Exhibit 3
INTERNATIONAL BUSINESS MACHINES CORPORATION
Debt Securities
$600,000,000 4.25% Notes due 2009
UNDERWRITING AGREEMENT
New York, New York
Dated as of September 5, 2002
To the Representatives named in Schedule I hereto
of the Underwriters named in Schedule II hereto
Dear Sirs:
International Business Machines Corporation, a New York corporation (the
"Company"), proposes to sell to the underwriters named in Schedule II hereto
(the "Underwriters"), for whom you are acting as representatives (the
"Representatives"), the principal amount of its Securities identified in
Schedule I hereto (the "Securities"), to be issued under an indenture dated as
of October 1, 1993 (the "Indenture"), between the Company and JPMorgan Chase
Bank, as trustee (the "Trustee"), as supplemented by the First Supplemental
Indenture dated as of December 15, 1995. If the firm or firms listed in
Schedule II hereto include only the firm or firms listed in Schedule I hereto,
then the terms "Underwriters" and "Representatives", as used herein shall each
be deemed to refer to such firm or firms.
1. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
to, and agrees with each Underwriter that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933 (the "Act") and has filed with the Securities and
Exchange Commission (the "Commission") a registration statement or
statements (the file number or numbers of which is or are set forth in
Schedule I hereto), including a related preliminary prospectus, on such
Form for the registration under the Act of the offering and sale of the
Securities. The Company may have filed one or more amendments thereto,
including the related preliminary prospectus, and has filed a preliminary
prospectus in accordance with Rules 415 and 424(b)(5), each of which has
previously been furnished to you. The Company will next file with the
Commission one of the following: (i) prior to effectiveness of such
registration statement, a further amendment thereto, including the form
of final prospectus, (ii) a final prospectus in accordance with Rules
430A and 424(b)(1) or (4), or (iii) a final prospectus in accordance with
Rules 415 and 424(b)(2) or (5). In the case of clause (ii), the Company
has included in such registration statement or statements, as amended at
the Effective Date, all information (other than Rule 430A Information)
required by the Act and the rules thereunder to be included in the
Prospectus with respect to the Securities and the offering thereof. As
filed, such amendment and form of final prospectus, or such final
prospectus, shall include all Rule 430A Information and, except to the
extent the Representatives shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to you prior
to the Execution Time or, to the extent not completed at the Execution
Time, shall contain only such specific additional information and other
changes (beyond that contained in the latest Preliminary Prospectus) as
the Company has advised you, prior to the Execution Time, will be
included or made therein. If the Registration Statement contains the
undertaking specified by Regulation S-K Item 512(a), the Registration
Statement, at the Execution Time, meets the requirements set forth in
Rule 415(a)(1)(x).
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The terms which follow, when used in this Agreement, shall have the
meanings indicated. The term the "Effective Date" shall mean each date
that the Registration Statement and any post-effective amendment or
amendments thereto became or become effective. "Execution Time" shall
mean the date and time that this Agreement is executed and delivered by
the parties hereto. "Preliminary Prospectus" shall mean any preliminary
prospectus referred to in the preceding paragraph and any preliminary
prospectus included in the Registration Statement at the Effective Date
that omits Rule 430A Information. "Prospectus" shall mean the prospectus
relating to the Securities that is first filed pursuant to Rule 424(b)
after the Execution Time or, if no filing pursuant to Rule 424(b) is
required, shall mean the form of final prospectus included in the
Registration Statement at the Effective Date. "Registration Statement"
shall mean the registration statement or statements referred to in the
preceding paragraph, including incorporated documents as of the filing of
the Company's Annual Report on Form 10-K for the year ended December 31,
2001, exhibits and financial statements, in the form in which it or they
has or have or shall become effective and, in the event any
post-effective amendment thereto becomes effective prior to the Closing
Date (as hereinafter defined), shall also mean such registration
statement or statements as so amended. Such term shall include Rule 430A
Information deemed to be included therein at the Effective Date as
provided by Rule 430A. "Rule 415", "Rule 424", "Rule 430A" and
"Regulation S-K" refer to such rules under the Act. "Rule 430A
Information" means information with respect to the Securities and the
offering thereof permitted to be omitted from the Registration Statement
when it becomes effective pursuant to Rule 430A. Any reference herein to
the Registration Statement, a Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed under
the Securities Exchange Act of 1934 (the "Exchange Act") on or before the
effective date of the Registration Statement or the date of such
Preliminary Prospectus or the Prospectus, as the case may be; and any
reference herein to the terms "amend", "amendment" or "supplement" with
respect to the Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after the effective date of the
Registration Statement, or the date of any Preliminary Prospectus or the
Prospectus, as the case may be, deemed to be incorporated therein by
reference.
