, with full corporate power and authority to own its properties
and conduct its business as described in the Prospectus, and is duly
qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction within the United
States which requires such qualifications wherein it owns or leases
material properties or conducts material business;
(B) the Securities conform in all material respects to the
description thereof contained in the Prospectus;
(C) the Indenture has been duly authorized, executed and delivered,
has been duly qualified under the Trust Indenture Act, and
constitutes a legal, valid and binding obligation enforceable
against the Company in accordance with its terms (subject to
applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws affecting
creditors' rights generally from time to time in effect, and
subject, as to enforceability, to general principles of equity,
regardless of whether such enforceability is considered in a
proceeding in equity or at law); and the Securities have been duly
authorized and, when executed and authenticated in accordance with
the provisions
8
<PAGE>
of the Indenture and delivered to and paid for by the Underwriters
pursuant to this Agreement, in the case of the Underwriters'
Securities, or by the purchasers thereof pursuant to Delayed
Delivery Contracts, in the case of any Contract Securities, will
constitute legal, valid and binding obligations of the Company
entitled to the benefits of the Indenture (subject to applicable
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, and other similar laws affecting creditors' rights
generally from time to time in effect);
(D) to the best knowledge of such counsel, there is no pending or
threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving
the Company or any of its subsidiaries, of a character required to
be disclosed in the Registration Statement which is not adequately
disclosed in the Prospectus, and there is no franchise, contract or
other document of a character required to be described in the
Registration Statement or Prospectus, or to be filed as an exhibit,
which is not described or filed as required;
(E) the Registration Statement and any amendments thereto have
become effective under the Act; any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) has
been made in the manner and within the time period required by Rule
424(b); to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement, as
amended, has been issued, no proceedings for that purpose have been
instituted or are pending or contemplated under the Act;
(F) this Agreement and any Delayed Delivery Contracts have been duly
authorized, executed and delivered by the Company;
(G) no authorization, approval or other action by, and no notice to,
consent of, order of, or filing with, any United States Federal or
New York governmental authority or regulatory body is required for
the consummation of the transactions contemplated herein or in any
Delayed Delivery Contracts, except such as have been obtained under
the Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the
Securities and such other approvals (specified in such opinion) as
have been obtained;
9
<PAGE>
(H) such counsel has no reason to believe that (1) the Registration
Statement and the Prospectus (except the financial statements and
the notes thereto and other information of an accounting or
financial nature included therein, and the Statement of Eligibility
(Form T-1) included as an exhibit to the Registration Statement, as
to which such counsel need express no view) were not appropriately
responsive in all material respects to requirements of the Act and
the applicable rules and regulations of the Commission thereunder
and (2) the Registration Statement or any amendment thereof at the
time it became effective contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus, as amended or supplemented,
contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading (in
each case except for the financial statements and the notes thereto
and other information of an accounting or financial nature included
therein, as to which such counsel need express no view); and
(I) none of the issue and sale of the Securities, the consummation
of any other of the transactions herein contemplated or the
fulfillment of the terms hereof or of any Delayed Delivery Contracts
will conflict with, result in a breach of, or constitute a default
under, the charter or by-laws of the Company or the terms of any
indenture or other agreement or instrument known to such counsel and
to which the Company or any of its subsidiaries is a party or bound,
or any decree or regulation known to such counsel to be applicable
to the Company or any of its subsidiaries of any court, regulatory
body, administrative agency, governmental body or arbitrator having
jurisdiction over the Company or any of its subsidiaries.
The statements described in one or more of paragraphs (B), (C), (E), (F),
(G) and (H)(1) of this subsection 5(b)(i) may be omitted from the opinion of
such counsel; provided, however, that in such event the Company shall also have
furnished to the Representatives the corresponding opinion or letter of Cravath,
Swaine & Moore, counsel for the Company, described in subsection 5(b)(ii) or
5(b)(iii) immediately following.
(ii) in the event that the statements described in one or more of
paragraphs (B), (C), (E), (F) or (G) of foregoing subsection 5(b)(i) is
10
<PAGE>
omitted from the opinion delivered pursuant to such subsection, the opinion of
Cravath, Swaine & Moore, counsel for the Company, dated the Closing Date, to the
effect of the statements so omitted.
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
New York or the United States, to the extent they deem proper and specified in
such opinion, upon the opinion of other counsel of good standing whom they
believe to be reliable and who are satisfactory to counsel for the Underwriters;
and (B) as to matters of fact, to the extent they deem proper, on certificates
of responsible officers of the Company and public officials.
(iii) in the event that the statements in paragraph (H)(1) of subsection
5(b)(i) are omitted from the opinion provided pursuant to such subsection, a
letter of Cravath, Swaine & Moore dated the Closing Date to the effect that,
having participated in conferences with certain officers of, and with the
accountants for, the Company and having made certain inquiries and
investigations in connection with the preparation of the Registration Statement
and the Prospectus, such counsel has no reason to believe that (i) the
Registration Statement and the Prospectus (except the financial statements and
the notes thereto and other information of an accounting or financial nature
included therein, and the Statement of Eligibility (Form T-1) included as an
exhibit to the Registration Statement, as to which such counsel need express no
view) were not appropriately responsive in all material respects with
requirements of the Act and the applicable rules and regulations of the
Commission thereunder and (ii) the Registration Statement at the Effective Date
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus on the Closing Date includes any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading (in each case except for the financial statements
and the notes thereto and other information of an accounting or financial nature
included therein, as to which such counsel need express no view).
(c) The Representatives shall have received from Davis Polk & Wardwell,
counsel for the Underwriters, such opinion or opinions, dated the Closing Date,
with respect to the issuance and sale of the Securities, the Indenture, any
Delayed Delivery Contracts, the Registration Statement, the Prospectus and other
related matters as the Representatives may reasonably require, and the Company
shall have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
11
<PAGE>
(d) The Company shall have furnished to the Representatives a certificate
of the Company, signed by the principal financial or accounting officer (or Vice
President and Treasurer) of the Company, dated the Closing Date, to the effect
that the signer of such certificate has carefully examined the Registration
Statement, the Prospectus, any supplement to the Prospectus and this Agreement
and that:
(i) the representations and warranties of the Company in this Agreement
are true and correct in all material respects on and as of the Closing Date with
the same effect as if made on the Closing Date and the Company has complied with
all the agreements and satisfied all the conditions on its part to be performed
or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the Registration
Statement, as amended, has been issued and no proceedings for that purpose have
been instituted or, to the Company's knowledge, threatened; and
(iii) since the date of the most recent financial statements included in
the Prospectus, there has been no material adverse change in the condition
(financial or other), earnings, business or properties of the Company and its
subsidiaries, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus.
(e) At the Closing Date, PricewaterhouseCoopers LLP shall have furnished
to the Representatives a letter or letters (which may refer to a letter
previously delivered to one or more of the Representatives), dated as of the
Closing Date, in form and substance satisfactory to the Representatives,
confirming that they are independent accountants within the meaning of the Act
and the Exchange Act and the respective applicable published rules and
regulations thereunder, that the response, if any, to Item 10 of the
Registration Statement is correct insofar as it relates to them and stating in
effect that:
(i) in their opinion the audited financial statements and schedules
thereto included or incorporated in the Registration Statement and the
Prospectus and reported on by them comply as to form in all material respects
with the applicable accounting requirements of the Exchange Act and the
published rules and regulations thereunder with respect to financial statements
and financial statement schedules included or incorporated in annual reports on
Form 10-K under the Exchange Act;
12
<PAGE>
(ii) on the basis of a reading of the unaudited financial statements
included or incorporated in the Registration Statement and the Prospectus and of
the latest unaudited financial statements made available by the Company and its
subsidiaries; carrying out certain specified procedures (but not an audit in
accordance with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the comments set
forth in such letter; a reading of the minutes of the meetings of the
stockholders, directors and executive committees of the Company and the
Subsidiaries since the date of the latest audited balance sheet, through a
specified date not more than five business days prior to the date of the letter;
and inquiries of certain officials of the Company who have responsibility for
financial and accounting matters of the Company and its subsidiaries as to
transactions and events subsequent to the date of the most recent financial
statements incorporated in the Registration Statement and the Prospectus,
nothing came to their attention which caused them to believe that:
(1) any unaudited financial statements included or incorporated in the
Registration Statement and the Prospectus do not comply as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the Commission with respect to financial statements
included or incorporated in quarterly reports on Form 10-Q under the Exchange
Act; and said unaudited financial statements are not stated on a basis
substantially consistent with that of the audited financial statements included
or incorporated in the Registration Statement and the Prospectus; or
(2) with respect to the period subsequent to the date of the most recent
financial statements incorporated in the Registration Statement and the
Prospectus, there were, at a specified date not more than five business days
prior to the date of the letter, any increases in long-term debt of the Company
and its subsidiaries or decreases in the capital stock of the Company or
decreases in the stockholders' equity of the Company and its subsidiaries as
compared with the amounts shown on the most recent consolidated balance sheet
included or incorporated in the Registration Statement and the Prospectus,
except in all instances for increases or decreases set forth in such letter, in
which case the letter shall be accompanied by an explanation by the Company as
to the significance thereof unless said explanation is not deemed necessary by
the Representatives; and
(iii) they have performed certain other procedures as a result of which
they determined that the information described in a schedule to be delivered on
behalf of the Underwriters of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical information derived
from the accounting records of the
13
<PAGE>
Company) set forth in the Registration Statement, as amended, the Prospectus, as
amended or supplemented, and in Exhibit 12 to the Registration Statement
(including selected accounting, financial or statistical information included or
incorporated in the Company's Annual Report on Form 10-K incorporated in the
Prospectus or any of the Company's Quarterly Reports on Form l0-Q incorporated
therein), agrees with the general ledger of the Company and its subsidiaries,
excluding any questions of legal interpretation.
References to the Prospectus in this paragraph (e) include any supplements
thereto at the date of the letter.
(f) Subsequent to the respective dates of which information is given in
the Registration Statement and the Prospectus, there shall not have been (i) any
change or decrease specified in the letter or letters referred to in paragraph
(e) of this Section 5 or (ii) any change, or any development involving a
prospective change, in or affecting the business or properties of the Company
and its subsidiaries the effect of which, in any case referred to in clause (i)
or (ii) above, is, in the judgment of the Representatives, so material and
adverse as to make it impractical or inadvisable to proceed with the public
offering or the delivery of the Securities as contemplated by the Registration
Statement and the Prospectus.
(g) Prior to the Closing Date, the Company shall have furnished to the
Representatives such further information, certificates and documents as the
Representatives may reasonably request.
(h) The Company shall have accepted Delayed Delivery Contracts in any case
where sales of Contract Securities arranged by the Underwriters have been
approved by the Company.
(i) Subsequent to the Execution Time, there shall not have been any
decrease in the ratings of any of the Securities by Moody's Investor's Service,
Inc. ("Moody's") or Standard & Poor's Corporation ("S&P") and neither Moody's
nor S&P shall have publicly announced that it has placed any of the Securities
on a credit watch with negative implications.
If any of the conditions specified in this Section 5 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and their counsel, this Agreement and all
obligations of the Underwriters hereunder may be canceled at, or at any time
14
<PAGE>
prior to, the Closing Date by the Representatives. Notice of such cancellation
shall be given to the Company in writing or by telephone or telegraph confirmed
in writing.
6. Reimbursement of Underwriters' Expenses. If the sale of the Securities
provided for herein is not consummated because any condition to the obligations
of the Underwriters set forth in Section 5 hereof is not satisfied or because of
any refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand for all out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
7. Indemnification and Contribution. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement for the registration of
the Securities as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party for any legal or other expenses reasonably incurred,
as incurred, by them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that (i) the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter through the Representatives
specifically for use in connection with the preparation thereof, and (ii) such
indemnity with respect to any Preliminary Prospectus shall not inure to the
benefit of any Underwriter (or any person controlling such Underwriter) from
whom the person asserting any such loss, claim, damage or liability purchased
the Securities which are the subject thereof if such person did not receive a
15
<PAGE>
copy of the Prospectus (or the Prospectus as supplemented) excluding documents
incorporated therein by reference at or prior to the confirmation of the sale of
such Securities to such person in any case where such delivery is required by
the Act and the untrue statement or omission of a material fact contained in
such Preliminary Prospectus was corrected in the Prospectus (or the Prospectus
as supplemented prior to the confirmation of the sale of such Securities to such
person). This indemnity agreement will be in addition to any liability which the
Company may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who signs the Registration
Statement, and each person who controls the Company within the meaning of either
the Act or the Exchange Act, to the same extent as the foregoing indemnity from
the Company to each Underwriter, but only with reference to written information
relating to such Underwriter furnished to the Company by or on behalf of such
Underwriter through the Representatives specifically for use in the preparation
of the documents referred to in the foregoing indemnity. This indemnity
agreement will be in addition to any liability which any Underwriter may
otherwise have. The Company acknowledges that the statements set forth in the
last paragraph of the cover page of the Prospectus and under the heading
"Underwriting" or "Plan of Distribution" and, if Schedule I hereto provides for
sales of Securities pursuant to delayed delivery arrangements, in the last
sentence under the heading "Delayed Delivery Arrangements" in any Preliminary
Prospectus and the Prospectus, constitute the only information furnished in
writing by or on behalf of the several Underwriters for inclusion in any
Preliminary Prospectus or the Prospectus, and you, as the Representatives,
confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 7, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 7. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to appoint counsel satisfactory to such
indemnified party to represent the indemnified party in such action; provided,
however, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
16
<PAGE>
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to appoint counsel to defend such action
and approval by the indemnified party of counsel, the indemnifying party will
not be liable to such indemnified party under this Section 7 for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel (in addition to any local
counsel), approved by the Representatives in the case of paragraph (a) of this
Section 7, representing the indemnified parties under such paragraph (a) who are
parties to such action), (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
action or (iii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party; and except
that, if clause (i) or (iii) is applicable, such liability shall be only in
respect of the counsel referred to in such clause (i) or (iii).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a) of this
Section 7 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company on grounds of policy or otherwise, the
Company and the Underwriters shall contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably incurred
in connection with investigating or defending same) to which the Company and one
or more of the Underwriters may be subject in such proportion so that the
Underwriters are responsible for that portion represented by the percentage that
the underwriting discount bears to the sum of such discount and the purchase
price of the Securities set forth on Schedule I hereto and the Company is
responsible for the balance; provided, however, that (y) in no case shall any
Underwriter (except as may be provided in any agreement among underwriters
relating to the offering of the Securities) be responsible for any amount in
excess of the underwriting discount applicable to the Securities purchased by
such Underwriter hereunder and (z) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person who controls an
Underwriter within the meaning of either the Act
17
<PAGE>
or the Exchange Act shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to clauses
(y) and (z) of this paragraph (d). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this paragraph (d), notify such
party or parties from whom contribution may be sought, but the omission to so
notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this paragraph (d).
