Exhibit (1)(b)
$[ ]
International Business Machines Corporation
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U.S. Medium-Term Notes
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AGENCY AGREEMENT
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, 199
[Agents' Addresses]
Dear Sirs:
1. Introduction. International Business Machines Corporation, a
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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 $[ ] aggregate principal amount 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 "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 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
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represents and warrants to, and agrees with, each Agent as follows:
(a) Registration statements of the Issuer (Nos. 33- and 33-
50537), 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 , 1996, a form of which is [included in
Registration Statement No. 33- ][filed with the Commission
pursuant to Rule 424(b)(2)], 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
misleading, except that the foregoing does not apply to
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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
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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 are authorized to solicit
offers to purchase Securities
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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 Cravath, Swaine & ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, 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
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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. In
addition, the Issuer will promptly furnish each Agent with copies of
all press releases or announcements to the general public. 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 statis-
tical 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, 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
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Relating to Disclosure of Doing Business with Cuba, and the Issuer
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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
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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 or Associate General
Counsel of 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 Statement or Prospectus, or to be filed as an
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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
judgment, order, decree 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.
(ii) the opinion of Cravath, Swaine & ▇▇▇▇▇, counsel for the
Issuer, dated the Closing Date, to the effect that:
(A) the Issuer 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;
(B) the authorized Securities conform in all material
respects to the description thereof contained in the
Prospectus;
(C) the Indenture has been duly authorized, executed
and delivered by the Issuer, has been duly qualified under
the Trust Indenture Act, and constitutes a valid and binding
instrument enforceable against the Issuer in accordance with
its terms (subject to applicable bankruptcy, reorganization,
insolvency, fraudulent transfer, moratorium or other similar
laws affecting creditors'
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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 1996, subject to the establishment of
certain terms of the Securities by officers of the Issuer
authorized by such resolutions to establish such terms, and,
when the terms of any such Security have been established as
provided in such resolutions and in the Indenture and such
Security has been executed and authenticated 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;
(D) 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 Statement or the Prospectus, or to be filed as
an exhibit, which is not described or filed as required;
(E) the Registration Statement and any amendments
thereto have become effective under the Act, and, to the
knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement, as amended, has
been issued, and no proceedings for that purpose have been
instituted or threatened;
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(F) this Agreement has been duly authorized, executed
and delivered by the Issuer;
(G) 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; and
(H) none of the issue and sale of the Securities, the
consummation of any other of the transactions herein
contemplated or the fulfillment of the terms hereof will
conflict with, result in a breach or violation of, or
constitute a default under, (x) the charter or by-laws of
the Issuer or (y) any judgment, order, decree 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.
(iii) each such counsel shall also furnish
letter that shall state that such counsel has no reason to believe
that: (i) at the Effective Date the Registration Statement 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, at the date of such
opinion, 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; and (ii) 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
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exhibit to the Registration Statement, as to which such counsel
need express no opinion), appeared on their face to be
appropriately responsive in all material respects to the
requirements of the Act and the Trust Indenture Act and the
applicable rules and regulations thereunder. The letter
furnished by the General Counsel or Associate General Counsel of
the Company shall also state that the documents incorporated by
reference in the Prospectus as amended or supplemented (except
the financial statements and other financial information of an
accounting or financial nature included therein, as to which such
counsel need express no opinion), when they became effective or
were filed with the Commission, as the case may be, complied as
to form in all material respects with the requirements of the Act
or the Exchange Act, as applicable, and the rules and regulations
of the Commission thereunder.
