EXHIBIT (1)(b)
$[___________________]
International Business Machines Corporation
U.S. Medium-Term Notes
AGENCY AGREEMENT
__________, 199_
[Agent Addresses]
Dear Sirs:
1. Introduction. International Business Machines Corporation, a New York
corporation (the "Issuer"), confirms its agreement with each of you
(individually an "Agent" and collectively the "Agents") with respect to the
issue and sale from time to time by the Issuer on or after the date hereof of up
to $[_________] in aggregate initial offering price of its Medium-Term
Securities (or for Medium-Term Securities denominated in currencies or currency
units other than U.S. dollars, the equivalent thereof based on the prevailing
exchange rates at the respective times such Medium-Term Securities are first
offered) (the "Securities") issued under Article Three of the Indenture, dated
as of October 1, 1993 (the "Trustee"), as supplemented by the First Supplemental
Indenture thereto dated as of December 15, 1995 (the "Indenture"), between the
Issuer and The Chase Manhattan Bank (National Association), as trustee. The
Securities will be issued, and the terms thereof estab-
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lished, 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 _______________, 199_,
a form of which is included in Registration Statement No. 333-______, as
supplemented as of the Closing Date, including all material incorporated
by reference therein, being hereinafter referred to as the "Prospectus").
Any reference in this Agreement to amending or supplementing the
Prospectus shall be deemed to include the filing of materials incorporated
by reference in the Prospectus after the Closing Date and any reference in
this Agreement to any amendment or supplement to the Prospectus shall be
deemed to include any such materials incorporated by reference in the
Prospectus after the Closing Date.
(b) On the effective date of each registration statement included in
the definition of Registration Statement, such registration statement
conformed, and on the Closing Date the Prospectus as then amended or
supplemented will conform, in all 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
mislead-
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ing, 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.
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.
Unless otherwise mutually agreed upon between the Issuer and the
Agent soliciting such offer, the Agents
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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 or [Attorneys of the
Issuer], not later than 10:00 A.M., New York City time, on the date of
this Agreement or at such other place, and at such later time and date
as may be
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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
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statement or omission or an amendment which will effect such compliance.
Notwithstanding the foregoing, if, at the time of any notification to
suspend solicitations, any Agent shall own any of the Securities with the
intention of reselling them as contemplated by Section 11 hereof, or the
Issuer has accepted an offer to purchase Securities but the related
settlement has not occurred, the Issuer, subject to the provisions of
subsection (a) of this Section, will promptly prepare and file with the
Commission an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance.
(c) The Issuer, during the period when a prospectus relating to the
Securities is required to be delivered under the Act, will file promptly
all documents required to be filed with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act. The Issuer will 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 determination 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.
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(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.
(h) The Issuer confirms as of the date hereof, and each acceptance
by the Issuer of an offer to purchase Securities will be deemed an
affirmation, that the Issuer is in compliance with all provisions of
Section 1 of the Laws of Florida, Chapter 92-198, An Act Relating to
Disclosure of Doing Business with Cuba, and the Issuer further agrees that
if it commences engaging in business with the government of Cuba or with
any person or affiliate located in Cuba after the date the Registration
Statement becomes effective with the Commission or with the Florida
Department of Banking and Finance (the "Department"), whichever date is
later, or if the information reported in the Prospectus, if any,
concerning the Issuer's business with Cuba or with any person or affiliate
located in Cuba changes in any material way, the Issuer will provide the
Department notice of such business or change, as appropriate, in a form
acceptable to the Department.