8. Default by an Underwriter. If any one or more Underwriters shall fail
to purchase and pay for any of the Securities agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule II hereto bears to the aggregate amount
of Securities set forth opposite the names of all the remaining Underwriters)
the Securities which the defaulting Underwriter or Underwriters agreed but
failed to purchase; provided, however, that in the event that the aggregate
amount of Securities which the defaulting Underwriter or Underwriters agreed but
failed to purchase shall exceed 10% of the aggregate amount of Securities set
forth in Schedule II hereto, the remaining Underwriters shall have the right to
purchase all, but shall not be under any obligation to purchase any, of the
Securities, and if such nondefaulting Underwriters do not purchase all the
Securities, this Agreement will terminate without liability to any nondefaulting
Underwriter or the Company. In the event of a default by any Underwriter as set
forth in this Section 8, the Closing Date shall be postponed for such period,
not exceeding seven days, as the Representatives shall determine in order that
the required changes in the Registration Statement and the Final Prospectus or
in any other documents or arrangements may be effected. Nothing contained in
this Agreement shall relieve any defaulting Underwriter of its liability, if
any, to the Company and any nondefaulting Underwriter for damages occasioned by
its default hereunder.
9. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company prior
to delivery of and payment for the Securities, if prior to
18
<PAGE>
such time (i) trading in securities generally on the New York Stock Exchange
shall have been suspended or limited or minimum prices shall have been
established on such Exchange, (ii) a banking moratorium shall have been declared
either by Federal or New York State authorities or (iii) there shall have
occurred any outbreak or material escalation of hostilities or other calamity or
crisis the effect of which on the financial markets of the United States is such
as to make it, in the judgment of the Representatives, impracticable to market
the Securities.
10. Representations and Indemnities to Survive. The respective agreement
representations, warranties, indemnities and other statements of the Company or
its officers and of the Underwriters set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of any Underwriter or the Company or any of the officers,
directors or controlling persons referred to in Section 7 hereof, and will
survive delivery of and payment for the Securities. The provisions of Sections 6
and 7 hereof shall survive the termination or cancellation of this Agreement.
11. Notices. All communications hereunder will be in writing and effective
only on receipt, and, if sent to the Representatives, will be mailed, delivered
or telegraphed and confirmed to them, at the address specified in Schedule I
hereto; or, if sent to the Company, will be mailed, delivered or telegraphed and
confirmed to it, at Armonk, New York 10504; attention of the Treasurer.
12. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 7 hereof, and no other
person will have any right or obligation hereunder.
13. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
INTERNATIONAL BUSINESS
MACHINES CORPORATION
By:
------------------------------------
19
<PAGE>
The foregoing Agreement is hereby confirmed and accepted on the date specified
in Schedule I hereto.
By:
By:
-----------------------------------
For themselves and the other several
Underwriters, if any, named in
Schedule II to the foregoing Agreement.
20
<PAGE>
SCHEDULE I
Debt Securities
Underwriting Agreement dated
Registration Statement No. 333-
Representatives:
Title of Securities:
Principal Amount:
Interest Rate:
Purchase Price:
Offering Price:
Interest Payment Dates:
Subordination Provisions:
Optional Redemption:
Sinking Fund Provisions:
Delayed Delivery:
Closing Date and Time:
Method of Payment of Underwriters' Securities:
Other provisions of or Amendments to Underwriting Agreement:
Additional Covenants Pursuant to Section 4:
[Until [ ], the Company will not, without the consent of the
Representatives, offer, sell or contract to sell, or otherwise dispose of,
directly or indirectly, or announce the offering
<PAGE>
of, any securities issued or guaranteed by the Company (other than the
Securities).]
Additional Covenants Pursuant to Section 5:
[At or prior to the Closing Date, the Indenture dated as of the Closing Date,
between the Company and [ ], as Trustee, in form and substance
satisfactory to the Underwriters, shall have been executed and delivered by the
parties thereto and shall be in full force and effect.]
Units
Title and principal amount of Debt Securities or title and number of shares of
Common Stock, Preferred Stock, Warrants or Depositary Shares in one Unit:
Purchase Price and currency:
Section 4(g) Listing upon notice of issuance on any national securities exchange
or automated quotation system:
Detachable Date:
Overallotment option:
Other provisions:
Section 5(h) provisions, if any:
Delayed Delivery: [None]
[Underwriters' commission shall be __% of the principal amount of Designated
Securities for which Delayed Delivery Contracts have been entered into and the
check given in payment of such commission shall be drawn to the order of
__________________]
[Maximum aggregate principal amount of Designated Securities to be offered
and sold pursuant to Delayed Delivery Contracts: [$]_______________]
2
<PAGE>
[Minimum principal amount of each Delayed Delivery Contract:
[$]__________________]
3
<PAGE>
SCHEDULE I
Common Stock
Preferred Stock
Depositary Shares
Warrants
Underwriting Agreement dated
Registration Statement No. 333-
Representative(s):
Designation, Purchase Price and Description:
Designation:
Liquidation preference per share:
Number of shares:
Purchase price per share (include accrued dividends, if any):
Other provisions:
Over-allotment option:
[Subject to the terms and conditions and in reliance upon the representations
and warranties set forth in the Underwriting Agreement, the Company hereby
grants an option to the several Underwriters named in Schedule II hereto to
purchase, severally and not jointly, up to [ ] additional shares of
[ ] (the "[U.S.] Option Securities", [together with the International
Option Securities (as hereinafter defined]), the "Option Securities") at the
same purchase price per share as the Underwriters shall pay for the Securities.
Said option may be exercised only to cover over-allotments in the sale of the
Securities by the Underwriters. Said option may be exercised in whole or in part
at any time (but not more than once) on or before the day after the date of the
Final Prospectus, upon written or telegraphic notice by the Representatives to
the Company setting forth the number of shares of [U.S.] Option Securities as to
which the several Underwriters are exercising the option and the Settlement
Date, as defined in the Underwriting Agreement. The number of shares of [U.S.]
Option Securities to be purchased by each Underwriter shall be the same
percentage of the total number of shares of [U.S.] Option Securities to
<PAGE>
be purchased by the several Underwriters as such Underwriter is purchasing of
the securities, as set forth in Schedule II hereto, subject to such
adjustments as the Representatives in their absolute discretion shall make to
eliminate any fractional shares.
If the option provided for herein is exercised after the business day
prior to the Closing Date, as defined in the Underwriting Agreement, the Company
will deliver (at the expense of the Company) to the Representatives, at
[ ], New York, New York, on the date specified by the
Representatives (which shall be within three business days after exercise of
said option) (the "Settlement Date"), certificates for [U.S.] Option Securities
in such names and denominations as the Representatives shall have requested not
less than three full business days in advance of the Settlement Date unless the
parties otherwise agree against payment of the purchase price thereof to or upon
the order of the Company by certified or official bank check or checks payable
in, or wire transfers of, (next day) funds. If settlement for [U.S.] Option
Securities occurs after the Closing Date, the Company will deliver to the
Representatives on the Settlement Date for [U.S.] Option Securities, and the
obligation of the Underwriters to purchase the [U.S.] Option Securities shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 5 of the Underwriting Agreement.]
Other provisions of or Amendments to Underwriting Agreement:
[The Company is concurrently entering into an International Underwriting
Agreement dated the date hereof (the "International Underwriting Agreement")
providing for the issue and sale by the Company of [ ] outside the United
States and Canada through arrangements with certain underwriters outside the
United States and Canada (the "International Underwriters"), for whom [ ]
are acting as representatives (the "International Representatives"), and
providing for the grant to the International Underwriters of an option to
purchase from the Company up to [ ] additional shares of [ ]
(the "International Option Securities"). It is further understood and agreed
that the Underwriters and the International Underwriters have entered into an
Agreement dated the date hereof (the "Agreement between Underwriters and
International Underwriters"), pursuant to which, among other things, the
International Underwriters may purchase from the Underwriters a portion of the
Securities to be sold pursuant to the Underwriting Agreement and the
Underwriters may purchase from the International Underwriters a portion of the
Securities to be sold pursuant to the International Underwriting Agreement.
2
<PAGE>
It is understood that two forms of Preliminary Final Prospectuses and two
forms of Final Prospectuses are to be used in connection with the offering and
sale of the Securities pursuant to the Underwriting Agreement and International
Underwriting Agreement: one form of Preliminary Final Prospectus and one form of
Final Prospectus relating to the Securities, which are to be offered and sold to
United States and Canadian Persons, and one form of Preliminary Final Prospectus
and one form of Final Prospectus relating to the Securities, which are to be
offered and sold to persons other than United States and Canadian Persons. The
two forms of Preliminary Final Prospectuses and the two forms of Final
Prospectuses are identical except for the outside front cover page, the
discussion under the heading "Underwriting" and the outside back cover page. The
form of Preliminary Final Prospectus, the form of Final Prospectus and the form
of any Rule 434 term sheet relating to the Securities which are to be offered to
U.S. and Canadian Persons, as first filed pursuant to Rule 424(b) or Rule 434
or, if no filing pursuant to Rule 424(b) is made, such form of Preliminary Final
Prospectus, Final Prospectus and any Rule 434 term sheet included in the
Registration Statement at the Effective Date, is hereinafter called the "U.S.
Prospectus"; such form of Preliminary Final Prospectus, such form of Final
Prospectus and such form of any Rule 434 term sheet relating to the Securities
which are to be offered to Persons other than United States and Canadian
Persons, as first filed pursuant to Rule 424(b) or Rule 434 or, if no filing
pursuant to Rule 424(b) is made, such form of Preliminary Final Prospectus, such
form of Final Prospectus and such form of any Rule 434 terms sheet included in
the Registration Statement at the Effective Date, is hereinafter called the
"International Prospectus"; and the U.S. Prospectus and the International
Prospectus are hereinafter collectively called the "Prospectuses."
Each Underwriter agrees that (i) it is not purchasing any of the
Securities or Option Securities for the account of anyone other than a United
States or Canadian Person, (ii) it has not offered or sold, and will not offer
or sell, directly or indirectly, any of the Securities or Option Securities or
distribute any U.S. Prospectus to any person outside the United States or
Canada, or to anyone other than a United States or Canadian Person, and (iii)
any dealer to whom it may sell any of the Securities will represent that it is
not purchasing for the account of anyone other than a United States or Canadian
Person and agree that it will not offer or resell, directly or indirectly, any
of the Securities or Option Securities outside the United States or Canada, or
to anyone other than a United States or Canadian Person or to any other dealer
who does not so represent and agree; provided, however, that the foregoing shall
not restrict (a) purchases and sales between the Underwriters on the one hand
and the International Underwriters on the other hand pursuant to the Agreement
between Underwriters and International Underwriters, (b) stabilization
transactions contemplated
3
<PAGE>
under the Agreement between Underwriters and International Underwriters,
conducted through [ ] as part of the distribution of the Securities
or Option Securities, and (c) sales to or through (or distributions of U.S.
Prospectuses or U.S. Preliminary Prospectuses to) United States or Canadian
Persons who are investment advisors, or who otherwise exercise investment
discretion, and who are purchasing for the account of anyone other than a
United States or Canadian Person.
The agreements of the Underwriters and International Underwriters set
forth above shall terminate upon the earlier of the following events:
(i) a mutual agreement of the Representatives and the International
Representatives to terminate the selling restrictions set forth above and in
Schedule I of the International Underwriting Agreement; or
(ii) the expiration of a period of 30 days after the Closing Date, unless
(A) the Representatives shall have given notice to the Company and the
International Representatives that the distribution of the Securities by the
Underwriters has not yet been completed or (B) the International Representatives
shall have given notice to the Company and the Underwriters that the
distribution of the International Securities by the International Underwriters
has not yet been completed. If such notice by the Representatives or the
International Representatives is given, the agreements set forth above shall
survive until the earlier of (1) the event referred to in clause (i) above or
(2) the expiration of an additional period of 30 days from the date of any such
notice].
Additional Covenants Pursuant to Section 4:
[Until the [ ], the Company will not, without the consent of the
Representatives, offer, sell or contract to sell, or otherwise dispose of,
directly or indirectly, or announce the offering of, any securities issued or
guaranteed by the Company (other than the Securities).]
[The Company will arrange for the listing of the Equity Securities upon notice
of issuance on [designate any national securities exchange or automated
quotation system].]