(e) At the Closing Date, the Agents shall have received a
certificate, dated the Closing Date, of the Chief Executive Officer or
any Vice President and the Treasurer, any Assistant Treasurer, or any
principal financial or accounting officer of the Issuer in which such
officers, to the best of their knowledge after reasonable
investigation, shall state that (i) the representations and warranties
of the Issuer in this Agreement are true and correct, (ii) the Issuer
has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to the Closing
Date, (iii) no stop order suspending the effectiveness of the
Registration Statement or of any part thereof has been issued and no
proceedings for that purpose have been instituted or are contemplated
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 each Representation Date referred to in Section 6(d), the
Agents shall have received a letter, dated such date, of Price
Waterhouse LLP ("Price Waterhouse"), confirming that they are
independent
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public accountants within the meaning of the Act and the Exchange Act
and the respective applicable published Rules and Regulations
thereunder, that the response, if any, to Item 10 of the Registration
Statement is correct insofar as it relates to them and stating in
effect that:
(i) in their opinion, the audited financial statements and
schedules thereto included or incorporated in the Registration
Statement and Prospectus and reported on by them comply as to
form in all material respects with the applicable accounting
requirements of the Exchange Act and the related published Rules
and Regulations thereunder with respect to financial statements
and financial statement schedules included or incorporated in
annual reports on Form 10-K under the Exchange Act;
(ii) on the basis of a reading of the unaudited financial
statements included or incorporated in the Registration Statement
and Prospectus and of the latest unaudited financial statements
made available by the Issuer and its subsidiaries; carrying out
certain specified procedures (but not an 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 trans-
actions 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
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included or incorporated in quarterly reports on Form 10-Q
under the Exchange Act; or said unaudited financial
statements are not fairly presented (except as permitted by
Form 10-Q) in conformity with generally accepted accounting
principles applied on a basis substantially consistent with
that of the audited financial statements included or
incorporated in the Registration Statement and Prospectus;
or
(B) any unaudited capsule information included or
incorporated in the Registration Statement and Prospectus
does not agree with the amounts set forth in the unaudited
consolidated financial statements from which it was derived
or was not determined on a basis substantially consistent
with that of the audited financial statements included or
incorporated in the Registration Statement and Prospectus;
and
(iii) they have performed certain other procedures as a
result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Issuer) set forth in the
Registration Statement and the Prospectus, including the
information included or incorporated in Items 1 and 7 of the
Issuer's Annual Report on Form 10-K incorporated therein or in
"Management's Discussion and Analysis of Financial Condition and
Results 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 ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇,
counsel for the Agents, such opinion or opinions, dated the Closing
Date, with respect to the incorporation of the Issuer, the validity of
the
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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.
The obligation of each Agent, as agent of the Issuer, under this
Agreement to solicit offers to purchase Securities at any time after
January 1 of each year, commencing January 1, 1997, is also subject to the
delivery to the Agents before that date of an opinion of Cravath, Swaine &
▇▇▇▇▇ to the effect of sub-paragraph (d)(ii)(C) above with respect to the
Securities to be issued during such year and such other documents and
certificates (including an opinion of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ to the effect
of sub-paragraph (g) above) as the Agents may reasonably request before
that date and the Issuer shall have furnished to ▇▇▇▇▇ ▇▇▇▇ & Warkwell 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:
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(a) Each acceptance by the Issuer of an offer for the purchase
of Securities solicited by any Agent pursuant hereto shall be deemed
to be an affirmation that its representations and warranties contained
in this Agreement are true and correct at the time of such acceptance
and a covenant that such representations and warranties will be true
and correct at the time of delivery to the purchaser of the Securities
relating to such acceptance as though made at and as of each such
time, it being understood that such representations and warranties
shall relate to the 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
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or prior to such settlement date, the aggregate amount of Registered
Securities (including any Securities) which have been issued and sold
by the Issuer will not exceed the amount of Registered Securities
registered pursuant to the Registration Statement.
(b) Each time that the Registration Statement or the Prospectus
shall be amended or supplemented (other than by an amendment or
supplement (i) that relates to an offering by the Issuer of Registered
Securities other than the Securities or (ii) that solely specifies the
terms of the Securities) (each such time being herein referred to as a
"Representation Date"), the Issuer shall, concurrently with such
amendment or supplement, furnish the Agents with a certificate, dated
the date of delivery thereof, of the Chief Executive Officer or any
Vice President and the Treasurer, any Assistant Treasurer, or any
principal financial or accounting officer of the Issuer, in form
satisfactory to the Agents, to the effect that the statements
contained in the certificate covering the matters set forth in
Section 5(e) hereof which was last furnished to the Agents are true
and correct at the time of such amendment or supplement as though made
at and as of such time (except that such statements shall be deemed to
relate to the Registration Statement and the Prospectus as amended or
supplemented at such time and except that the statements contained in
the certificate covering the matters set forth in clause (ii) of
Section 5(e) shall be deemed to relate to the time of delivery of such
certificate) or, in lieu of such certificate, a certificate of the
same tenor as the certificate referred to in Section 5(e), modified as
necessary to relate to the Registration Statement and the Prospectus
as amended or supplemented at the time of delivery of such certificate
and, in the case of the matters set forth in clause (ii) of Sec-
tion 5(e), to the time of delivery of such certificate; provided,
--------
however, that the Issuer shall deliver such a certificate with respect
-------
to a Representation Date arising from the incorporation by reference
into the Prospectus of a quarterly report on Form 10-Q only upon the
reasonable request of the Agents.
(c) At each Representation Date, the Issuer shall, if so
requested by the Agents, concurrently furnish the Agents with a
written opinion or opinions, dated the date of such Representation
Date, of inside
18
counsel for the Issuer or, if so specified by the Agents and solely in
connection with an amendment or supplement setting forth or incorpo-
rating by reference financial statements or other information included
in the Issuer's Annual Reports on Form 10-K, of Cravath, Swaine &
▇▇▇▇▇, 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 on which the Registration
Statement or the Prospectus shall be amended or supplemented to
include additional financial information as a result of the filing of
the Issuer's Annual Report on Form 10-K and, upon the request of the
Agents, at any other such Representation Date, 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 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.