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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
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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, Assistant General
Counsel or Associate General Counsel of the Issuer, or the
opinion of Cravath, Swaine & Xxxxx, 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 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 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
10
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 or violation 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, moratorium
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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 during 199_,
subject to the establish-ment 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 Security 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
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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 an accounting
13
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
agree-ments 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 Price Waterhouse LLP ("Price Waterhouse"),
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
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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 examination in accordance with
generally accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments set
forth in such letter; a reading of the minutes of the Board of
Directors of the Issuer and the Pricing Committee appointed by the
Board of Directors of the Issuer, if any; and inquiries of certain
officials of the Issuer who have responsibility for financial and
accounting matters as to transactions and events subsequent to the
date of the most recent financial statements included or
incorporated in the Registration Statement and the Prospectus,
nothing came to their attention that caused them to believe that:
(A) any unaudited financial statements included or
incorporated in the Registration Statement and Prospectus do
not comply as to form in all material respects with applicable
accounting requirements and with the published rules and
regulations of the Commission with respect to financial
statements included or incorporated in quarterly reports on
Form 10-Q under the Exchange Act; or said unaudited financial
statements are not fairly presented (except as permitted by
Form 10-Q)
15
in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the
audited financial statements included or incorporated in the
Registration Statement and Prospectus; or
(B) any unaudited capsule information included or
incorporated in the Registration Statement and Prospectus does
not agree with the amounts set forth in the unaudited
consolidated financial statements from which it was derived or
was not determined on a basis substantially consistent with
that of the audited financial statements included or
incorporated in the Registration Statement and Prospectus; and
(iii) they have performed certain other procedures as a result
of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general
accounting records of the Issuer) set forth in the Registration
Statement and the Prospectus, including the information included or
incorporated in Items 1 and 7 of the Issuer's Annual Report on Form
10-K incorporated therein or in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included
or incorporated in any of the Issuer's Quarterly Reports on Form
10-Q incorporated therein, agrees with the accounting records of the
Issuer and its subsidiaries, excluding any questions of legal
interpretation.
References to the Registration Statement and the Prospectus in this
subsection (f) are to such documents as amended and supplemented at the
date of the letter.
(g) The Agents shall have received from Xxxxx Xxxx & Xxxxxxxx,
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.
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(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 November
30, 1997, is also subject to the delivery to the Agents before that date and
thereafter, periodically as appropriate, of an opinion of inside counsel for
the Issuer or Cravath, Swaine & Xxxxx to the effect of sub-paragraph
(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 Xxxxx Xxxx & Xxxxxxxx to the effect of sub-paragraph (g) above) as the
Agents may reasonably request before that date and the Issuer shall have
furnished to Xxxxx Xxxx & Xxxxxxxx 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
17
this Agreement are true and correct at the time of such acceptance and a
covenant that such representations and warranties will be true and correct
at the time of delivery to the purchaser of the Securities relating to
such acceptance as though made at and as of each such time, it being
understood that such representations and warranties shall relate to the
Prospectus as amended or supplemented at each such time. Each such
acceptance by the Issuer of an offer for the purchase of Securities shall
be deemed to constitute an additional representation, warranty and
agreement by the Issuer that, as of the settlement date for the sale of
such Securities, after giving effect to the issuance of such Securities,
of any other Securities to be issued on or prior to such settlement date
and of any other Registered Securities to be issued and sold by the Issuer
on or prior to such settlement date, the aggregate amount of Registered
Securities (including any Securities) which have been issued and sold by
the Issuer will not exceed the amount of Registered Securities registered
pursuant to the Registration Statement.
(b) Each time that the Registration Statement or the Prospectus
shall be amended or supplemented (other than by an amendment or supplement
(i) that relates to an offering by the Issuer of Registered Securities
other than the Securities or (ii) that solely specifies the terms of the
Securities) (each such time being herein referred to as a "Representation
Date"), the Issuer shall, if reasonably requested by the Agents, 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
18
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.
(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
inside counsel for the Issuer or Cravath, Swaine & Xxxxx, in form
satisfactory to the Agents, to the effect set forth in Section 5(d)
hereof, but modified, as necessary, to relate to the Registration
Statement and the Prospectus as amended or supplemented at such
Representation Date; provided, however, that in lieu of such opinion or
opinions, counsel may furnish the Agents with a letter or letters to the
effect that the Agents may rely on a prior opinion delivered under Section
5(d) or this Section 6(c) to the same extent as if it were dated the date
of such letter (except that statements in such prior opinion shall be
deemed to relate to the Registration Statement and the Prospectus as
amended or supplemented at such Representation Date).
(d) At each Representation Date, upon the reasonable request of
the Agents, the Issuer shall cause Price Waterhouse 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
19
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, Price
Waterhouse 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 any
preliminary prospectus or the Prospectus, or arise out of or are based upon the
omission
20
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
21
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 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).