(b) On the Effective Date, the Registration Statement did or will,
and when the Prospectus is first filed (if required) in accordance with
Rule 424(b) and on the Closing Date, the Prospectus (and any supplements
thereto) will, comply in all material respects with the applicable
requirements of the Act and the Exchange Act and the respective rules
thereunder; on the Effective Date and on the Closing Date the Indenture
did or will comply in all material respects with the requirements of the
Trust Indenture Act of 1939 (the "Trust Indenture Act") and the rules
thereunder; on the Effective Date, the Registration Statement did not or
will not contain any untrue statement of a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, the Prospectus, if not filed
pursuant to Rule 424(b), did not or will not, and on the date of any
filing pursuant to Rule 424(b) and on the Closing Date, the Prospectus
(together with any supplement thereto) will not, include any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations or warranties as to
(i) that part of the Registration Statement which shall constitute the
Statement of Eligibility and
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Qualification (Form T-1) under the Trust Indenture Act of the
Trustee or (ii) the information contained in or omitted from the
Registration Statement or the Prospectus (or any supplement thereto) in
reliance upon and in conformity with information furnished in writing to
the Company by or on behalf of any Underwriter through the
Representatives specifically for use in connection with the preparation
of the Registration Statement or the Prospectus (or any supplement
thereto).
2. PURCHASE AND SALE. Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Company agrees
to sell to each Underwriter, and each Underwriter agrees, severally and not
jointly, to purchase from the Company, at the purchase price set forth in
Schedule I hereto, the respective principal amounts of the Securities set
forth opposite each respective Underwriter's name in Schedule II hereto,
except that, if Schedule I hereto provides for the sale of Securities pursuant
to delayed delivery arrangements, the respective principal amounts of
Securities to be purchased by the Underwriters shall be as set forth in
Schedule II hereto, less the respective amounts of Contract Securities
determined as provided below. Securities to be purchased by the Underwriters
are herein sometimes called the "Underwriters' Securities" and Securities to
be purchased pursuant to Delayed Delivery Contracts as hereinafter provided
are herein called "Contract Securities".
If so provided in Schedule I hereto, the Underwriters are authorized to
solicit offers to purchase Securities from the Company pursuant to delayed
delivery contracts ("Delayed Delivery Contracts"), substantially in the form
of Schedule III hereto but with such changes therein as the Company may
authorize or approve. The Underwriters will endeavor to make such arrangements
and, as compensation therefor, the Company will pay to the Representatives,
for the account of underwriters, on the Closing Date, the percentage set forth
in Schedule I hereto of the principal amount of the Securities for which
Delayed Delivery Contracts are made. Delayed Delivery Contracts are to be with
institutional investors, including commercial and savings banks, insurance
companies, pension funds, investment companies and educational and charitable
institutions. The Company will make Delayed Delivery Contracts in all cases
where sales of Contract Securities arranged by the Underwriters have been
approved by the Company but, except as the Company may otherwise agree, each
such Delayed Delivery Contract must be for not less than the minimum principal
amount set forth in Schedule I hereto and the aggregate principal amount of
Contract Securities may not exceed the maximum aggregate principal amount set
forth in Schedule I hereto. The Underwriters will not have any responsibility
in respect of the validity or performance of Delayed Delivery Contracts. The
principal amount of Securities to be purchased by each Underwriter as set
forth in Schedule II hereto shall be reduced by an amount which shall bear the
same proportion to the total principal amount of Contract Securities as the
principal amount of Securities set forth opposite the name of such Underwriter
bears to the aggregate principal amount set forth in Schedule II hereto,
except to the extent that you determine that such reduction shall be otherwise
than in such proportion and so advise the Company in writing; provided,
however, that the total principal amount of Securities to be purchased by all
Underwriters shall be the aggregate principal amount set forth in Schedule II
hereto, less the aggregate principal amount of Contract Securities.