19
(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 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
20
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 Secur-
ities to such person in any case where such delivery is required by the Act
and the untrue statement or omission of a material fact contained in any
preliminary prospectus or the Prospectus was corrected in the Prospectus
(or the Prospectus as amended or supplemented prior to the confirmation of
the sale of such Securities to such person). This indemnity agreement will
be in addition to any liability which the Issuer may otherwise have.
(b) Each Agent agrees to indemnify and hold harmless the Issuer,
each of its directors, each of its officers who signed the Registration
Statement or any amendment thereto, and each person who controls the Issuer
within the meaning of either the Act or the Exchange Act, to the same
extent as the foregoing indemnity from the Issuer to such Agent, but only
with reference to written information relating to such Agent furnished to
the Issuer by such Agent specifically for use in the preparation of the
documents referred to in the foregoing indemnity. This indemnity agreement
will be in addition to any liability which such Agent may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have
to any indemnified party otherwise than under this Section 7. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein, and to the extent that it may elect by
written notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, to assume the defense
thereof, with counsel 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
21
and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assert such legal
defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from
the indemnifying party to such indemnified party of its election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified
party under this Section 7 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the
proviso to the next preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than
one separate counsel, approved by the Agents in the case of
subparagraph (a), representing the indemnified parties under
subparagraph (a) who are parties to such action), (ii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party
to represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has authorized
the employment of counsel for the indemnified party at the expense of the
indemnifying party; and except that, if clause (i) or (iii) is applicable,
such liability shall be only in respect of the counsel referred to in such
clause (i) or (iii).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a) of
this Section 7 is due in accordance with its terms but is for any reason
held by a court to be unavailable from the Issuer on grounds of policy or
otherwise, the Issuer and the Agents 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 any Agent may be subject in such proportion so that
the Agents are responsible for that portion represented by the percentage
that the sum of aggregate commissions received by the Agents pursuant to
Section 3(c) hereof bears to the aggregate principal amount of the
Securities sold hereunder 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, and (z) no person
found liable for fraudu-
22
lent 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 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
23
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 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 which case such purchase shall be made in accordance with the terms of a
separate agreement (a "Purchase Agreement") to be entered into between such
Agent and the Issuer in the form attached hereto as Exhibit C. In
connection with any resale of Securities so purchased, an Agent may agree
with the Issuer that 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 and may reallow to any broker or
dealer any portion of the discount
24
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 [Agent] shall be directed to it at , Attention:
; notices to [Agent] shall be directed to it at
, Attention: ; and notices to the Issuer
shall be directed to it at ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Office of
the Treasurer; or in the case of any party hereto, to such other address or
person as such party shall specify to each other party by a notice 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:
25
CONFIRMED AND ACCEPTED, as of the
date first above written:
[ ]
By
__________________________
Title:
[ ]
By
__________________________
Title:
EXHIBIT A
The Issuer agrees to pay the relevant Agent a commission equal to
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)
---- --------------------
9 months to less than 12 months .125%
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 nine months 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
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 nine months after the
date of issue; provided, however, that each
-------- -------
Floating Rate Note (as defined below) will
mature on an Interest Payment Date (as defined
below) for such Note.
Redemption: The Floating Rate Notes will not be redeemable
----------
prior to maturity. 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: Each Note will bear interest from and including
----------------
its original issue date or, in the case of
Notes issued upon replacement, transfer or
exchange, from the most recent Interest Payment
Date to which interest has been paid or
provided for, to but excluding the maturity
date of such Note; provided, however, that a
-------- -------
Floating Rate Note which has a rate of interest
that is reset weekly will bear interest from
and including its original issue date or the
day following the most recent Record Date (as
defined below) for the most recent Interest
Payment Date to which interest on such Note has
been paid or provided for. Each Note will bear
interest (i) in the case of Notes bearing
interest at a Fixed Rate (the "Fixed Rate
Notes"), at the annual rate stated on the face
thereof, payable semiannually in arrears on
April 1 and October 1 (each an "Interest
Payment Date" with respect to such Fixed Rate
Note) and at maturity and (ii) in the case of
Notes bearing interest at a rate or rates
determined by reference to an
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 Each Agent will promptly advise the Issuer of
------------- each reasonable offer to purchase Notes
Offers: 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 For each offer solicited by an Agent that is
----------- accepted by the Issuer, the Agent who presented
Settlement: 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 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 The Issuer and the Agents will discuss from
Rate Changes: 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
Solicitation may suspend Amendment or solicitation of
Amendment or purchases at any time and, upon receipt of
Supplement: notice from the Issuer, each Agent will
---------- forthwith suspend solicitation until such time
as the Issuer has advised them that
solicitation of purchases may be resumed.