22
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a) of this
Section 7 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Issuer on grounds of policy or otherwise, the
Issuer and each Agent shall contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) to which the Issuer and such
Agents may be subject in such proportion so that each Agent is responsible for
that portion represented by the percentage that the sum of aggregate commissions
received by such Agent pursuant to Section 3(c) hereof in connection with the
sale of the Securities to which such loss, claim, damage or liability relates to
the aggregate principal amount of such Securities and the Issuer is responsible
for the balance; provided, however, that (y) in no case shall any Agent be
responsible for any amount in excess of the commissions received by it for such
Securities to which such loss, claim, damage or liability relates, and (z) no
person found liable for fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
was found not liable for such fraudulent misrepresentation. For purposes of this
Section 7, each person who controls any Agent within the meaning of either the
Act or the Exchange Act shall have the same rights to contribution as such
Agent, and each person who controls the Issuer within the meaning of either the
Act or the Exchange Act, each officer of the Issuer who shall have signed the
Registration Statement or any amendment thereto, and each director of the Issuer
shall have the same rights to contribution as the Issuer, subject in each case
to clause (y) of this paragraph (d). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this paragraph (d), notify such
party or parties from whom contribution may be sought, but the omission to
notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have hereunder or
otherwise than under this paragraph (d).
8. Status of each Agent. In soliciting offers to purchase the
Securities from the Issuer pursuant to this Agreement and in assuming its other
obligations hereunder (other than offers to purchase pursuant to Section 11
23
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.
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
24
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:
Notices to ___________________ shall be directed to it at
______________________, Attention: __________ (Fax:_________).
25
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. This
Agreement may be executed in counterparts and the executed counterparts shall
together constitute a single instrument.
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:
26
By__________________________
Title:
By__________________________
Title:
____________________________
[Name of Lead Agent]
By__________________________
Title:
EXHIBIT A
The Issuer agrees to pay the relevant Agent, in each instance, 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
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 __________,
199_ (the "Agency Agreement"), among the Issuer and the Agents. No Agent will
be obligated to purchase Notes for its own account. The Notes will be issued
pursuant to an Indenture, dated as of October 1, 1993 (the "Indenture"), between
the Issuer and The Chase Manhattan Bank (National Association), as trustee (the
"Trustee"), as supplemented by the First Supplemental Indenture thereto dated as
of December 15, 1995. The Notes will rank equally with all other unsecured and
unsubordinated indebtedness of the Issuer and have been registered with the
Securities and Exchange Commission (the "Commission").
Each Note will be represented initially by either a global security
registered in the name of a nominee of The Depository Trust Company, as
Depositary ("DTC") (a "BookEntry Note") or a certificate issued in definitive
form (a "Certificate Note"). It is currently contemplated that both Fixed Rate
Notes (as defined below) and Floating Rate Notes (as defined below) may be
issued as Book-Entry Notes.
Administrative procedures and specific terms of the Notes and the
offering, to the extent Notes are offered and sold through the Agents, are
explained below. Administrative and record-keeping responsibilities will be
handled for the Issuer by its Treasury Department. The Issuer will advise each
Agent in writing of those persons handling administrative responsibilities with
whom each Agent is to communicate regarding offers to purchase Notes and the
details of their delivery. To the extent that the following procedures conflict
with the provisions of the Notes, the Indenture or the Letter (as defined
below), the relevant provisions of the Note, the Indenture or the Letter shall
control.
2
I. CERTIFICATE NOTES AND GENERAL TERMS
Unless otherwise agreed between 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.
3
PRICE TO PUBLIC: Each Note will be issued at 100% of principal amount,
unless otherwise agreed between the Issuer and the
relevant Agent.
DENOMINATIONS: Unless otherwise agreed between the Issuer and the
relevant Agent, the denominations of the Notes will
be $1,000 or any multiple thereof. The denominations
of Notes denominated in currencies or currency units
other than U.S. dollars will be as agreed between the
Issuer and the relevant Agent.
REGISTRATION: Notes will be issued only in fully registered form.