3. DELIVERY AND PAYMENT. Delivery of and payment for the Underwriters'
Securities shall be made at the office, on the date and at the time specified
in Schedule I hereto, which date and time may be postponed by agreement
between the Representatives and the Company or as provided in Section 8 hereof
(such date and time of delivery and payment for the Securities being called
the "Closing Date"). Delivery of the Underwriters' Securities shall be made to
the Representatives for the respective accounts of the several Underwriters
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against payment by the several Underwriters through the Representatives
of the purchase price thereof to or upon the order of the Company by certified
or official bank check or checks payable, or wire transfers, in immediately
available funds. The Securities shall be delivered in definitive global form
through the facilities of The Depository Trust Company.
4. AGREEMENTS.
(A) The Company agrees with the several Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement, and any amendment thereof, if not effective at the Execution
Time, to become effective. If the Registration Statement has become or
becomes effective pursuant to Rule 430A, or filing of the Prospectus is
otherwise required under Rule 424(b), the Company will file the
Prospectus, properly completed, pursuant to the applicable paragraph of
Rule 424(b) within the time period prescribed and will provide evidence
satisfactory to the Representatives of such timely filing. The Company
will promptly advise the Representatives (i) when the Registration
Statement shall have become effective, (ii) when any amendment to the
Registration Statement relating to the Securities shall have become
effective, (iii) of any request by the Commission for any amendment of
the Registration Statement or amendment of or supplement to the
Prospectus or for any additional information, (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose and (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose. The Company will use its best efforts
to prevent the issuance of any such stop order and, if issued, to obtain
as soon as possible the withdrawal thereof. The Company will not file any
amendment of the Registration Statement or supplement to the Prospectus
unless the Company has furnished you a copy for your review prior to
filing and will not file any such proposed amendment or supplement to
which you reasonably object.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then amended or supplemented would include any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall
be necessary to amend or supplement the Prospectus to comply with the Act
or the Exchange Act or the respective rules thereunder, the Company will
give the Representatives immediate notice of the occurrence of such event
and promptly will prepare and file with the Commission, subject to the
first sentence of paragraph (a) of this Section 4, an amendment or
supplement which will correct such statement or omission or an amendment
which will effect such compliance.
(c) The Company will make generally available to its security
holders and to the Representatives as soon as practicable, but not later
than 45 days after the end of the 12-month period beginning at the end of
the current fiscal quarter of the Company, an earnings statement (which
need not be audited) of the Company and its subsidiaries, covering a
period of at least 12 months beginning after the end of the current
fiscal quarter of the Company, which will satisfy the provisions of
Section 11(a) of the Act.
(d) The Company will furnish to the Representatives and counsel for
the Underwriters, without charge, copies of the Registration Statement
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(including exhibits thereto) and each amendment thereto which shall
become effective on or prior to the Closing Date and, so long as delivery
of a prospectus by an Underwriter or dealer may be required by the Act,
as many copies of any Preliminary Final Prospectus and the Final
Prospectus and any amendments thereof and supplements thereto as the
Representatives may reasonably request.
(e) The Company will arrange for the qualification of the Securities
for sale under the laws of such jurisdictions as the Representatives may
designate, will maintain such qualifications in effect so long as
required for the distribution of the Securities and will arrange for the
determination of the legality of the Securities for purchase by
institutional investors.
(f) Until the earlier of the day on which the distribution of the
Securities is completed or the business day following the Closing Date,
the Company will not, without the consent of the Representatives, offer
or sell, or announce the offering of, any debt securities covered by the
Registration Statement or any other registration statement filed under
the Act.
(B) The several Underwriters agree with the Company that:
(a) The several Underwriters will pay the expenses of printing and
distributing all documents relating to the offering.
(b) The several Underwriters will pay the reasonable fees and
disbursements of outside counsel for the Company and the Underwriters
relating to the offering.