If the Agents receive the notice from the
Issuer contemplated by Section 4(b) of the
Agency Agreement, they will promptly suspend
solicitation and will only resume solicitation
as provided in the Agency Agreement. If the
Issuer decides to amend or supplement the
Registration Statement or the Prospectus
relating to the Notes (other than by an
amendment or supplement that (i) only specifies
the terms of the Securities or (ii) relates to
an offering by the Issuer of Registered
Securities other than the Securities), it will
promptly advise each Agent and will furnish
each Agent with the proposed amendment or
supplement in accordance with the terms of the
Agency Agreement. The Issuer will promptly
file or mail to the Commission for filing such
amendment or supplement, provide the Agents
with copies of any such amendment or
supplement, confirm to the Agents that such
amendment or supplement has been filed with the
Commission and advise the Agents that
solicitation may be resumed.
Any such suspension shall not affect the
Issuer's obligations under the Agency
Agreement; and in the event that at the time
the Issuer suspends
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 With respect to each purchase resulting from a
Prospectus: solicitation by any Agent, a copy of the
---------- Prospectus, as most recently amended or
supplemented on the date of delivery thereof
(except as provided below), but excluding
materials incorporated by 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 pur-
chaser'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 The Issuer will cause the Trustee to furnish
Signatures: 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 $150,000,000 principal amount of all such
Notes that have the same maturity date,
redemption provisions, if any, repayment pro-
visions, 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
Numbers: Bureau 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 $150,000,000 in aggregate
principal amount, one Global Security will be
authenticated and issued to represent each
18
$150,000,000 of principal amount of the
exchanged Global Securities and an additional
Global Security will be authenticated and
issued to represent any remaining principal
amount of such Global Securities (see
"Denominations" below).
Notice of Repayment With respect to each Book-Entry Note that is
Terms: repayable at the option of the Holder, the
----- Trustee will furnish DTC on or not more than
60 days prior to the settlement date pertaining
to such Book-Entry Note a notice setting forth
the terms of such 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
Repayment: Letter with regard to redemptions and
--------- repayments of the Notes. If a Global Security
is to be redeemed or repaid in part, the
Trustee will exchange such Global Security for
two Global Securities, one of which shall
represent the portion of the Global Security
being redeemed or repaid and shall be canceled
immediately after issuance and the other of
which shall represent the remaining portion of
such Global Security and shall bear
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 $150,000,000. If one or more Book-Entry
Notes having an aggregate principal amount in
excess of $150,000,000 would, but for the
preceding sentence, be represented by a single
Global Security, then one Global Security will
be issued to represent each $150,000,000
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
-------------------------
Principal and
Interest: Regular Record Date, the Trustee will deliver
-------- to the Issuer and DTC a written notice
specifying by CUSIP number the amount of
interest to be paid on each Global Security on
the following Interest Payment Date (other than
an Interest Payment Date coinciding with
maturity) and the total of such amounts. The
Issuer will confirm with the Trustee the amount
payable on each Global Security on such
Interest Payment Date. DTC will confirm the
amount payable on each Global Security on such
Interest Payment Date by reference to the daily
or weekly bond reports published by Standard &
Poor's Corporation. The Issuer will pay to the
Trustee the total amount of interest due on
such Interest Payment Date (other than at
maturity), and the Trustee will pay such amount
to DTC at the times and in the manner set forth
below under "Manner of Payment". If any
Interest Payment Date for a Book-Entry Note is
not a Business Day, the payment due on such day
shall be made on the next succeeding Business
Day and no interest shall accrue on such
payment for the period from and after such
Interest Payment Date.
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 Note sold by the Issuer through a
Procedures: 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 ▇▇▇▇▇▇
Guaranty Trust Co., New York N.Y., Account
of International Business Machines
Corporation, Cash Concentration, ABA
Number 021000238, Account Number 001 35
436, 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 mail-
ing a written confirmation to such
purchaser.
Settlement For orders of Book-Entry Notes
Procedures solicited by an Agent and accepted by
Timetable: the Issuer for settlement on the
--------- first Business Day after the sale
date, Settlement Procedures "A"
through "K" set forth above shall be
completed as soon as possible but not
later than the respective times (New
York City time) set forth below:
Settlement
Procedure Time
---------- ----
A 11:00 a.m. on the sale date
B 12:00 noon on the sale date
C 2:00 p.m. on the sale date
D 3:00 p.m. on the sale date
E 9:00 a.m. on settlement
date
F 10:00 a.m. on settlement
date
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 ▇▇▇▇ 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
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Treasurer
The undersigned agrees to purchase the following principal amount
of the Securities described in the Agency Agreement dated , 199
(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 cove-
nants 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
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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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