INTEREST PAYMENT: Unless otherwise specified in an applicable 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
wil 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
4
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 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
5
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, facsimile
transmission or other acceptable means the following
information (the "Purchase Information"):
6
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.
7
12. Presenting Agent's commission (to be paid in the
form of a discount from the proceeds remitted to the
Issuer upon settlement).
The original issue date of, and the settlement date
for, Notes will be the same. Before accepting any
offer to purchase Notes to be settled in less than
three days, the Issuer shall verify that the Trustee
will have adequate time to prepare and authenticate the
Notes. After receiving the details for each offer from
the Presenting Agent, the Issuer will, after recording
the details and any necessary calculations, communicate
the Purchase Information by telephone, facsimile
transmission or other acceptable means, to the Trustee.
Prior to preparing the Notes for delivery, the Trustee
will confirm the Purchase Information by telephone with
the Presenting Agent. The Trustee will assign to and
enter on each Note a transaction number.
Special provisions relating to Certificate Notes
denominated or payable in a currency, currencies, a
currency unit or currency units other than U.S. dollars
may be agreed by the Issuer and the Agents at a later
time.
CONFIRMATION: For each accepted offer solicited by an Agent, the
Presenting Agent will issue a confirmation to the
purchaser, with a copy to the Issuer's Treasury
Department and the Trustee, setting forth the Purchase
Information and delivery and payment instructions.
Note Deliveries Upon the receipt of appropriate
AND CASH PAYMENT: documentation and instructions, which may be by
telephone to be
8
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 a delivery of Certificate Notes:
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
9
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
RATE CHANGES: The Issuer and the Agents will discuss from time to
time the rates to be borne by the Notes that may be
sold as a result of the solicitation of offers by the
Agents. Once any Agent has recorded any indication of
interest in Notes upon certain terms, and communicated
with the Issuer, if the Issuer plans to accept an offer
to purchase Notes upon such terms, it will prepare a
10
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 tte 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
11
attached (other than those retained for files), will be
destroyed.
Suspension of As provided in the Agency Agreement, the Issuer may
Solicitation suspend Amendment or solicitation of purchases at any
Amendment or time and, upon receipt of notice from the Issuer, each
SUPPLEMENT: Agent will forthwith suspend solicitation until such
time as the Issuer has advised them that solicitation
of purchases may be resumed.
If the Agents receive the notice from the Issuer
contemplated by Section 4(b) of the Agency Agreement,
they will promptly suspend solicitation and will only
resume solicitation as provided in the Agency
Agreement. If the Issuer decides to amend or
supplement the Registration Statement or the Prospectus
relating to the Notes (other than by an amendment or
supplement that (i) only specifies the terms of the
Securities or (ii) relates to an offering by the Issuer
of Registered Securities other than the Securities), it
will promptly advise each Agent and will furnish each
Agent with the proposed amendment or supplement in
accordance with the terms of the Agency Agreement. The
Issuer will promptly file or mail to the Commission for
filing such amendment or supplement, provide the Agents
with copies of any such amendment or supplement,
confirm to the Agents that such amendment or supplement
has been filed with the Commission and advise the
Agents that solicitation may be resumed.
Any such suspension shall not affect the Issuer's
obligations under the Agency Agreement; and in the
event that at the time the Issuer suspends
12
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
PROSPECTUS: With respect to each purchase resulting from a
solicitation by any Agent, a copy of the Prospectus, as
most recently amended or supplemented on the date of
delivery thereof (except as provided below), but
excluding materials incorporated by reference therein,
must be delivered to a purchaser prior to or together
with the earlier of delivery of (i) the written
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
13
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
SIGNATURES: The Issuer will cause the Trustee to furnish the Agents
from time to time with the specimen signatures of each
of the Trustee's officers, employees or agents who have
been authorized by the Trustee to authenticate Notes,
but the Agents will have no obligation or liability to
the Issuer or the Trustee in respect of the
authenticity of the signature of any officer, employee
or agent of
14
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.