(c) The several Underwriters will pay any fees of ▇▇▇▇▇'▇ Investors
Service, Inc. and Standard & Poor's Ratings Group, a division of the
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. relating to the rating of the Securities.
(d) The several Underwriters will pay the fees and disbursements of
PricewaterhouseCoopers LLC relating to the preparation of the letter
required by Section 5(e) of this Agreement.
(e) The several Underwriters will pay the reasonable fees and
expenses of JPMorgan Chase Bank as Trustee.
(f) The several Underwriters will pay any and all fees associated
with listing the Securities on any United States or foreign securities
exchange.
(g) The several Underwriters will pay any and all travel expenses
incurred by the Company in connection with the offering of the
Securities.
(h) The several Underwriters will pay any and all other
miscellaneous expenses and/or taxes associated with the offering.
5. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of
the Underwriters to purchase the Underwriters' Securities shall be subject to
the accuracy of the representations and warranties on the part of the Company
contained herein as of the Execution Time, as of the date of the effectiveness
of any amendment to the Registration Statement filed prior to the Closing Date
(including the filing of any document incorporated by reference therein) and
as of the Closing Date, to the accuracy of the statements of the Company made
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in any certificates pursuant to the provisions hereof, to the performance
by the Company of its obligations hereunder and to the following additional
conditions:
(a) If the Registration Statement has not become effective prior to
the Execution Time, unless the Representatives agree in writing to a
later time, the Registration Statement shall have become effective not
later than (i) 6:00 P.M. New York City time, on the date of determination
of the public offering price, if such determination occurred at or prior
to 3:00 P.M. New York City time on such date or (ii) 12:00 Noon on the
business day following the day on which the public offering price was
determined, if such determination occurred after 3:00 P.M. New York City
time on such date; if filing of the Prospectus, or any supplement
thereto, is required pursuant to Rule 424(b), the Prospectus shall have
been filed in the manner and within the time period required by Rule
424(b); and no stop order suspending the effectiveness of the
Registration Statement, as amended from time to time, shall have been
issued and no proceedings for that purpose shall have been instituted or
threatened.
(b) The Company shall have furnished to the Representatives:
(i) the opinion of the General Counsel, an Assistant General
Counsel, an Associate General Counsel or other senior counsel of the
Company, dated the Closing Date, to the effect that:
(A) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
the State of New York, with full corporate power and authority
to own its properties and conduct its business as described in
the Prospectus, and is duly qualified to do business as a
foreign corporation and is in good standing under the laws of
each jurisdiction within the United States which requires such
qualifications wherein it owns or leases material properties or
conducts material business;
(B) the Securities conform in all material respects to the
description thereof contained in the Prospectus;
(C) the Indenture has been duly authorized, executed and
delivered, has been duly qualified under the Trust Indenture
Act, and constitutes a legal, valid and binding obligation
enforceable against the Company in accordance with its terms
(subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar laws
affecting creditors' rights generally from time to time in
effect, and subject, as to enforceability, to general
principles of equity, regardless of whether such enforceability
is considered in a proceeding in equity or at law); and the
Securities have been duly authorized and, when executed and
authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Underwriters
pursuant to this Agreement, in the case of the Underwriters'
Securities, or by the purchasers thereof pursuant to Delayed
Delivery Contracts, in the case of any Contract Securities,
will constitute legal, valid and binding obligations of the
Company entitled to the benefits of the Indenture (subject to
applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium, and other similar laws affecting
creditors' rights generally from time to time in effect);
(D) to the best knowledge of such counsel, there is no
pending or threatened action, suit or proceeding before any
court or governmental agency, authority or body or any
arbitrator involving
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the Company or any of its subsidiaries, of a character
required to be disclosed in the Registration Statement which is
not adequately disclosed in the Prospectus, and there is no
franchise, contract or other document of a character required
to be described in the Registration Statement or Prospectus, or
to be filed as an exhibit, which is not described or filed as
required;
(E) the Registration Statement and any amendments thereto
have become effective under the Act; any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b)
has been made in the manner and within the time period required
by Rule 424(b); to the best knowledge of such counsel, no stop
order suspending the effectiveness of the Registration
Statement, as amended, has been issued, no proceedings for that