Additional Covenants Pursuant to Section 5:
Supplemental matters to be covered by the opinion of Cravath, Swaine & Moore
and/or the General Counsel, an Assistant General Counsel or an Associate General
Counsel of the Company, to be delivered pursuant to Section 5(b):
4
<PAGE>
Modification of items to be covered by the letter from PricewaterhouseCoopers
LLP delivered pursuant to Section 5(e) at the Execution Time:
Section 5(h) provisions, if any:
Deposit Agreement: Terms and Conditions
Warrant Agreement: Terms and Conditions
Purchased Securities Closing Date and Time:
Method of Payment of Underwriters' Securities:
Delayed Delivery Arrangements:
Fee:
Minimum principal amount of each contract:
Maximum aggregate principal amount of all contracts:
Convertibility:
Exchangeability into Debt Securities:
Closing Date and Time:
5
<PAGE>
SCHEDULE II
Amount
Underwriter To Be Purchased
- ----------- ---------------
<PAGE>
SCHEDULE III
Delayed Delivery Contract
[Date]
[Insert name and address
of lead Representative]
Ladies and Gentlemen:
The undersigned hereby agrees to purchase from International Business
Machines Corporation (the "Company"), and the Company agrees to sell to the
undersigned, on , 200_ , (the "Delivery Date"), principal amount
of the Company's (the "Securities") offered by the Company's Prospectus dated
, 200_, and related Prospectus Supplement dated , 200_,
receipt of a copy of which is hereby acknowledged, at a [purchase price of %
of the] [principal amount] [thereof, plus] [accrued interest] [amortization of
original issue discount], if any, thereon from , 200_, to the date
of payment and delivery, and on the further terms and conditions set forth in
this contract.
Payment for the Securities to be purchased by the undersigned shall be
made on or before 11:00 AM, New York City time, on the Delivery Date to or upon
the order of the Company in New York Clearing House (next day) funds, at your
office or at such other place as shall be agreed between the Company and the
undersigned, upon delivery to the undersigned of the Securities in definitive
fully registered form and in such authorized denominations and registered in
such names as the undersigned may request by written or telegraphic
communication addressed to the Company not less than five full business days
prior to the Delivery Date. If no request is received, the Securities will be
registered in the name of the undersigned and issued in a denomination equal to
the aggregate principal amount or number of Securities to be purchased by the
undersigned on the Delivery Date.
The obligation of the undersigned to take delivery of and make payment for
Securities on the Delivery Date, and the obligation of the Company to sell and
deliver Securities on the Delivery Date, shall be subject to the conditions (and
neither party shall incur any liability by reason of the failure thereof) that
(1) the purchase of Securities to be made by the undersigned, which purchase the
undersigned represents is not prohibited on the date hereof, shall not on the
Delivery Date be
<PAGE>
prohibited under the laws of the jurisdiction to which the undersigned is
subject, and (2) the Company, on or before the Delivery Date, shall have sold to
certain underwriters (the "Underwriters") such principal amount or number of
Securities as is to be sold to them pursuant to the Underwriting Agreement
referred to in the Prospectus and Prospectus Supplement mentioned above.
Promptly after completion of such sale to the Underwriters, the Company will
mail or deliver to the undersigned at its address set forth below notice to such
effect, accompanied by a copy of the opinion of counsel for the Company
delivered to the Underwriters in connection therewith. The obligation of the
undersigned to take delivery of and make payment for the Securities, and the
obligation of the Company to cause the Securities to be sold and delivered,
shall not be affected by the failure of any purchaser to take delivery of and
make payment for the Securities pursuant to other contracts similar to this
contract.
This contract will inure to the benefit of and be binding upon the parties
hereto and their respective successors, but will not be assignable by either
party hereto without the written consent of the other.
It is understood that acceptance of this contract and other similar
contracts is in the Company's sole discretion and, without limiting the
foregoing, need not be on a first come, first served basis. If this contract is
acceptable to the Company, it is required that the Company sign the form of
acceptance below and mail or deliver one of the counterparts hereof to the
undersigned at its address set forth below. This will become a binding contract
between the Company and the undersigned, as of the date first above written,
when such counterpart is so mailed or delivered.
This agreement shall be governed by and construed in accordance with the
laws of the State of New York without reference to choice of law principles.
Very truly yours,
--------------------------------
(Name of Purchaser)
By:
-----------------------------
(Signature and Title of Officer)
--------------------------------
(Address)
2
<PAGE>
Accepted:
International Business Machines Corporation
By:
-------------------------------
Title:
-----------------------------
3
<PAGE>
EXHIBIT (1)(b)
$________________
International Business Machines Corporation
U.S. Medium-Term Notes
AGENCY AGREEMENT
__________ __, 200_
[Agent Addresses]
Dear Sirs:
1. INTRODUCTION. International Business Machines Corporation, a New York
corporation (the "Issuer"), confirms its agreement with each of you
(individually an "Agent" and collectively the "Agents") with respect to the
issue and sale from time to time by the Issuer on or after the date hereof of up
to $___________ in aggregate initial offering price of its Medium-Term
Securities (or for Medium-Term Securities denominated in currencies or currency
units other than U.S. dollars, the equivalent thereof based on the prevailing
exchange rates at the respective times such Medium-Term Securities are first
offered) (the "Securities") issued under Article Three of the Indenture, dated
as of October 1, 1993 (the "Trustee"), as supplemented by the First Supplemental
Indenture thereto dated as of December 15, 1995 (the "Indenture"), between the
Issuer and The Chase Manhattan Bank, as trustee. The Securities will be issued,
and the terms thereof established, from time to time by the Issuer in accordance
with the Indenture and the Procedures (as defined in Section 3(d) hereof).
2. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer represents and
warrants to, and agrees with, each Agent as follows:
(a) Registration statements of the Issuer (Nos. 333-_____ and
333-____), 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 _________ __, 200_, a
form of which is included in Registration Statement No. 333-_______, as
supplemented as of the Closing Date, including all material incorporated
by reference therein, being hereinafter referred to as the "Prospectus").
Any reference in this Agreement to amending or supplementing
<PAGE>
the Prospectus shall be deemed to include the filing of materials
incorporated by reference in the Prospectus after the Closing Date and any
reference in this Agreement to any amendment or supplement to the
Prospectus shall be deemed to include any such materials incorporated by
reference in the Prospectus after the Closing Date.
(b) On the effective date of each registration statement included in
the definition of Registration Statement, such registration statement
conformed, and on the Closing Date the Prospectus as then amended or
supplemented will conform, in all material respects to the requirements of
the Securities Act of 1933 (the "Act"), the Securities Exchange Act of
1934 (the "Exchange Act"), the Trust Indenture Act of 1939 (the "Trust
Indenture Act") and the rules and regulations of the Commission thereunder
(the "Rules and Regulations"), and on its effective date each registration
statement did not, and such Prospectus will not, include any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading, except that the foregoing does not apply to statements in or
omissions from any of such documents based upon written information
furnished to the Issuer by any Agent specifically for use therein.
3. APPOINTMENT AS AGENT; SOLICITATIONS AS AGENT.
(a) Subject to the terms and conditions stated herein, the Issuer
hereby appoints each of the Agents an agent of the Issuer for the purpose
of soliciting or receiving offers to purchase the Securities from the
Issuer by others. Nothing contained in this Agreement shall be construed
to prevent the Issuer from selling at any time to any person any
Registered Securities, including the Securities, directly on its own
behalf or in a firm commitment underwriting pursuant to an underwriting
agreement that does not provide for a continuous offering of such
Securities. Each Agent agrees to use its reasonable efforts to solicit
purchases of the Securities on the terms and subject to the conditions set
forth herein and in the Procedures (as defined below).
(b) On the basis of the representations and warranties contained
herein, but subject to the terms and conditions herein set forth, each
Agent agrees, as agent of the Issuer, to solicit offers to purchase the
Securities upon the terms and conditions set forth in the Prospectus, as
from time to time amended or supplemented.
Upon receipt of notice from the Issuer as contemplated by Section
4(b) hereof, the 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.
2
<PAGE>
The Issuer reserves the right, in its sole discretion, to suspend
solicitation of offers to purchase the Securities commencing at any time
for any period of time or permanently. Upon receipt of notice from the
Issuer, the Agents will forthwith suspend solicitation of offers to
purchase the Securities from the Issuer until such time as the Issuer has
advised the Agents that such solicitation may be resumed. During any such
suspension, the Issuer's obligations under Sections 6(a), 6(b), 6(c) and
6(d) shall be suspended, except with respect to Notes held by an Agent for
resale during the first 180 days after the Agent's purchase thereof and
identified in a notice from the Agent to the Issuer as being held by such
Agent for resale during such period.
Unless otherwise mutually agreed upon between the Issuer and the
Agent soliciting such offer, the Agents are authorized to solicit offers
to purchase Securities only in fully registered form in denominations of
$1,000 or any multiple thereof. The authorized denominations of Securities
not denominated in U.S. dollars will be determined by the Issuer at the
time of sale. Each Agent shall communicate to the Issuer, orally or in
writing, each reasonable offer to purchase the Securities received by it
as Agent. The Issuer shall have the sole right to accept offers to
purchase the Securities and may reject any such offer, in whole or in
part. Each Agent shall have the right, in its discretion reasonably
exercised, without notice to the Issuer, to reject any offer to purchase
the Securities received by it, in whole or in part, and any such rejection
shall not be deemed a breach of its agreement contained herein.
No Security which the Issuer has agreed to sell pursuant to this
Agreement shall be deemed to have been purchased and paid for, or sold, by
the Issuer until such Security shall have been delivered to the purchaser
thereof against payment by such purchaser.
(c) At the time of delivery of, and payment for, any Securities sold
by the Issuer as a result of a solicitation made by, or offer to purchase
received by, an Agent, the Issuer agrees to pay such Agent a commission in
accordance with the schedule set forth in Exhibit A hereto, unless
otherwise agreed.
(d) Administrative procedures respecting the sale of Securities (the
"Procedures") shall be agreed upon from time to time by the Agents and the
Issuer. The initial Procedures, which are set forth in Exhibit B hereto,
shall remain in effect until changed by agreement among the Issuer and the
Agents. Each Agent and the Issuer agree to perform the respective duties
and obligations specifically provided to be performed by 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
3
<PAGE>
date of this Agreement or at such other place, and at such later time and
date as may be mutually agreed by the Issuer and the Agents, such time and
date being herein called the "Closing Date."
4. CERTAIN AGREEMENTS OF THE ISSUER. The Issuer agrees with the Agents
that, in connection with each offering of Securities,
(a) The Issuer will advise each Agent promptly of any proposal to
amend or supplement the Registration Statement or the Prospectus (other
than an amendment or supplement (i) providing solely for a change in the
terms of the Securities, (ii) by means of the filing of materials
incorporated by reference in the Prospectus, (iii) relating to an offering
by the Issuer of Registered Securities other than the Securities or (iv)
that is a pricing amendment or supplement relating to Securities the
purchase of which was not solicited by any Agent) and will afford the
Agents a reasonable opportunity to comment on any such proposed amendment
or supplement; and the Issuer will also advise each Agent of the filing of
any such amendment or supplement and of the institution by the Commission
of any stop order proceedings in respect of the Registration Statement or
of any part thereof and will use its best efforts to prevent the issuance
of any such stop order and to obtain as soon as possible its lifting, if
issued.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or if it is necessary at any time to amend the
Registration Statement or the Prospectus to comply with the Act, the
Exchange Act or the Rules and Regulations (other than as contemplated in
the parenthetical clause of Section 4(a) hereof), the Issuer will promptly
notify each Agent to suspend solicitation of offers to purchase the
Securities; and if the Issuer shall decide so to amend or supplement the
Registration Statement or the Prospectus, it will promptly advise each
Agent by telephone (with confirmation in writing) and will promptly
prepare and file with the Commission an amendment or supplement which will
correct such statement or omission or an amendment which will effect such
compliance. Notwithstanding the foregoing, if, at the time of any
notification to suspend solicitations, any Agent shall own any of the
Securities with the intention of reselling them as contemplated by Section
11 hereof, or the Issuer has accepted an offer 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
4
<PAGE>
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) or at the Commission's website which is located at
(HTTP://WWW.SEC.GOV ). The Issuer will also immediately notify each Agent
of any downgrading in the rating of the Securities or any other debt
securities of the Issuer, or any proposal to downgrade the rating of the
Securities or any other debt securities of the Issuer, by any "nationally
recognized statistical rating organization" (as defined for purposes of
Rule 436(g) under the Act), as soon as the Issuer learns of such
downgrading or proposal to downgrade.
(d) The Issuer will furnish to each Agent copies of the Prospectus
and all amendments and supplements thereto, and all amendments to the
Registration Statement after the date hereof (other than an amendment or
supplement (i) relating to an offering by the Issuer of Registered
Securities other than the Securities or (ii) that solely specifies the
terms of the Securities the purchase of which was not solicited by any
Agent), in each case as soon as available and in such quantities as are
reasonably requested.
(e) The Issuer will arrange for the qualification of the Securities
for sale and the termination of their eligibility for investment under the
laws of such jurisdictions as the Agents designate and will continue such
qualifications in effect so long as required for the distribution of the
Securities.
(f) So long as any Securities are outstanding, if so requested by
the Agents, the Issuer will furnish to the Agents, (i) as soon as
practicable after the end of each fiscal year, a copy of its annual report
to stockholders for such year, (ii) as soon as available, a copy of each
report or definitive proxy statement of the Issuer, if any, filed with the
Commission under the Exchange Act or mailed to stockholders, and (iii)
from time to time, such other information concerning the issuer as the
Agents may reasonably request.
(g) The Issuer will pay all expenses incident to the performance of
its obligations under this Agreement and will reimburse each Agent for any
expenses (including fees and disbursements of counsel) incurred by it in
connection with qualification of the Securities for sale and determination
of their eligibility for investment under the laws of such jurisdictions
as such Agent may designate and the printing of memoranda relating
thereto, for any fees charged by investment rating agencies for the rating
of the Securities, for expenses incurred in distributing the Prospectus
and all supplements thereto, any preliminary prospectuses and any
preliminary prospectus supplements, to each Agent and for the reasonable
fees and disbursements of counsel to the Agents.