II. BOOK-ENTRY NOTES
The following procedures supplement and, to the extent inconsistent
therewith, replace the procedures set forth above with respect to the offering
of Book-Entry Notes. In connection with the qualification of the Book-Entry
Notes for eligibility in the book-entry system maintained by DTC, the Trustee
will perform the custodial, document control and administrative functions
described below, in accordance with its respective obligations under a Letter of
Representation (the "Letter") from the Issuer and the Trustee to be entered into
with DTC and a Medium-Term Note Certificate Agreement between the Trustee and
DTC dated as of March 10, 1989, and its obligations as a participant in DTC,
including DTC's Same-Day Funds Settlement System ("SDFS"). Both Fixed and
Floating Rate Notes may be issued in book-entry form.
ISSUANCE: On any date of settlement (as defined under
"Settlement" below) for one or more Book-Entry Notes,
the Issuer will issue a single global security in fully
registered form without coupons (a "Global Security")
representing up to $200,000,000 principal amount of all
such Notes that have the same maturity date, redemption
provisions, if any, repayment provisions, if any,
Interest Payment Dates, interest rate basis, spread or
spread multiplier, maximum or minimum interest rates,
index maturity, Interest Determination Dates, Interest
Reset Dates (as such terms are defined in the
applicable Prospectus Supplement), interest reset
period, original issue date
15
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 The Issuer will arrange with the CUSIP Service Bureau
NUMBERS: of Standard & Poor's Corporation (the "CUSIP Service
Bureau") for the reservation of a series of CUSIP
numbers, consisting of approximately 900 CUSIP numbers
relating to Global Securities representing Book-Entry
Notes. The Issuer will obtain from the CUSIP Service
Bureau a written list of such series of reserved CUSIP
numbers and will deliver to the Trustee and DTC a
written list of CUSIP numbers of such series. The
Trustee will assign CUSIP numbers to Global Securities
as described below under Settlement Procedure "C". DTC
will notify the CUSIP Service Bureau periodically of
the CUSIP numbers that the Trustee has assigned to
Global Securities. The Trustee will notify the Issuer
at any time when fewer than 100 of the reserved CUSIP
numbers remain unassigned to Global Securities, and if
it deems necessary, the Issuer
16
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.
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
17
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 $200,000,000 in aggregate
principal amount, one Global Security will be
authenticated and issued to represent each
18
$200,000,000 of principal amount of the exchanged
Global Securities and an additional Global Security
will be authenticated and issued to represent any
remaining principal amount of such Global Securities
(see "Denominations" below).
Notice of Repayment: With respect to each Book-Entry Note that is repayable
TERMS: at the option of the Holder, unless otherwise specified
in a Pricing Supplement, the Trustee will furnish
DTC on or not more than 60 days prior to the settlement
date pertaining to such Book-Entry Note a notice
setting forth the terms of such repayment option. Such
terms shall include the start date and end dates of the
first exercise period, the purchase date following such
first exercise period, the frequency that such exercise
periods occur (I.E., quarterly, semiannually, annually,
etc.) and, if the repayment option expires before
maturity, the same information (except frequency)
concerning the last exercise period. It is understood
that the exercise period shall be at least 15 calendar
days long and that the purchase date shall be at least
7 calendar days,after the last day of the exercise
period.
Redemption and 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
19
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 $200,000,000. If one or more
Book-Entry Notes having an aggregate principal amount
in excess of $200,000,000 would, but for the preceding
sentence, be represented by a single Global Security,
then one Global Security will be issued to represent
each $200,000,000 principal amount of such Book-Entry
Note or Notes and an additional Global Security will be
issued to represent any remaining principal amount of
such Book-Entry Note or Notes. In such a case, each of
the Global Securities representing such Book-Entry Note
or Notes shall be assigned the same CUSIP number.
INTEREST: PUBLICATION. Standard & Poor's Corporation will use
the information received in the pending deposit message
described under the Settlement Procedure "C" below in
order to include the amount of any interest payable and
certain other information regarding the related Global
Security in the appropriate weekly bond report
published by Standard & Poor's Corporation.
NOTICE OF INTEREST PAYMENT AND REGULAR RECORD DATES.
On the first Business Day of January, April, July and
October of each year, the Trustee will deliver to the
Issuer and DTC a written list of Regular Record Dates
and Interest Payment Dates that will occur with respect
20
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 PAYMENTS OF INTEREST ONLY. Promptly after each Regular
Principal and Record Date, the Trustee will deliver to the Issuer and
INTEREST: 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.