purpose have been instituted or are pending or contemplated
under the Act;
(F) this Agreement and any Delayed Delivery Contracts have
been duly authorized, executed and delivered by the Company;
(G) no authorization, approval or other action by, and no
notice to, consent of, order of, or filing with, any United
States Federal or New York governmental authority or regulatory
body is required for the consummation of the transactions
contemplated herein or in any Delayed Delivery Contracts,
except such as have been obtained under the Act and such as may
be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Securities
and such other approvals (specified in such opinion) as have
been obtained;
(H) such counsel has no reason to believe that (1) the
Registration Statement and the Prospectus (except the financial
statements and the notes thereto and other information of an
accounting or financial nature included therein, and the
Statement of Eligibility (Form T-1) included as an exhibit to
the Registration Statement, as to which such counsel need
express no view) were not appropriately responsive in all
material respects to requirements of the Act and the applicable
rules and regulations of the Commission thereunder and (2) the
Registration Statement or any amendment thereof at the time it
became effective contained any untrue statement of a material
fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus, as amended or supplemented,
contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading (in each case except for the financial statements
and the notes thereto and other information of an accounting or
financial nature included therein, as to which such counsel
need express no view); and
(I) none of the issue and sale of the Securities, the
consummation of any other of the transactions herein
contemplated or the fulfillment of the terms hereof or of any
Delayed Delivery Contracts will conflict with, result in a
breach of, or constitute a default under, the charter or
by-laws of the Company or the terms of any indenture or other
agreement or instrument known to such counsel and to which the
Company or any of its subsidiaries is a party or bound, or any
decree or regulation known to such counsel to be applicable to
the Company or any of its subsidiaries of any court, regulatory
body, administrative agency, governmental body or
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arbitrator having jurisdiction over the Company or any of
its subsidiaries.
The statements described in one or more of paragraphs (B),
(C), (E), (F), (G) and (H)(1) of this subsection 5(b)(i) may be
omitted from the opinion of such counsel; provided, however,
that in such event the Company shall also have furnished to the
Representatives the corresponding opinion or letter of ▇▇▇▇▇▇▇,
Swaine & ▇▇▇▇▇, counsel for the Company, described in
subsection 5(b)(ii) or 5(b)(iii) immediately following.
(ii) in the event that the statements described in one or more of
paragraphs (B), (C), (E), (F) or (G) of foregoing subsection 5(b)(i) is
omitted from the opinion delivered pursuant to such subsection, the
opinion of ▇▇▇▇▇▇▇, Swaine & ▇▇▇▇▇, counsel for the Company, dated the
Closing Date, to the effect of the statements so omitted.
In rendering such opinions, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other
than the State of New York or the United States, to the extent they
deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who
are satisfactory to counsel for the Underwriters; and (B) as to
matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company and public officials.
(iii) in the event that the statements in paragraph (H)(1) of
subsection 5(b)(i) are omitted from the opinion provided pursuant to
such subsection, a letter of ▇▇▇▇▇▇▇, Swaine & ▇▇▇▇▇ dated the
Closing Date to the effect that, having participated in conferences
with certain officers of, and with the accountants for, the Company
and having made certain inquiries and investigations in connection
with the preparation of the Registration Statement and the
Prospectus, such counsel has no reason to believe that (i) the
Registration Statement and the Prospectus (except the financial
statements and the notes thereto and other information of an
accounting or financial nature included therein, and the Statement
of Eligibility (Form T-1) included as an exhibit to the Registration
Statement, as to which such counsel need express no view) were not
appropriately responsive in all material respects with requirements
of the Act and the applicable rules and regulations of the
Commission thereunder and (ii) the Registration Statement at the
Effective Date contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the
Prospectus on the Closing Date includes any untrue statement of a
material fact or omits to state a material fact necessary in order
to make the statements therein, in light of the circumstances under
which they were made, not misleading (in each case except for the
financial statements and the notes thereto and other information of
an accounting or financial nature included therein, as to which such
counsel need express no view).
(c) The Representatives shall have received from ▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel for the Underwriters, such opinion or opinions, dated
the Closing Date, with respect to the issuance and sale of the
Securities, the Indenture, any Delayed Delivery Contracts, the
Registration Statement, the Prospectus and other related matters as the
Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as they request for the purpose
of enabling them to pass upon such matters.