5
<PAGE>
5. CONDITIONS OF OBLIGATIONS. The obligation of each Agent, as agent of
the Issuer, under this Agreement at any time to solicit offers to purchase the
Securities is subject to the accuracy, on the date hereof, on the Closing Date,
on the date of each such solicitation, and at each of the times of acceptance
and of delivery referred to in Section 6(a) hereof and at each Representation
Date (as defined in Section 6(b)), of the representations and warranties of the
Issuer herein, to the accuracy, on each such date, of the statements of the
Issuer's officers in any certificates made pursuant to the provisions hereof, to
the performance, on or prior to each such date, by the Issuer of its obligations
hereunder, and to each of the following additional conditions precedent:
(a) No stop order suspending the effectiveness of the Registration
Statement or of any part thereof shall have been issued and no proceedings
for that purpose shall have been instituted or, to the knowledge of the
Issuer or any Agent, shall be contemplated by the Commission.
(b) The Prospectus, as amended or supplemented as of the Closing
Date, the date of such solicitation or any Representation Date, shall not
contain any untrue statement of fact which, in the opinion of any Agent,
is material or omits to state a fact which, in the opinion of any Agent,
is material and is required to be stated therein or is necessary to make
the statements therein not misleading.
(c) There shall not have occurred between each trade and settlement
date (i) any change, or any development involving a prospective change, in
or affecting particularly the business or properties of the Issuer or its
subsidiaries which, in the judgment of such Agent, materially impairs the
investment quality of the Securities; (ii) any downgrading in the rating
of the Issuer's debt securities or public announcement that such debt
securities are under surveillance or review, with possible negative
implications, by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act);
(iii) any suspension or limitation of trading in securities generally on
the New York Stock Exchange, or any setting of minimum prices for trading
on such exchange, or any suspension of trading of any securities of the
Issuer on any exchange or in the over-the-counter market; (iv) any banking
moratorium declared by Federal or New York authorities; or (v) 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
Senior Counsel of the Issuer having knowledge of and responsibility
for securities or financial matters, the "Issuer Counsel"), or the
opinion of Cravath,
6
<PAGE>
Swaine & Moore, counsel for the Issuer, dated the Closing Date, to
the effect that:
(A) the Issuer (x) has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of New York, with full corporate power and
authority to own its properties and conduct its business as
described in the Prospectus and (y) is duly qualified to do
business as a foreign corporation and is in good standing
under the laws of each jurisdiction within the United States
which requires such qualification wherein it owns or leases
material properties or conducts material business where such
failure so to qualify may have a material adverse effect on
the financial condition, earnings, business or properties of
the Issuer;
(B) to the knowledge of opining counsel, there is no
pending or threatened action, suit or proceeding before any
court or governmental agency, authority or body or any
arbitrator involving the Issuer or any of its subsidiaries, of
a character required to be disclosed in the Registration
Statement which is not adequately disclosed in the Prospectus,
and there is no franchise, contract or other document of a
character required to be described in the Registration
Statement or Prospectus, or to be filed as an exhibit, which
is not described or filed as required; and the statements in
the Prospectus describing the terms of the Securities and the
provisions of the Indenture fairly summarize the matters
therein described; and
(C) none of the issue and sale of the Securities, the
consummation of any other of the transactions contemplated
herein or the fulfillment of the terms hereof will conflict
with, result in a breach of, or constitute a default under,
(x) the charter or by-laws of the Issuer; (y) the terms of any
indenture or other agreement or instrument known to such
counsel and to which the Issuer or any of its subsidiaries is
a party or bound, or (z) any order or regulation known to such
counsel to be applicable to the Issuer or any of its
subsidiaries of any court, regulatory body, administrative
agency, 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,
7
<PAGE>
moratorium or other similar laws affecting creditors' rights
generally from time to time in effect and to general
principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at
law); and the Securities have been duly authorized by
resolutions of the Board of Directors of the Issuer for
issuance for a period of two years following the effective
date of the Registration Statement (the "Period"), subject to
the establishment of certain terms of the Securities by
officers of the Issuer authorized by such resolutions to
establish such terms, and, when the terms of any such Security
have been established as provided in such resolutions and in
the Indenture and such has been executed and authenticated
during such period in accordance with the provisions of the
Indenture and delivered to and paid for by the purchaser
thereof in accordance with the terms of this Agreement, each
such Security, assuming it does not violate any applicable law
then binding on the Issuer, will constitute a valid and
binding obligation of the Issuer entitled to the benefits of
the Indenture;
(F) the Registration Statement and any amendments
thereto have become effective under the Act, and, to the
knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement, as amended, has
been issued, and no proceedings for that purpose have been
instituted or threatened;
(G) this Agreement has been duly authorized, executed
and delivered by the Issuer; and
(H) no consent, approval, authorization or order of any
United States Federal or New York governmental agency or
regulatory body is required for the consummation of the
transactions contemplated herein, except such as have been
obtained under the Act and such as may be required under the
blue sky laws of any jurisdiction in connection with the issue
and sale of the Securities and such other approvals (specified
in such opinion) as have been obtained.
(ii) such counsel shall also furnish a letter, dated the
Closing Date, that shall state that such counsel has no reason to
believe that: (A) the Registration Statement or any amendment
thereof at the time it became effective contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus, as amended or
supplemented, includes an untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading (in each case, except for the
financial statements and other information of
8
<PAGE>
an accounting or financial nature included therein, and the
Statement of Eligibility (Form T-1), included as an exhibit to the
Registration Statement, as to which such counsel need express no
view); and (B) the Registration Statement and the Prospectus as
amended or supplemented (except the financial statements and other
information of an accounting or financial nature included therein,
and the Statement of Eligibility (Form T-1), included as an exhibit
to the Registration Statement, as to which such counsel need express
no view), were not appropriately responsive in all material respects
to the requirements of the Act and the Trust Indenture Act and the
applicable rules and regulations thereunder.
(e) At the Closing Date, the Agents shall have received a
certificate, dated the Closing Date, of the Chief Executive Officer or any
Vice President and the Treasurer, any Assistant Treasurer, or any
principal financial or accounting officer of the Issuer in which such
officers, to the best of their knowledge after reasonable investigation,
shall state that (i) the representations and warranties of the Issuer in
this Agreement are true and correct, (ii) the Issuer has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date, (iii) no stop order
suspending the effectiveness of the Registration Statement or of any part
thereof has been issued and no proceedings for that purpose have been
instituted or are threatened by the Commission, and (iv) subsequent to the
date of the most recent financial statements in the Prospectus, there has
been no material adverse change in the financial position or results of
operations of the Issuer and its subsidiaries, except as set forth in or
contemplated by the Prospectus or as described in such certificate.
(f) At the Closing Date, the Agents shall have received a letter,
dated such date, of PricewaterhouseCoopers LLP ("PWC"), confirming that
they are independent public accountants within the meaning of the Act and
the Exchange Act and the respective applicable published Rules and
Regulations thereunder, that the response, if any, to Item 10 of the
Registration Statement is correct insofar as it relates to them and
stating in effect that:
(i) in their opinion, the audited financial statements and
schedules thereto included or incorporated in the Registration
Statement and Prospectus and reported on by them comply as to form
in all material respects with the applicable accounting requirements
of the Exchange Act and the related published Rules and Regulations
thereunder with respect to financial statements and financial
statement schedules included or incorporated in annual reports on
Form 10-K under the Exchange Act;
(ii) on the basis of a reading of the unaudited financial
statements included or incorporated in the Registration Statement
and Prospectus and of the latest unaudited financial statements made
available by the Issuer and its subsidiaries; carrying out certain
specified procedures (but not an
9
<PAGE>
audit 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 the Prospectus
do not comply as to form in all material respects with
applicable accounting requirements and with the published
rules and regulations of the Commission with respect to
financial statements included or incorporated in quarterly
reports on Form 10-Q under the Exchange Act; and said
unaudited financial statements are not stated on a basis
substantially consistent with that of the audited financial
statements included or incorporated in the Registration
Statement and the Prospectus; or
(B) any unaudited capsule information included or
incorporated in the Registration Statement and Prospectus does
not agree with the amounts set forth in the unaudited
consolidated financial statements from which it was derived or
was not determined on a basis substantially consistent with
that of the audited financial statements included or
incorporated in the Registration Statement and Prospectus; and
(iii) they have performed certain other procedures as a result
of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general
accounting records of the Issuer) set forth in the Registration
Statement and the Prospectus, including the information included or
incorporated in Items 1 and 7 of the Issuer's Annual Report on Form
10-K incorporated therein or in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included
or incorporated in any of the 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.
10
<PAGE>
(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 solicited by any Agent pursuant hereto shall be deemed to be an
affirmation that its representations and warranties contained in this
Agreement are true and correct at the time of such acceptance and a
covenant that such representations and warranties will be true and correct
at the time of delivery to the purchaser of the Securities relating to
such acceptance as though made at and as of each such time, it being
understood that such representations and warranties shall relate to the
11
<PAGE>
Prospectus as amended or supplemented at each such time. Each such
acceptance by the Issuer of an offer for the purchase of Securities shall
be deemed to constitute an additional representation, warranty and
agreement by the Issuer that, as of the settlement date for the sale of
such securities, after giving effect to the issuance of such Securities,
of any other Securities to be issued on or prior to such settlement date
and of any other Registered Securities to be issued and sold by the Issuer
on or prior to such settlement date, the aggregate amount of Registered
Securities (including any Securities) which have been issued and sold by
the Issuer will not exceed the amount of Registered Securities registered
pursuant to the Registration Statement.
(b) Each time that the Registration Statement or the Prospectus
shall be amended or supplemented (other than by an amendment or supplement
(i) that relates to an offering by the Issuer of Registered Securities
other than the Securities or (ii) that solely specifies the terms of the
Securities) (each such time being herein referred to as a "Representation
Date"), the Issuer shall, concurrently with such amendment or supplement,
furnish the Agents with a certificate, dated the date of delivery thereof,
of the Chief Executive Officer or any Vice President and the Treasurer,
any Assistant Treasurer, or any principal financial or accounting officer
of the Issuer, in form satisfactory to the Agents, to the effect that the
statements contained in the certificate covering the matters set forth in
Section 5(e) hereof which was last furnished to the Agents are true and
correct at the time of such amendment or supplement as though made at and
as of such time (except that such statements shall be deemed to relate to
the Registration Statement and the Prospectus as amended or supplemented
at such time and except that the statements contained in the certificate
covering the matters set forth in clause (ii) of Section 5(e) shall be
deemed to relate to the time of delivery of such certificate) or, in lieu
of such certificate, a certificate of the same tenor as the certificate
referred to in Section 5(e), modified as necessary to relate to the
Registration Statement and the Prospectus as amended or supplemented at
the time of delivery of such certificate and, in the case of the matters
set forth in clause (ii) of Section 5(e), to the time of delivery of such
certificate; provided, however, that the Issuer shall deliver such
certificate with respect to a Representation Date arising from the
incorporation by reference into the Prospectus of a current report on Form
8-K or a quarterly report on Form 10-Q only upon the reasonable request of
the Agents.
(c) At each Representation Date, the Issuer shall, if reasonably
requested by the Agents, concurrently furnish the Agents with a written
opinion or opinions, dated the date of such Representation Date, of Issuer
Counsel or Cravath, Swaine & Moore, in form satisfactory to the Agents, to
the effect set forth in Section 5(d) hereof, but modified, as necessary,
to relate to the Registration Statement and the Prospectus as amended or
supplemented at such Representation Date; provided, however, that in lieu
of such opinion or opinions, counsel may furnish the Agents with a letter
or letters to the effect that the Agents may rely on a prior opinion
delivered under Section 5(d) or this Section 6(c) to the same extent as if
it were
12
<PAGE>
dated the date of such letter (except that statements in such prior
opinion shall be deemed to relate to the Registration Statement and the
Prospectus as amended or supplemented at such Representation Date).
(d) At each Representation Date on which the Registration Statement
or the Prospectus shall be amended or supplemented to include additional
financial information as a result of filing of the Issuer's Annual Report
on Form 10-K, and upon the reasonable request of the Agents and at the
expense of the Agents, the Issuer shall cause PWC concurrently to furnish
the Agents with a letter, addressed jointly to the Issuer and the Agents
and dated the date of such Representation Date, in form and substance
satisfactory to the Agents, to the effect set forth in Section 5(f) hereof
but modified to relate to the Registration Statement and the Prospectus as
amended or supplemented at such Representation Date, with such changes as
may be necessary to reflect changes in the financial statements and other
information derived from the accounting records of the Issuer; provided,
however, that if the Registration Statement or the Prospectus is amended
or supplemented solely to include financial information as of and for a
fiscal quarter, PWC may limit the scope of such letter to the audited
financial statements included in such amendment or supplement unless there
is contained therein any other accounting, financial or statistical
information that, in the reasonable judgment of the Agents, should be
covered by such letter, in which event such letter shall also cover such
other information and procedures as shall be agreed upon by the Agents.