21
PAYMENTS AT MATURITY. On or about the first Business
Day of each month, the Trustee will deliver to the
Issuer and DTC a written list of principal and interest
to be paid on each Global Security maturing either at
stated maturity or on a redemption or repayment date in
the following month. The Issuer, the Trustee and DTC
will confirm the amounts of such principal and interest
payments with respect to each such Global Security on
or about the fifth Business Day preceding the maturity
of such Global Security. The Issuer will pay to the
Trustee, as the paying agent, the principal amount of
such Global Security, together with interest due at
such maturity. The Trustee will pay such amounts to
DTC at the times and in the manner set forth below
under "Manner of Payment". If any maturity of a Global
Security representing Book-Entry Notes is not a
Business Day, the payment due on such day shall be made
on the next succeeding Business Day and no interest
shall accrue on such payment for the period from and
after such maturity. Promptly after payment to DTC of
the principal and interest due at the maturity of such
Global Security, the Trustee will cancel and destroy
such Global Security in accordance with the terms of
the Indenture and deliver a certificate of destruction
to the Issuer.
MANNER OF PAYMENT. The total amount of any principal
and interest due on Global Securities on any Interest
Payment Date or at Maturity shall be paid by the Issuer
to the Trustee in funds available for use by the
Trustee as of 9:30 a.m. (New York City time), or as
soon as
22
practicable thereafter on such date. The Issuer will
make such payment on such Global Securities by wire
transfer to the Trustee. The Issuer will confirm
instructions regarding payment in writing to the
Trustee. Prior to 10:00 a.m. (New York City time) on
each maturity date or as soon as possible thereafter,
following receipt of such funds from the Issuer, the
Trustee will pay by separate wire transfer (using
Fedwire message entry instructions in a form previously
specified by DTC) to an account at the Federal Reserve
Bank of New York previously specified by DTC, in funds
available for immediate use by DTC, each payment of
principal (together with interest thereon) due on
Global Securities on any maturity date. On each
Interest Payment Date, interest payment shall be made
to DTC in same-day funds in accordance with existing
arrangements between the Trustee and DTC. Thereafter,
on each such date, DTC will pay, in 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 tne 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
23
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 Settlement Procedures with regard to each Book-Entry
PROCEDURES: 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 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
24
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.
25
6. CUSIP number of the Global Security
representing such Note.
7. Whether such Global Security will represent
any other Book-Entry Note (to the extent
known at such time).
D. The Issuer will deliver to the Trustee a Global
Security representing such Note.
E. The Trustee will complete and authenticate the
Global Security representing such Note. Prior to
preparing the Global Security for delivery, the
Trustee will confirm the Purchase Information by
telephone with the Presenting Agent.
F. DTC will credit such Note to the Trustee's
participant account at DTC.
G. The Trustee will enter an SDFS deliver order
through DTC's Participant Terminal System
instructing DTC to (i) debit such Note to the
Trustee's participant account and credit such Note
to the Presenting Agent's participant account and
(ii) debit the Presenting Agent's settlement
account and credit the Trustee's settlement
account for an amount equal to the price of such
Note less the Presenting Agent's commission. The
entry of such a delivery order shall constitute a
representation and warranty by the Trustee to DTC
that (i) the Global Security representing such
Book-Entry Note has been
26
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
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".
27
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 For orders of Book-Entry Notes solicited by an Agent
Procedures and accepted by the Issuer for settlement on the first
TIMETABLE: Business Day after the sale date, Settlement Procedures
"A" through "K" set forth above shall be completed as
soon as possible but not later than the respective
times (New York City time) set forth below:
Settlement
PROCEDURE TIME
---------- ----
A 11:00 a.m. on the sale date
B 12:00 noon on the sale date
C 2:00 p.m. on the sale date
D 3:00 p.m. on the sale date
E 9:00 a.m. on settlement date
F 10:00 a.m. on settlement date
G-H 2:00 p.m. on settlement date
I 4:45 p.m. on settlement date
J-K 5:00 p.m. on settlement date
If a sale is to be settled two Business Days after the
sale date, Settlement Procedures "A", "B" and "C" shall
be completed as soon as practicable but no later than
11:00 a.m., 12:00 noon and 2:00 p.m., as the case may
be, on the first Business Day after the sale date.