(e) The Issuer agrees that any obligation of a person who has agreed
to purchase Securities as the result of solicitation by any Agent pursuant
hereto to make payment for and take delivery of such Securities shall be
subject to (i) the accuracy, on the related settlement date fixed pursuant
to the Procedures, of the Issuer's representation and warranty deemed to
be made to the Agents pursuant to the last sentence of subsection (a) of
this Section 6, and (ii) the satisfaction, on such settlement date, of
each of the conditions set forth in Sections 5(a), (b) and (c), it being
understood that under no circumstance shall any Agent have any duty or
obligation to exercise the judgment permitted under Section 5(b) or (c) on
behalf of any such person.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Issuer agrees to indemnify and hold harmless each Agent and
each person who controls such Agent within the meaning of either the Act
or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become
subject, under the Act, the Exchange Act or other Federal or State
statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement
relating to the Registered Securities as originally filed or in any
amendment thereto, or in
13
<PAGE>
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 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
14
<PAGE>
satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assert such legal
defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from
the indemnifying party to such indemnified party of its election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified
party under this Section 7 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the
proviso to the next preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than
one separate counsel, approved by the Agents in the case of subparagraph
(a), representing the indemnified parties under subparagraph (a) who are
parties to such action), (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of
the action or (iii) the indemnifying party has authorized the employment
of counsel for the indemnified party at the expense of the indemnifying
party; and except that, if clause (i) or (iii) is applicable, such
liability shall be only in respect of the counsel referred to in such
clause (i) or (iii).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a)
of this Section 7 is due in accordance with its terms but is for any
reason held by a court to be unavailable from the Issuer on grounds of
policy or otherwise, the Issuer and each Agent shall contribute to the
aggregate losses, claims, damages and liabilities (including legal or
other expenses reasonably incurred in connection with investigating or
defending same) to which the Issuer and such Agents may be subject in such
proportion so that each Agent is responsible for that portion represented
by the percentage that the sum of aggregate commissions received by such
Agent pursuant to Section 3(c) hereof in connection with the sale of the
Securities to which such loss, claim, damage or liability relates to the
aggregate principal amount of such Securities and the Issuer is
responsible for the balance; provided, however, that (y) in no case shall
any Agent be responsible for any amount in excess of the commissions
received by it for such Securities to which such loss, claim, damage or
liability relates, and (z) no person found liable for fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall
be entitled to contribution from any person who was found not liable for
such fraudulent misrepresentation. For purposes of this Section 7, each
person who controls
15
<PAGE>
any Agent within the meaning of either the Act or the Exchange Act shall
have the same rights to contribution as such Agent, and each person who
controls the Issuer within the meaning of either the Act or the Exchange
Act, each officer of the Issuer who shall have signed the Registration
Statement or any amendment thereto, and each director of the Issuer shall
have the same rights to contribution as the Issuer, subject in each case
to clause (y) of this paragraph (d). Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit
or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this
paragraph (d), notify such party or parties from whom contribution may be
sought, but the omission to notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any
obligation it or they may have hereunder or otherwise than under this
paragraph (d).
8. STATUS OF EACH AGENT. In soliciting offers to purchase the Securities
from the Issuer pursuant to this Agreement and in assuming its other obligations
hereunder (other than offers to purchase pursuant to Section 11 hereof), each
Agent is acting solely as agent for the Issuer and not as principal. Each Agent
will make reasonable efforts to assist the Issuer in obtaining performance by
each purchaser whose offer to purchase Securities from the Issuer has been
solicited by such Agent and accepted by the Issuer, but such Agent shall have no
liability to the Issuer in the event any such purchase is not consummated for
any reason. If the Issuer shall default on its obligations to deliver Securities
to a purchaser who has agreed to purchase Securities as a result of solicitation
by any Agent pursuant hereto, and whose offer the Issuer has accepted, the
Issuer (i) shall hold the Agents harmless against any loss, claim or damages
arising from or as a result of such default by the Issuer, and (ii) in
particular, shall pay to the Agents any commission to which they would be
entitled in connection with such sale.
9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of the
Issuer or its officers and of the Agents set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation,
or statement as to the results thereof, made by or on behalf of any Agent, the
Issuer or any of their respective representatives, officers or directors or any
controlling person and will survive delivery of and payment for the Securities.
If this Agreement is terminated pursuant to Section 10 or for any other reason,
the Issuer shall remain responsible for the expenses to be paid or reimbursed by
it pursuant to Section 4(g) and the obligations of the Issuer under Section 4(f)
and the respective obligations of the Issuer and the Agents pursuant to Section
7 shall remain in effect. In addition, if any such termination shall occur
either (i) at a time when any Agent shall own any of the Securities with the
intention of reselling them as contemplated by Section 11 hereof or (ii) after
the Issuer has accepted an offer to purchase Securities solicited by any Agent
pursuant hereto and prior to the related settlement, the obligations of the
Issuer under the last sentence of Section 4(b), under Sections 4(a), 4(c), 4(d),
4(e), 6(a), and 6(e) and, in the case of a termination occurring as described in
(ii) above, under Section 3(c) and under the last sentence of Section 8, shall
also remain in effect.
16
<PAGE>
10. TERMINATION. This Agreement may be terminated for any reason at any
time by the Issuer as to any Agent or, in the case of any Agent, by such Agent
insofar as this Agreement relates to such Agent, upon the giving of one day's
written notice of such termination to the other parties hereto. Any settlement
with respect to Securities placed by an Agent occurring after termination of
this Agreement shall be made in accordance with the Procedures and each Agent
agrees, if requested by the Issuer, to take the steps therein provided to be
taken by such Agent in connection with such settlement.
11. PURCHASES AS PRINCIPAL. From time to time, any Agent may agree with
the Issuer to purchase Securities from the Issuer as principal. In such case the
purchasing Agent and the Issuer may set forth the terms of such purchase in a
separate agreement (a "Purchase Agreement") to be entered into between such
Agent and the Issuer in the form attached hereto as Exhibit C. Upon acceptance
by the Issuer of an offer to purchase Securities, unless the Issuer and the
purchasing Agent otherwise agree in writing, any such Purchase Agreement or
other written confirmation or communication transmitted by the purchasing Agent
to the Issuer or, in the absence of a Purchase Agreement or other written
confirmation or communication from the purchasing Agent, the oral agreement with
respect to the terms of the Securities and of their offer and sale evidenced by
the offer communicated by the purchasing Agent and accepted by the Issuer, in
each case together with the provisions of this Agreement, shall constitute an
agreement between the purchasing Agent and the Issuer for the sale and purchase
of such Securities (whether or not any Purchase Agreement or other written
confirmation or communication shall have been executed by the Issuer or the
purchasing Agent). In connection with any resale of Securities so purchased,
such Securities may be resold by such Agent at varying prices from time to time
or at a fixed public offering price or that such Agent may use a selling or
dealer group. Such Agent may reallow to any broker or dealer any portion of the
discount or commission payable pursuant hereto. A Purchase Agreement, to the
extent set forth therein, may incorporate by reference specified provisions of
this Agreement.
12. NOTICES. Except as otherwise provided herein, all notices and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if mailed or transmitted by any standard form of telecommunication.
Except as otherwise provided in the Procedures:
To the Issuer:
Notices to International Business Machines Corporation shall be directed
to it at New Orchard Road, Armonk, New York 10504, Attention:
Treasurer (Fax: 914-499-2883).
To the Agents:
Notices to ____________________ shall be directed to it at
______________________, Attention: ____________________ (Fax: _____________).
17
<PAGE>
In the case of any party hereto, alternatively notice may be directed to
such other address or person as such party shall specify to each other party by
a notice given in accordance given in accordance with the provisions of this
Section 12. Any such notice shall take effect at the time of receipt.
13. SUCCESSORS. This Agreement will inure to the benefit of and be binding
upon the parties hereto, their respective successors, the officers and directors
and controlling persons referred to in Section 7 and, to the extent provided in
Section 6(e), any person who has agreed to purchase Securities from the Issuer
as the result of solicitation by any Agent pursuant hereto, and no other person
will have any right or obligation hereunder.
14. GOVERNING LAW; COUNTERPARTS. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to the conflicts of laws principles thereof. This Agreement may be
executed in counterparts and the executed counterparts shall together constitute
a single instrument.
15. ENTIRE AGREEMENT. This Agreement incorporates the entire agreement
between the parties hereto with respect to the transactions contemplated herein.
All prior negotiations and agreements between the parties are merged in, and
superseded by, this Agreement and there are no agreements, representations or
warranties between the parties other than those set forth or provided for
herein.
If the foregoing correctly sets forth our agreement, please indicate your
acceptance hereof in the space provided for that purpose below.
Very truly yours,
INTERNATIONAL BUSINESS
MACHINES CORPORATION
By
--------------------------------
Title:
CONFIRMED AND ACCEPTED, as of the
date first above written:
By
-----------------------------
Title:
By
-----------------------------
Title:
18
<PAGE>
By
-----------------------------
Title:
By
-----------------------------
Title:
By
-----------------------------
Title:
19
<PAGE>
EXHIBIT A
The Issuer agrees to pay the relevant Agent a commission which will
be no more than the following percentage of the principal amount of Securities
sold to purchasers solicited by such Agent:
Commission Rate
(as a percentage
Term of Principal Amount)
- -------------------------------- --------------------
12 months to less than 18 months .15
18 months to less than 24 months .20
24 months to less than 30 months .25
30 months to less than 3 years .30
3 years to less than 4 years .35
4 years to less than 5 years .45
5 years to less than 7 years .50
7 years to less than 10 years .55
10 years to less than 15 years .625
15 years to less than 20 years .700
20 years to 30 years .750
More than 30 years as negotiated between the Company
and the relevant Agent at the time
of sale
<PAGE>
EXHIBIT B
ADMINISTRATIVE PROCEDURES
The Medium-Term Notes due one year or more from their issue date
(the "Notes") are to be offered on a continuing basis by International Business
Machines Corporation (the "Issuer").
________________________, as agents (each individually an "Agent" and
collectively the "Agents"), have agreed to use reasonable efforts to solicit
purchases of the Notes pursuant to an Agency Agreement dated _______________
(the "Agency Agreement"), among the Issuer and the Agents. No Agent will be
obligated to purchase Notes for its own account. The Notes will be issued
pursuant to an Indenture, dated as of October 1, 1993 (the "Indenture"), between
the Issuer and The Chase Manhattan Bank (National Association), as trustee (the
"Trustee"), as supplemented by the First Supplemental Indenture thereto dated as
of December15, 1995. The Notes will rank equally with all other unsecured and
unsubordinated indebtedness of the Issuer and have been registered with the
Securities and Exchange Commission (the "Commission").
Each Note will be represented initially by either a global security
registered in the name of a nominee of The Depository Trust Company, as
Depositary ("DTC") (a "BookEntry Note") or a certificate issued in definitive
form (a "Certificate Note"). It is currently contemplated that both Fixed Rate
Notes (as defined below) and Floating Rate Notes (as defined below) may be
issued as Book-Entry Notes.
Administrative procedures and specific terms of the Notes and the
offering, to the extent Notes are offered and sold through the Agents, are
explained below. Administrative and record-keeping responsibilities will be
handled for the Issuer by its Treasury Department. The Issuer will advise each
Agent in writing of those persons handling administrative responsibilities with
whom each Agent is to communicate regarding offers to purchase Notes and the
details of their delivery. To the extent that the following procedures conflict
with the provisions of the Notes, the Indenture or the Letter (as defined
below), the relevant provisions of the Note, the Indenture or the Letter shall
control.
<PAGE>
I. CERTIFICATE NOTES AND GENERAL TERMS
Unless otherwise agreed by the Issuer and the relevant agent, the
following administrative procedures and specific terms are applicable to
Certificate Notes and, except to the extent otherwise specified under II below,
Book-Entry Notes.
ORIGINAL ISSUE DATE: Each Note will be dated the date of its
authentication. Each Note will also bear an original
issue date which, with respect to any Note (or
portion thereof), shall mean the date of its
original issuance and shall be specified therein.
The original issue date shall remain the same for
all Notes subsequently issued upon transfer,
exchange or substitution of a Note, regardless of
their dates of authentication.
MATURITIES: Each Note will mature on a date, selected by the
purchaser and agreed to by the Issuer, which will be
at least one year after the date of issue; PROVIDED,
however, that each Floating Rate Note (as defined
below) will mature on an Interest Payment Date (as
defined below) for such Note.
REDEMPTION: The Floating Rate Notes will not be redeemable prior
to maturity, unless otherwise specified in the
applicable Pricing Supplement. The Fixed Rate Notes
(as defined below) either (i) will not be redeemable
prior to maturity, or (ii) will be redeemable at the
option of the Issuer on or after a specified date
prior to maturity at par or at prices which will
decline annually by a fixed percentage from a
specified initial premium to par. Unless otherwise
specified in the applicable pricing supplement,
Redemption Dates for redeemable Fixed Rate Notes
will correspond with the Interest Payment Dates for
such Notes.
PRICE TO PUBLIC: Each Note will be issued at 100% of principal
amount, unless otherwise agreed between the Issuer
and the relevant Agent.
2
<PAGE>
DENOMINATIONS: Unless otherwise agreed between the Issuer and the
relevant Agent, the denominations of the Notes will
be $1,000 or any multiple thereof. The denominations
of Notes denominated in currencies or currency units
other than U.S. dollars will be as agreed between
the Issuer and the relevant Agent.
REGISTRATION: Notes will be issued only in fully registered form.
INTEREST PAYMENT: Unless otherwise specified in a Pricing Supplement,
each Note will bear interest from and including its
original issue date or, in the case of Notes issued
upon replacement, transfer or exchange, from the
most recent Interest Payment Date to which interest
has been paid or provided for, to but excluding the
maturity date of such Note; PROVIDED, HOWEVER, that
a Floating Rate Note which has a rate of interest
that is reset weekly will bear interest from and
including its original issue date or the day
following the most recent Record Date (as defined
below) for the most recent Interest Payment Date to
which interest on such Note has been paid or
provided for. Each Note will bear interest (i) in
the case of Notes bearing interest at a Fixed Rate
(the "Fixed Rate Notes"), at the annual rate stated
on the face thereof, payable semiannually in arrears
on April 1 and October 1 (each an "Interest Payment
Date" with respect to such Fixed Rate Note) and at
maturity and (ii) in the case of Notes bearing
interest at a rate or rates determined by reference
to an interest rate formula (the "Floating Rate
Notes"), at a rate determined pursuant to the
formula stated on the face thereof, payable in
arrears on such dates as are specified therein and
in the related Pricing Supplement (each an "Interest
Payment Date" with respect to such Floating Rate
Note). Interest payable on a Fixed Rate Note
(including payments for partial periods) will be
calculated and paid on the basis of a 360-day year
of 12 30-day months. Interest payable on a Floating
Rate Note will be calculated and paid on the basis
of the actual number of days elapsed in the interest
period and a year of 360 days; PROVIDED, HOWEVER,
that interest payable on a Floating Rate Note which
has a rate of interest determined in accordance with
the Treasury Rate will be calculated on the basis of
the actual number of days in the year. Interest will
be payable on each Interest Payment
3
<PAGE>
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.
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,
4
<PAGE>
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.
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
5
<PAGE>
offer to purchase Notes to be settled in less than
three days, the Issuer shall verify that the Trustee
will have adequate time to prepare and authenticate
the Notes. After receiving the details for each
offer from the Presenting Agent, the Issuer will,
after recording the details and any necessary
calculations, communicate the Purchase Information
by telephone, facsimile transmission or other
acceptable means, to the Trustee. Prior to preparing
the Notes for delivery, the Trustee will confirm the
Purchase Information by telephone with the
Presenting Agent. The Trustee will assign to and
enter on each Note a transaction number.
Special provisions relating to Certificate Notes
denominated or payable in a currency, currencies, a
currency unit or currency units other than U.S.
dollars may be agreed by the Issuer and the Agents
at a later time.
CONFIRMATION: For each accepted offer solicited by an Agent, the
Presenting Agent will issue a confirmation to the
purchaser, with a copy to the Issuer's Treasury
Department and the Trustee, setting forth the
Purchase Information and delivery and payment
instructions.
NOTE DELIVERIES Upon the receipt of appropriate documentation and
AND CASH PAYMENT: instructions, which may be by telephone to be
confirmed in writing from the Issuer, and
verification thereof, the Trustee will cause the
Notes to be prepared and authenticated and hold the
Notes for delivery against payment.
The Trustee will deliver the Notes, in accordance
with instructions from the Issuer, to the Presenting
Agent, as the Issuer's agent, for the benefit of the
purchaser only against delivery of a receipt
therefor.
Agents' addresses for delivery of Certificate Notes:
6
<PAGE>
The Presenting Agent, as the Issuer's agent, will
deliver the Notes (with the written confirmation
provided for above) to the purchaser thereof against
payment by such purchaser in immediately available
funds and will give instructions for payment to be
made to the Issuer of an amount equal to the face
amount of the Notes less the Presenting Agent's
commission. Delivery of any confirmation or Note
will be made in compliance with "Delivery of
Prospectus" below.
FAILS: In the event that a purchaser shall fail to accept
delivery of and make payment for a Note on the
settlement date, the Presenting Agent will notify
the Trustee and the Issuer by telephone, confirmed
in writing. If the Note has been delivered to the
Presenting Agent, as the Issuer's agent, the
Presenting Agent shall return such Note to the
Trustee. If funds have been advanced by the
Presenting Agent for the purchase of such Note, the
Issuer will, immediately upon receipt of such
notice, refund the 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.
PROCEDURE FOR The Issuer and the Agents will discuss from time to
RATE CHANGES: time the rates to be borne by the Notes that may be
sold as a result of the solicitation of offers by
the Agents. Once any Agent has recorded any
indication of interest in Notes upon certain terms,
and communicated with the Issuer, if the Issuer
7
<PAGE>
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 Issuer may
SOLICITATION suspend Amendment or solicitation of purchases at
AMENDMENT OR any time and, upon receipt of notice from the
SUPPLEMENT: Issuer, each Agent will forthwith suspend
solicitation until such time as the Issuer has
advised them that solicitation of purchases may be
resumed.
If the Agents receive the notice from the Issuer
contemplated by Section 4(b) of the Agency
8
<PAGE>
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 from a
PROSPECTUS: solicitation by any Agent, a copy of the Prospectus,
as most recently amended or supplemented on the date
of delivery thereof (except as provided below), but
excluding materials incorporated by
9
<PAGE>
reference therein, must be delivered to a purchaser
prior to or together with the earlier of delivery of
(i) the written confirmation provided for above, and
(ii) any Note purchased by such purchaser as a
result of such solicitation. The Issuer shall ensure
that the Presenting Agent receives the required
number of copies of the Prospectus and each
amendment or supplement thereto (including
appropriate pricing stickers), but excluding
materials incorporated by reference therein, by
telecopy or overnight express (for delivery not
later than 11:00 a.m. on the Business Day next
following the trade date) to enable the Presenting
Agent to deliver such confirmation or Note to such
purchaser as contemplated by these procedures and in
compliance with the preceding sentence. If, since
the date of acceptance of such purchaser's offer,
the Prospectus shall have been supplemented solely
to reflect any sale of Notes on terms different from
those agreed to between the Issuer and such
purchaser or a change in posted rates not applicable
to such purchaser, such purchaser shall not receive
the Prospectus as supplemented by such new
supplement, but shall receive the Prospectus as
supplemented to reflect the terms of the Notes being
purchased by such purchaser and otherwise as most
recently amended or supplemented on the date of
delivery of the Prospectus.
AGENTS' ADDRESSES FOR DELIVERY OF PRICING
SUPPLEMENTS:
AUTHENTICITY OF The Issuer will cause the Trustee to furnish the
SIGNATURES: Agents from time to time with the specimen
signatures of each of the Trustee's officers,
employees or agents who have been authorized by the
Trustee to authenticate Notes, but the Agents will
have no obligation or liability to the Issuer or the
Trustee in respect of the authenticity of the
signature of any officer, employee or agent of the
Issuer or the Trustee on any Note.
ADVERTISING COST: The Issuer will determine with the Agents the amount
of advertising that may be appropriate in offering
the Notes. Advertising expenses will be paid by the
Issuer.
10
<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
11
<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.
12
<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 is
TERMS: repayable at the option of the Holder, the Trustee
will furnish DTC on or not more than 60 days prior
to the settlement date pertaining to such Book-Entry
Note a notice setting forth the terms of such
13
<PAGE>
repayment option. Such terms shall include the start
date and end dates of the first exercise period, the
purchase date following such first exercise period,
the frequency that such exercise periods occur
(I.E., quarterly, semiannually, annually, etc.) and,
if the repayment option expires before maturity, the
same information (except frequency) concerning the
last exercise period. It is understood that the
exercise period shall be at least 15 calendar days
long and that the purchase date shall be at least 7
calendar days, after the last day of the exercise
period.
REDEMPTION AND The Trustee will comply with the terms of the Letter
REPAYMENT: with regard to redemptions and repayments of the
Notes. If a Global Security is to be redeemed or
repaid in part, the Trustee will exchange such
Global Security for two Global 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
message described under the Settlement Procedure "C"
below in order to include the amount of any interest
payable and certain other information
14
<PAGE>
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 each
INTEREST: Regular Record Date, the Trustee will deliver to the
Issuer and DTC a written notice specifying by CUSIP
number the amount of interest to be paid on each
Global Security on the following Interest Payment
Date (other than an Interest Payment Date coinciding
with maturity) and the total of such amounts. The
Issuer will confirm with the Trustee the amount
payable on each Global Security on such Interest
Payment Date. DTC will confirm the amount payable on
each Global Security on such Interest Payment Date
by reference to the daily or weekly bond reports
published by Standard & Poor's Corporation. The
Issuer will pay to the Trustee the total amount of
interest due on such Interest Payment Date (other
than at maturity), and the Trustee will pay such
amount to DTC at the times and in the manner set
forth below under "Manner of Payment". If any
Interest Payment Date for a Book-Entry Note is not a
Business Day, the payment due on such day shall be
made on the next succeeding Business Day and no
interest shall accrue on such payment for the period
from and after such Interest Payment Date.
PAYMENTS AT MATURITY. On or about the first Business
Day of each month, the Trustee will deliver to the
Issuer and DTC a written list of principal and
15
<PAGE>
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 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
16
<PAGE>
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.
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
17
<PAGE>
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.
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.
18
<PAGE>
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.
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
19
<PAGE>
and credit the settlement account of The
Presenting Agent for an amount equal to the
price of such Note.
I. Transfers of funds in accordance with SDFS
deliver orders described in Settlement
Procedures "G" and "H" will be settled in
accordance with SDFS operating procedures in
effect on the settlement date.
J. The Trustee, upon confirming receipt
of such funds, will wire transfer to
the account of the Issuer maintained
at Chase Manhattan Bank, New York
N.Y., Account of International
Business Machines Corporation, Cash
Concentration, ABA Number 021000021,
Account Number 323 213 499, in funds
available for immediate use in the
amount transferred to the Trustee in
accordance with Settlement Procedure
"G".
K. The Presenting Agent will confirm
the purchase of such Note to the
purchaser either by transmitting to
the Participants with respect to
such Note a confirmation order or
orders through DTC's institutional
delivery system or by mailing a
written confirmation to such
purchaser.
SETTLEMENT PROCEDURES For orders of Book-Entry Notes solicited by an Agent
TIMETABLE: and accepted by the Issuer for settlement on the
first Business Day after the sale date, Settlement
Procedures "A" through "K" set forth above shall be
completed as soon as possible but not later than the
respective times (New York City time) set forth
below:
SETTLEMENT
PROCEDURE TIME
A 11:00 a.m. on the sale date
B 12:00 noon on the sale date
C 2:00 p.m. on the sale date
D 3:00 p.m. on the sale date
E 9:00 a.m. on settlement date
F 10:00 a.m. on settlement date
20
<PAGE>
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
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
21
<PAGE>
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 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
22
<PAGE>
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.
23
<PAGE>
EXHIBIT C
PURCHASE AGREEMENT
[Date _____, 200_]
International Business Machines Corporation
New Orchard Road
Armonk, NY 10504
Attention: Treasurer
The undersigned agrees to purchase the following principal amount of
the Securities described in the Agency Agreement dated __________________ (the
"Agency Agreement"):
Principal Amount $______________________
Interest Rate ______________________
Maturity Date ______________, 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
<PAGE>
shall relate to the Registration Statement and the Prospectus as amended at such
Settlement Date) and to your performance and observance of all covenants and
agreements contained in Sections 4 and 6 thereof. Our obligation hereunder is
also subject to the following conditions:
(a) the satisfaction, at such Settlement Date, of each of the
conditions set forth in subsections (a) and (b) and (d) through (g) of Section 5
of the Agency Agreement (it being understood that each document so required to
be delivered shall be dated such Settlement Date and that each such condition
and the statements contained in each such document that relate to the
Registration Statement or the Prospectus shall be deemed to relate to the
Registration Statement or the Prospectus, as the case may be, as amended or
supplemented at the time of settlement on such Settlement Date and except that
the opinion described in Section 5(d) of the Agency Agreement shall be modified
so as to state that the Securities being sold on such Settlement Date, when
delivered against payment therefor as provided in the Indenture and this
Agreement, will have been duly executed, authenticated, issued and delivered and
will constitute valid and legally binding obligations of the Issuer enforceable
in accordance with their terms, subject only to the exceptions as to enforcement
set forth in clause (ii) of Section 5(d) of the Agency Agreement, and will
conform to the description thereof contained in the Prospectus as amended or
supplemented at such Settlement Date); and
(b) there shall not have occurred (i) any change, or any development
involving a prospective change, in or affecting particularly the business or
properties of the Issuer or its subsidiaries which, in our judgment, materially
impairs the investment quality of the Securities; (ii) any downgrading in the
rating of the Issuer's debt securities or public announcement that such debt
securities are under surveillance or review, with possible negative
implications, by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Act); (iii) any suspension or
limitation of trading in securities generally on the New York Stock Exchange, or
any setting of minimum prices for trading on such exchange, or any suspension of
trading of any securities of the Issuer on any exchange or in the
over-the-counter market; (iv) any banking moratorium declared by Federal or New
York authorities; or (v) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by Congress or any
other substantial national or international calamity or emergency if, in our
judgment, the effect of any such outbreak, escalation, declaration, calamity or
emergency makes it impractical or inadvisable to proceed with completion of the
sale of and payment for the Securities.
[In further consideration of our agreement hereunder, you agree that
between the date hereof and the above Settlement Date, you will not offer or
sell, or enter into any agreement to sell, any debt securities of the Issuer in
the United States, other than sales of Securities, borrowings under your
revolving credit agreements and lines of credit, the private placement of
securities and issuances of your commercial paper.]
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
2
<PAGE>
Section 4 of the Agency Agreement and the respective obligations of you and the
undersigned pursuant to Section 7 shall remain in effect. If for any reason our
purchase of the above Securities is not consummated other than because of our
default or a failure to satisfy a condition set forth in clause (iii), (iv) or
(v) of paragraph (b) above, you shall reimburse us, severally, for all
out-of-pocket expenses reasonably incurred by us in connection with the offering
of the above Securities and not otherwise required to be reimbursed pursuant to
Section 4 of the Agency Agreement.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York. This Agreement may be executed in
counterparts and the executed counterparts shall together constitute a single
instrument.
[Insert Name of Purchaser]
By_________________________
CONFIRMED AND ACCEPTED, as of
the date first above written:
International Business Machines Corporation
By:___________________________
Title:________________________
3
<PAGE>
EXHIBIT 5
[LETTERHEAD]
INTERNATIONAL BUSINESS MACHINES CORPORATION
Office of the Vice President and Assistant General Counsel
Armonk, New York 10504
May 15, 2000
Ladies & Gentlemen:
As a Vice President and Assistant General Counsel of International
Business Machines Corporation (the "Company") and an attorney duly admitted to
practice in the State of New York, I am giving this opinion in connection with
the proposed issuance and sale from time to time pursuant to Rule 415 under the
Securities Act of 1993 (the "Securities Act") of senior or subordinated debt
securities of the Company, to be issued under an Indenture dated as of October
1, 1993, as supplemented by the First Supplemental Indenture thereto dated as of
December 15, 1995 (the "Senior Indenture"), between the Company and The Chase
Manhattan Bank (the "Senior Trustee") or an Indenture (the Subordinated
Indenture") to be entered into between the Company and a Trustee (the
"Subordinated Trustee"), preferred stock (the "Preferred Stock") of the Company,
depositary shares (the "Depositary Shares") of the Company representing a
fractional interest in a share of Preferred Stock, capital stock (the "Capital
Stock") of the Company and/or warrants to purchase Debt Securities, Preferred
Stock or Capital Stock (the "Warrants") of the Company (the Debt Securities,
Preferred Stock, Depositary Shares, Capital Stock and Warrants are collectively
referred to herein as the "Securities").