28
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
29
the Trustee's participant account. DTC will process
the withdrawal message, provided that the Trustee's
participant account contains a principal amount of the
Global Security representing such Note that is at least
equal to the principal amount to be debited. If a
withdrawal message is processed with respect to all the
Book-Entry Notes represented by a Global Security, the
Trustee will xxxx such Global Security "canceled", make
appropriate entries in its records and send such
canceled Global Security to the Issuer. The cusir
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
30
Settlement Procedures "H" and "G", respectively.
Thereafter, the Trustee will deliver the withdrawal
message and take the applicable related actions
described in the preceding paragraph. If such failure
shall have occurred for any reason other than the
failure of the Presenting Agent to provide the Purchase
Information to the Issuer or to provide a confirmation
to the purchaser, the Issuer will reimburse the
Presenting Agent on an equitable basis for its loss of
the use of funds during the period when they were
credited to the account of the Issuer.
Notwithstanding the foregoing, upon any failure to
settle with respect to a Book-Entry Note, DTC may take
any actions in accordance with its SDFS operating
procedures then in effect. In the event of a failure
to settle with respect to one or more, but not all, the
Book-Entry Notes to have been represented by a Global
Security, the Trustee will provide, in accordance with
Settlement Procedure "E", for the authentication and
issuance of a Global Security representing the other
Book-Entry Notes to have been represented by such
Global Security and will make appropriate entries in
its records.
EXHIBIT C
PURCHASE AGREEMENT
, 19
International Business Machines Corporation
Xxxxxx, XX 00000
Attention: Treasurer
The undersigned agrees to purchase the following principal amount of
the Securities described in the Agency Agreement dated __________, 1997 (the
"Agency Agreement"):
Principal Amount $______________________
Interest Rate ______________________
Maturity Date _______________, 19___
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
2
representations and warranties contained in Section 2 of the Agency
Agreement (it being understood that such representations and warranties
shall relate to the Registration Statement and the Prospectus as amended
at such Settlement Date) and to your performance and observance of all
covenants and agreements contained in Sections 4 and 6 thereof. Our
obligation hereunder is also subject to the following conditions:
(a) the satisfaction, at such Settlement Date, of each of the
conditions set forth in subsections (a) and (b) and (d) through (g) of
Section 5 of the Agency Agreement (it being understood that each document
so required to be delivered shall be dated such Settlement Date and that
each such condition and the statements contained in each such document
that relate to the Registration Statement or the Prospectus shall be
deemed to relate to the Registration Statement or the Prospectus, as the
case may be, as amended or supplemented at the time of settlement on such
Settlement Date and except that the opinion described in Section 5(d) of
the Agency Agreement shall be modified so as to state that the 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
3
Federal or New York authorities; or (v) any outbreak or escalation of major
hostilities in which the United States is involved, any declaration of war
by Congress or any other substantial national or international calamity or
emergency if, in our judgment, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable to
proceed with completion of the sale of and payment for the Securities.
[In further consideration of our agreement hereunder, you agree that
between the date hereof and the above Settlement Date, you will not offer
or sell, or enter into any agreement to sell, any debt securities of the
Issuer in the United States, other than sales of Securities, borrowings
under your revolving credit agreements and lines of credit, the private
placement of securities and issuances of your commercial paper.]
If for any reason our purchase of the above Securities is not
consummated, you shall remain responsible for the expenses to be paid or
reimbursed by you pursuant to Section 4 of the Agency Agreement and the
respective obligations of you and the undersigned pursuant to Section 7
shall remain in effect. If for any reason our purchase of the above
Securities is not consummated other than because of our default or a
failure to satisfy a condition set forth in clause (iii), (iv) or (v) of
paragraph (b) above, you shall reimburse us, severally, for all
out-of-pocket expenses reasonably incurred by us in connection with the
offering of the above Securities and not otherwise required to be
reimbursed pursuant to Section 4 of the Agency Agreement.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York. This
4
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
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