I, working together with competent members of my legal staff acting
under my direct supervision and control, have examined the Certificate of
Incorporation of the Company, as amended; the By-laws of the Company, the Senior
<PAGE>
Indenture; and the forms of Subordinated Indenture and Deposit Agreement (the
"Deposit Agreement") filed as Exhibits to the Registration Statement. In
addition, I am familiar with the proceedings by which such instruments and the
transactions contemplated thereby were authorized by the Company.
Based upon and subject to the foregoing, and assuming that: (i) the
Registration Statement and any amendments thereto (including post-effective
amendments) will have become effective and comply with all applicable laws; (ii)
the Registration Statement will be effective and will comply with all applicable
laws at the time the Securities are offered or issued as contemplated by the
Registration Statement; (iii) a Prospectus Supplement, Pricing Supplement or
term sheet will have been prepared and file with the Securities and Exchange
Commission describing the Securities offered thereby and will comply with all
applicable laws; (iv) all Securities will be issued and sold in compliance with
applicable federal and state securities laws and in the manner stated in the
Registration Statement and the appropriate Prospectus Supplement; (v) a
definitive purchase, underwriting or similar agreement with respect to any
Securities offered or issued will have been duly authorized and validly executed
and delivered by the Company and the other parties thereto; and (vi) any
Securities issuable upon conversion, exchange or exercise of any Security being
offered or issued will be duly authorized, created and, if appropriate, reserved
for issuance upon such conversion, exchange or exercise, I am of the opinion
that:
(1) the Company has been duly incorporated and is a validly existing
corporation under the laws of the State of New York.
(2) with respect to Debt Securities to be issued under either the
Senior Indenture or Subordinated Indenture, when (A) the Senior Trustee or
Subordinated Trustee, as applicable, is qualified to act as Senior Trustee or
Subordinated Trustee, as applicable, under the Senior Indenture or Subordinated
Indenture, as applicable, (B) the Senior Trustee or Subordinated Trustee, as
applicable, has duly executed and delivered the Subordinated Indenture or Senior
Indenture, as applicable, (C) the Senior Indenture or Subordinated Indenture, as
applicable, has been duly authorized and validly executed and delivered by the
Company to the Senior Trustee or Subordinated Trustee, as
2
<PAGE>
applicable, (D) the Senior Indenture or Subordinated Indenture, as
applicable, has been duly qualified under the Trust Indenture Act of 1939, as
amended, (E) the Board of Directors of the Company or a duly constituted and
acting committee thereof (such Board of Directors or committee being
hereinafter referred to as the "Board") has taken all necessary corporate
action to approve the issuance and terms of such Debt Securities, the terms
of the offering thereof and related matters, and (F) such Debt Securities
have been duly executed, authenticated, issued and delivered in accordance
with the provisions of the Senior Indenture or Subordinated Indenture, as
applicable, and the applicable definitive purchase, underwriting or similar
agreement approved by the Board upon payment of the consideration therefor
provided for therein, such Debt Securities will be validly issued and will
constitute valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms (subject to applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws in effect and subject to general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law);
(3) with respect to shares of Preferred Stock, when both (A) the Board
has taken all necessary corporate action to approve the issuance and terms of
the shares of Preferred Stock, the terms of the offering thereof, and related
matters, including the adoption of a Certificate of Amendment relating to such
Preferred Stock (a "Certificate") and the filing of the Certificate with the
Secretary of State of the State of New York, and (B) certificates representing
the shares of Preferred Stock have been duly executed, countersigned, registered
and delivered either (i) in accordance with the applicable definitive purchase,
underwriting or similar agreement approved by the Board upon payment of the
consideration therefor (not less than the par value of the Preferred Stock)
provided for therein or (ii) upon conversion or exercise of such Security or the
instrument governing such Security providing for such conversion or exercise as
approved by the Board, for the consideration approved by the Board (not less
than the par value of the Preferred Stock), then the shares of Preferred Stock
will be validly issued, fully paid and nonassessable;
(4) with respect to Depositary Shares, when (A) the Board has taken all
necessary corporate action to approve
3
<PAGE>
the issuance and terms of the Depositary Shares, the terms of the offering
thereof, and related matters, including the adoption of a Certificate relating
to the Preferred Stock underlying such Depositary Shares and the filing of the
Certificate with the Secretary of State of the State of New York, (B) the
Deposit Agreement or Agreements relating to the Depositary Shares and the
related Depositary Receipts have been duly authorized and validly executed and
delivered by the Company and the Depositary appointed by the Company, (C) the
shares of Preferred Stock underlying such Depositary Shares have been deposited
with a bank or trust company (which meets the requirements for the Depositary
set forth in the Registration Statement) under the applicable Deposit Agreement,
and (D) the Depositary Receipts representing the Depositary Shares have been
duly executed, countersigned, registered and delivered in accordance with the
appropriate Deposit Agreement and the applicable definitive purchase,
underwriting or similar agreement approved by the Board upon payment of the
consideration therefor provided for therein, the Depositary Shares will be
validly issued;
(5) with respect to shares of Capital Stock, when both (A) the Board
has taken all necessary corporate action to approve the issuance of and the
terms of the offering of the shares of Capital Stock and related matters and (B)
certificates representing the shares of Capital Stock have been duly executed,
countersigned, registered and delivered either (i) in accordance with the
applicable definitive purchase, underwriting or similar agreement approved by
the Board upon payment of the consideration therefor (not less than the par
value of the Capital Stock) provided for therein or (ii) upon conversion or
exercise of any other Security, in accordance with the terms of such Security or
the instrument governing such Security providing for such conversion or exercise
as approved by the Board, for the consideration approved by the Board (not less
than the par value of the Capital Stock), then the shares of Capital Stock will
be validly issued, fully paid and nonassessable; and
(6) with respect to the Warrants, when (A) the Board has taken all
necessary corporate action to approve the creation of and the issuance and terms
of the Warrants, the terms of the offering thereof, and related matters, (B) the
Warrant Agreement or Agreements relating to the Warrants have been duly
authorized and validly executed and delivered by the Company and the Warrant
Agent appointed by the Company, and (C) the Warrants or certificates
4
<PAGE>
representing the Warrants have been duly executed, countersigned, registered and
delivered in accordance with the appropriate Warrant Agreement or Agreements and
the applicable definitive purchase, underwriting or similar agreement approved
by the Board upon payment of the consideration therefor provided for therein,
the Warrants will be validly issued.
I understand that I may be referred to, as counsel who has passed upon
the validity of the Debt Securities or the issuance of the Preferred Stock,
Depositary Shares, Capital Stock or Warrants on behalf of the Company, in a
supplement to the Prospectus forming a part of the Registration Statement on
Form S-3 relating to the Securities filed with the Securities and Exchange
Commission pursuant to the Securities Act, and I hereby consent to such use of
my name in said Registration Statement and to the use of this opinion for filing
with said Registration Statement as Exhibit (5) thereto.
Very truly yours,
/s/ David S. Hershberg
----------------------
David S. Hershberg
5
<PAGE>
EXHIBIT 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated January 19, 2000 relating to the
consolidated financial statements, which appears in the 1999 Annual Report to
Stockholders of International Business Machines Corporation which is
incorporated by reference in International Business Machines Corporation's
Annual Report on Form 10-K for the year ended December 31, 1999. We also consent
to the incorporation by reference of our report dated January 19, 2000 relating
to the Financial Statement Schedule which appears in such Annual Report on Form
10-K. We also consent to the reference to us under the heading "Experts" in such
registration statement.
/s/ PricewaterhouseCoopers LLP
- -------------------------------
PricewaterhouseCoopers LLP
New York, New York
May 15, 2000
<PAGE>
EXHIBIT 24(a)
POWER OF ATTORNEY OF LOUIS V. GERSTNER, JR.
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Chairman of
the Board of Directors and Chief Executive Officer of International Business
Machines Corporation, a New York corporation (the "Corporation"), which may file
with the Securities and Exchange Commission (the "SEC"), Washington, D.C., under
the provisions of the Securities Act of 1933, a shelf registration statement
pursuant to Rule 415 under the Securities Act of 1933 in a total amount which
includes $10B authorized by resolutions dated the date hereof plus all amounts
available for issuance pursuant to Registration Statement No. 333-70521, of
Indebtedness, Preferred Stock, Depositary Shares, Capital Stock and Warrants
(collectively the "Securities") of the Corporation, hereby constitute and
appoint Lawrence R. Ricciardi, John R. Joyce, Mark Loughridge, Walter S. Berman,
Daniel E. O'Donnell, Andrew Bonzani and Cassio A. Calil, and each of them, my
true and lawful attorneys-in-fact and agents, with full power to act, together
or each without the others, for me and in my name, place and stead, in any and
all capacities, to sign, or cause to be signed electronically, such registration
statement and any and all amendments to the aforementioned registration
statement, and to file said registration statement and amendments thereto so
signed with all exhibits thereto, and any and all other documents in connection
therewith, with the SEC, hereby granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform any and all acts
and things requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as I might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 29th day of February, 2000.
/s/ Louis V. Gerstner, Jr.
--------------------------
Louis V. Gerstner, Jr.
Chairman of the Board of Directors
and Chief Executive Officer
<PAGE>
POWER OF ATTORNEY OF JOHN R. JOYCE
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Senior Vice
President and Chief Financial Officer of International Business Machines
Corporation, a New York corporation (the "Corporation"), which may file with the
Securities and Exchange Commission (the "SEC"), Washington, D.C., under the
provisions of the Securities Act of 1933, a shelf registration statement
pursuant to Rule 415 under the Securities Act of 1933 in a total amount which
includes $10B authorized by resolutions dated the date hereof plus all amounts
available for issuance pursuant to Registration Statement No. 333-70521, of
Indebtedness, Preferred Stock, Depositary Shares, Capital Stock and Warrants
(collectively the "Securities") of the Corporation, hereby constitute and
appoint Louis V. Gerstner, Jr., Lawrence R. Ricciardi, Mark Loughridge, Walter
S. Berman, Daniel E. O'Donnell, Andrew Bonzani and Cassio A. Calil, and each of
them, my true and lawful attorneys-in-fact and agents, with full power to act,
together or each without the others, for me and in my name, place and stead, in
any and all capacities, to sign, or cause to be signed electronically, such
registration statement and any and all amendments to the aforementioned
registration statement, and to file said registration statement and amendments
thereto so signed with all exhibits thereto, and any and all other documents in
connection therewith, with the SEC, hereby granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as I might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 29th day of February, 2000.
/s/ John R. Joyce
-----------------
John R. Joyce
Senior Vice President and
Chief Financial Officer
2
<PAGE>
POWER OF ATTORNEY OF MARK LOUGHRIDGE
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Vice President
and Controller of International Business Machines Corporation, a New York
corporation (the "Corporation"), which may file with the Securities and Exchange
Commission (the "SEC"), Washington, D.C., under the provisions of the Securities
Act of 1933, a shelf registration statement pursuant to Rule 415 under the
Securities Act of 1933 in a total amount which includes $10B authorized by
resolutions dated the date hereof plus all amounts available for issuance
pursuant to Registration Statement No. 333-70521, of Indebtedness, Preferred
Stock, Depositary Shares, Capital Stock and Warrants (collectively the
"Securities") of the Corporation, hereby constitute and appoint Louis V.
Gerstner, Jr., Lawrence R. Ricciardi, John R. Joyce, Walter S. Berman, Daniel E.
O'Donnell, Andrew Bonzani and Cassio A. Calil, and each of them, my true and
lawful attorneys-in-fact and agents, with full power to act, together or each
without the others, for me and in my name, place and stead, in any and all
capacities, to sign, or cause to be signed electronically, such registration
statement and any and all amendments to the aforementioned registration
statement, and to file said registration statement and amendments thereto so
signed with all exhibits thereto, and any and all other documents in connection
therewith, with the SEC, hereby granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform any and all acts
and things requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as I might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 29th day of February, 2000.
/s/ Mark Loughridge
-------------------
Mark Loughridge
Vice President and Controller
3
<PAGE>
POWER OF ATTORNEY OF IBM DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Director of
International Business Machines Corporation, a New York corporation (the
"Corporation"), which may file with the Securities and Exchange Commission (the
"SEC"), Washington, D.C., under the provisions of the Securities Act of 1933, a
shelf registration statement pursuant to Rule 415 under the Securities Act of
1933 in a total amount which includes $10B authorized by resolutions dated the
date hereof, plus all amounts available for issuance pursuant to Registration
Statement No. 333-70521, of Indebtedness, Preferred Stock, Depositary Shares,
Capital Stock and Warrants (collectively the "Securities") of the Corporation,
hereby constitute and appoint Louis V. Gerstner, Jr., Lawrence R. Ricciardi,
John R. Joyce, Mark Loughridge, Walter S. Berman, Daniel E. O'Donnell, Andrew
Bonzani and Cassio A. Calil, and each of them, my true and lawful
attorneys-in-fact and agents, with full power to act, together or each without
the others, for me and in my name, place and stead, in any and all capacities,
to sign, or cause to be signed electronically, such registration statement and
any and all amendments to the aforementioned registration statement, and to file
said registration statement and amendments thereto so signed with all exhibits
thereto, and any and all other documents in connection therewith, with the SEC,
hereby granting unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform any and all acts and things requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as I might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them may lawfully do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I, the undersigned, have executed this Power of
Attorney as of this 29th day of February, 2000.
/s/ Cathleen Black
------------------
Director
/s/ Kenneth I. Chenault
-----------------------
Director
/s/ Juergen Dormann
-------------------
Director
/s/ Nannerl O. Keohane
----------------------
Director
/s/ Charles F. Knight
---------------------
Director
/s/ Minoru Makihara
-------------------
Director
/s/ Lucio A. Noto
-----------------
Director
/s/ John B. Slaughter
---------------------
Director
/s/ Alex Trotman
----------------
Director
/s/ Lodewijk C. van Wachem
--------------------------
Director
4
<PAGE>
EXHIBIT 24(b)
INTERNATIONAL BUSINESS MACHINES CORPORATION
CERTIFICATE OF THE ASSISTANT SECRETARY
I, Andrew Bonzani, the undersigned Assistant Secretary of International
Business Machines Corporation, a New York Corporation, do hereby certify as
follows:
Attached hereto as Exhibit A is a true copy of the resolutions adopted by
the Board of Directors of International Business Machines Corporation,
authorizing the officers of the Corporation to execute the Registration
Statement, to which this certificate is attached as an exhibit, by power of
attorney.
IN WITNESS WHEREOF, I have executed this certificate as of this 15th day
of May 2000.
By: /s/ Andrew Bonzani
-----------------------
Andrew Bonzani
Assistant Secretary
<PAGE>
EXHIBIT A
RESOLUTIONS REGARDING SEC UNIVERSAL SHELF REGISTRATION
RESOLVED, that the Board of Directors of the Corporation hereby
authorizes (in addition to the authority previously granted by
resolutions of the Board of Directors, all of which other resolutions
remain in full force and effect) the issuance and sale by the
Corporation during the period from the date hereof through and
including the date which is two years from the date the registration
statement authorized to be filed with the Securities and Exchange
Commission pursuant to these resolutions becomes effective (the
"Period") of an additional $10B of: (a) notes, debentures or other debt
instruments (the "Indebtedness"); (b) shares of preferred stock, $.01
par value, of the Corporation (the "Preferred Stock") or depositary
shares representing ownership of and entitlement to all rights and
preferences of a fraction of a share of Preferred Stock (the
"Depositary Shares"); (c) shares of Capital Stock, $0.20 par value, of
the Corporation (the "Capital Stock"); and (d) warrants or other rights
to acquire Capital Stock, Preferred Stock or Indebtedness of the
Corporation or securities of any other corporation (the "Warrants").
The Indebtedness, Preferred Stock, Depositary Shares, Capital Stock and
Warrants shall sometimes hereinafter be referred to collectively as the
"Securities." The issuance of any Securities hereunder shall require
the prior approval of the Senior Vice President and General Counsel or
such other person as may be designated by the General Counsel from time
to time; and be it further
RESOLVED, that the Indebtedness, for purposes of these
resolutions, shall exclude all debt having a maturity of less than one
year at the time of issuance, all notes issued to banks pursuant to
lines of credit, and all debt which is privately
2
<PAGE>
placed or sold pursuant to an exemption from the U.S. securities laws.
The Indebtedness shall include, without limitation, debt denominated in
U.S. dollars or in a foreign currency computed at a conversion rate
prevailing on dates determined by either the Chief Executive Officer,
the Senior Vice President and Chief Financial Officer, the Vice
President and Treasurer, or any Assistant Treasurer, to be relevant to
the issuance of such Indebtedness, with such Indebtedness to be
registered under the Securities Act of 1933, or sold pursuant to an
exemption therefrom or outside the scope thereof; and be it further
RESOLVED, that the Chief Executive Officer, the Senior Vice
President and Chief Financial Officer, the Vice President and
Treasurer, and any Assistant Treasurer, or any of them acting
individually, be, and they hereby are, delegated full power and
authority to authorize and approve during the Period the issuance of
Indebtedness of the Corporation pursuant to the foregoing resolutions
and, in connection therewith, to determine the terms and provisions of
such Indebtedness and of the issuance and sale thereof, including,
without limitation, the following: (i) the principal amount of such
Indebtedness, (ii) the final maturity date of such Indebtedness and any
sinking fund or other repayment provisions, (iii) the effective rate of
interest of such Indebtedness, (iv) the price at which such
Indebtedness shall be sold by the Corporation, (v) the provisions, if
any, for the redemption of such Indebtedness and the premiums, if any,
to be paid upon any such redemption, (vi) the right to convert such
Indebtedness into or exchange such Indebtedness for shares or other
securities of the Corporation or any other corporation or to issue
warrants or other rights to acquire shares or other securities of the
Corporation or any other corporation in conjunction with such
Indebtedness, and all terms of such conversion or exchange provisions
or warrants or other rights, including the conversion, exchange or
exercise prices and any antidilution provisions, and the authorization
of the issuance of any shares and the delivery of such shares or other
securities of the Corporation or any other corporation upon the
conversion or exchange of such Indebtedness or the
3
<PAGE>
exercise of such warrants or other rights, (vii) the form, terms and
provisions of any indentures, fiscal agency agreements or other
instruments under which such Indebtedness may be issued and the banks
or trust companies to act as trustees, fiscal agents and paying agents
thereunder, (viii) the preparation and filing of all documents
necessary or appropriate in connection with the registration of the
Indebtedness under the Securities Act of 1933, the qualification of an
indenture under the Trust Indenture Act of 1939 and the qualification
under any other applicable Federal, foreign, state, local or other
governmental requirements, (ix) the preparation of any offering
memorandum or other descriptive material relating to the issuance of
such Indebtedness, (x) the listing of the Indebtedness on any United
States or non-United States stock exchange, and (xi) underwriting
arrangements; and be it further
RESOLVED, that the Executive Committee of the Board of Directors,
is delegated, without further action of the Board of Directors, full
power and authority to authorize the issuance and sale by the
Corporation during the Period of Capital Stock, Preferred Stock and
Depositary Shares. In connection therewith, the Executive Committee be,
and it hereby is, delegated full power and authority to determine the
terms and provisions of the Preferred Stock and of the issuance and
sale thereof, including, without limitation, with respect to: (i)
whether the holders thereof shall be entitled to cumulative,
noncumulative or partially cumulative dividends and, with respect to
shares entitled to dividends, the dividend rate or rates, including,
without limitation the methods and procedures for determining such rate
or rates, and any other terms and conditions relating to such
dividends, (ii) whether, and if so to what extent and upon what terms
4
<PAGE>
and conditions, the holders thereof shall be entitled to rights upon
the liquidation of, or upon any distribution of the assets of, the
Company, (iii) whether, and if so upon what terms and conditions, such
shares shall be convertible into, or exchangeable for, shares or other
securities of the Corporation or any other corporation, (iv) whether,
and if so upon what terms and conditions, such shares shall be
redeemable, (v) whether the shares shall be redeemable and subject to
any sinking fund provided for the purchase or redemption of such shares
and, if so, the terms of such fund, (vi) whether the holders thereof
shall be entitled to voting rights and, if so, the terms and conditions
for the exercise thereof, subject to the provisions of Section 2(f) of
Article Four of the Certificate of Incorporation, and (vii) whether the
holders thereof shall be entitled to any other preferences or rights
and, if so, the qualifications, limitations, or restrictions of such
preferences or rights; and be it further
RESOLVED, that the Executive Committee of the Board of Directors,
is delegated, without further action of the Board of Directors, full
power and authority to authorize the issuance and sale by the
Corporation during the Period of Warrants, and the Executive Committee
be, and it hereby is, delegated power and authority to determine the
terms and provisions of the Warrants and of the issuance and sale
thereof, including, without limitation, with respect to: (i) whether
such warrants will be for Indebtedness, Preferred Stock, Depositary
Shares or Capital Stock, and (ii) the form, terms and provisions of any
warrant agreements; and be it further
RESOLVED, that the proper officers of the Corporation be, and
hereby are, authorized, and directed to prepare for filing with the
Securities and Exchange Commission (the "SEC"), Washington, D.C., under
the provisions of the Securities Act of 1933, a shelf registration
statement pursuant to Rule 415 under the Securities Act of 1933, for a
total amount which includes both the $10B authorized herein plus all
amounts then available for issuance pursuant to Registration Statement
No. 333-70521, of Indebtedness, Preferred Stock, Depositary Shares,
Capital Stock and Warrants (collectively the "Securities") of the
Corporation that may be issued in the future pursuant to these
resolutions, and that each of Louis V. Gerstner, Jr., Lawrence R.
Ricciardi, John R. Joyce, Mark Loughridge, Walter S. Berman, Daniel E.
O'Donnell, Andrew Bonzani and Cassio A. Calil, be, and each of
5
<PAGE>
them is hereby vested with full power to act, together or each without
the others, in any and all capacities, in the name and on behalf of the
Corporation to sign, or cause to be signed electronically, such
registration statement (which may constitute a post-effective amendment
to a registration statement previously filed with the SEC) and any and
all amendments to the aforementioned registration statement, and to
file said registration statement and amendments thereto so signed with
all exhibits thereto, and any and all other documents in connection
therewith, with the SEC, and all actions in connection with the
preparation, execution and filing of said registration statement with
the SEC on behalf of and as attorneys for the Corporation are hereby
ratified, approved and adopted in all respects; and be it further
RESOLVED, that the proper officers of the Corporation be, and
they hereby are, authorized in the name and on behalf of the
Corporation, to take any and all action which they may deem necessary
or advisable in order to effect the registration or qualification (or
exemption therefrom) of the Securities for issue, offer, sale or trade
under the Blue Sky or securities laws of any of the States of the
United States of America as well as in any foreign jurisdiction and
political subdivisions thereof, and in connection therewith to execute,
acknowledge, verify, deliver, file or cause to be published any
applications, reports, consents to service of process, appointments of
attorneys to receive service of process and other papers and
instruments which may be required under such laws, and to take any and
all further action which they may deem necessary or advisable in order
to maintain any such registration, qualification or exemption for as
long as they deem necessary or as required by law, and that the
execution by such officers of any such paper or document, or the doing
by them of any act in connection with the foregoing matters shall
conclusively establish their authority therefor from the Corporation
and the ratification by the Corporation of the papers and documents so
executed and the actions so taken; and be it further
6
<PAGE>
RESOLVED, that the Corporation is hereby authorized to list the
Securities on any public exchanges, and that the proper officers of the
Corporation are hereby authorized on behalf of the Corporation to
execute all listing applications, fee agreements and other documents in
connection with the foregoing; and be it further
RESOLVED, that the proper officers of the Corporation be, and
they hereby are, authorized to take all such further action and to
execute all such further instruments and documents in the name and on
behalf of the Corporation and under its corporate seal or otherwise,
and to pay all expenses and taxes as in their judgment shall be
necessary, proper or advisable in order fully to carry out the intent
and accomplish the purposes of the foregoing Resolutions; and be it
further
RESOLVED, that the proper officers of the Corporation shall have
the authority to further delegate, in whole or in part, the authority
provided in these Resolutions to any other officer or employee of the
Corporation or its subsidiaries.
7
<PAGE>
EXHIBIT 25(a)
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
---------------------------------------------
International Business Machines Corporation
(Exact name of obligor as specified in its charter)
New York 13-0871985
(State or other jurisdiction of (I.R.S.employer
incorporation or organization) identification No.)
New Orchard Road
Armonk, New York 10504
(Address of principal executive offices) (Zip Code)
-----------------------------------------
Debt Securities
-----------------------------------------
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
New York State Banking Department, State House, Albany, New York 12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2
<PAGE>
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 27th day of April, 2000.
THE CHASE MANHATTAN BANK
By /s/ Sheik Wiltshire
-------------------
Sheik Wiltshire
Assistant Vice President
3
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1999, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
in Millions
<S> <C>
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin .......................................... $ 13,271
Interest-bearing balances .................................... 30,165
Securities:
Held to maturity securities.................................... 724
Available for sale securities.................................. 54,770
Federal funds sold and securities purchased under
agreements to resell ...................................... 26,694
Loans and lease financing receivables:
Loans and leases, net of unearned income $132,814
Less: Allowance for loan and lease losses 2,254
Less: Allocated transfer risk reserve 0
--------
Loans and leases, net of unearned income,
allowance, and reserve .................................... 130,560
Trading Assets .................................................. 53,619
Premises and fixed assets (including capitalized
leases)....................................................... 3,359
Other real estate owned ......................................... 29
Investments in unconsolidated subsidiaries and
associated companies.......................................... 186
Customers' liability to this bank on acceptances
outstanding .................................................. 608
Intangible assets ............................................... 3,659
Other assets .................................................... 14,554
------
TOTAL ASSETS .................................. $332,198
========
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
LIABILITIES
Deposits
In domestic offices .................................... $102,421
Noninterest-bearing .................................... $41,580
Interest-bearing ....................................... 60,841
In foreign offices, Edge and Agreement
subsidiaries and IBF's ............................... 108,233
Noninterest-bearing ....................................... 6,061
Interest-bearing ....................................... 102,172
Federal funds purchased and securities sold under
agreements to repurchase .............................. 47,425
Demand notes issued to the U.S. Treasury .................. 100
Trading liabilities ....................................... 33,626
Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases):
With a remaining maturity of one year or less .......... 3,964
With a remaining maturity of more than one year
through three years.............................. 14
With a remaining maturity of more than three years.. 99
Bank's liability on acceptances executed and outstanding... 608
Subordinated notes and debentures ......................... 5,430
Other liabilities ......................................... 11,886
TOTAL LIABILITIES ......................................... 313,806
EQUITY CAPITAL
Perpetual preferred stock and related surplus.............. 0
Common stock .............................................. 1,211
Surplus (exclude all surplus related to preferred stock)... 11,066
Undivided profits and capital reserves .................... 7,376
Net unrealized holding gains (losses)
on available-for-sale securities ....................... (1,277)
Accumulated net gains (losses) on cash flow hedges......... 0
Cumulative foreign currency translation adjustments ....... 16
TOTAL EQUITY CAPITAL ...................................... 18,392
------
TOTAL LIABILITIES AND EQUITY CAPITAL ................ $332,198
==========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WILLIAM B. HARRISON, JR. )
HELENE L. KAPLAN ) DIRECTORS
HENRY B. SCHACHT )
5