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(d) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the principal financial or
accounting officer (or Vice President and Treasurer) of the Company,
dated the Closing Date, to the effect that the signer of such certificate
has carefully examined the Registration Statement, the Prospectus, any
supplement to the Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and the Company has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at or
prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement, as amended, has been issued and no
proceedings for that purpose have been instituted or, to the
Company's knowledge, threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectus, there has been no material adverse
change in the condition (financial or other), earnings, business or
properties of the Company and its subsidiaries, whether or not
arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Prospectus.
(e) At the Closing Date, PricewaterhouseCoopers LLC shall have
furnished to the Representatives a letter or letters (which may refer to
a letter previously delivered to one or more of the Representatives),
dated as of the Closing Date, in form and substance satisfactory to the
Representatives, confirming that they are independent accountants within
the meaning of the Act and the Exchange Act and the respective applicable
published rules and regulations thereunder, that the response, if any, to
Item 10 of the Registration Statement is correct insofar as it relates to
them and stating in effect that:
(i) in their opinion the audited financial statements and
schedules thereto included or incorporated in the Registration
Statement and the Prospectus and reported on by them comply as to
form in all material respects with the applicable accounting
requirements of the Exchange Act and the published rules and
regulations thereunder with respect to financial statements and
financial statement schedules included or incorporated in annual
reports on Form 10-K under the Exchange Act;
(ii) on the basis of a reading of the unaudited financial
statements included or incorporated in the Registration Statement
and the Prospectus and of the latest unaudited financial statements
made available by the Company and its subsidiaries; carrying out
certain specified procedures (but not an 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
meetings of the stockholders, directors and executive committees of
the Company and the Subsidiaries since the date of the latest
audited balance sheet, through a specified date not more than five
business days prior to the date of the letter; and inquiries of
certain officials of the Company who have responsibility for
financial and accounting matters of the Company and its subsidiaries
as to transactions and events subsequent to the date of
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the most recent financial statements incorporated in the
Registration Statement and the Prospectus, nothing came to their
attention which caused them to believe that:
(1) any unaudited financial statements included or
incorporated in the Registration Statement and the Prospectus
do not comply as to form in all material respects with
applicable accounting requirements and with the published rules
and regulations of the Commission with respect to financial
statements included or incorporated in quarterly reports on
Form 10-Q under the Exchange Act; and said unaudited financial
statements are not stated on a basis substantially consistent
with that of the audited financial statements included or
incorporated in the Registration Statement and the Prospectus;
or
(2) with respect to the period subsequent to the date of
the most recent financial statements incorporated in the
Registration Statement and the Prospectus, there were, at a
specified date not more than five business days prior to the
date of the letter, any increases in long-term debt of the
Company and its subsidiaries or decreases in the capital stock
of the Company or decreases in the stockholders' equity of the
Company and its subsidiaries as compared with the amounts shown
on the most recent consolidated balance sheet included or
incorporated in the Registration Statement and the Prospectus,
except in all instances for increases or decreases set forth in
such letter, in which case the letter shall be accompanied by
an explanation by the Company as to the significance thereof
unless said explanation is not deemed necessary by the
Representatives; and
(iii) they have performed certain other procedures as a result
of which they determined that the information described in a
schedule to be delivered on behalf of the Underwriters of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general ledger of the Company) set forth in the Registration
Statement, as amended, the Prospectus, as amended or supplemented,
and in Exhibit 12 to the Registration Statement (including selected
accounting, financial or statistical information included or
incorporated in the Company's Annual Report on Form 10-K
incorporated in the Prospectus or any of the Company's Quarterly
Reports on Form l0-Q incorporated therein), agrees with the general
ledger of the Company and its subsidiaries, excluding any questions
of legal interpretation.
References to the Prospectus in this paragraph (e) include any
supplements thereto at the date of the letter.
(f) Subsequent to the respective dates of which information is given
in the Registration Statement and the Prospectus, there shall not have
been (i) any change or decrease specified in the letter or letters
referred to in paragraph (e) of this Section 5 or (ii) any change, or any
development involving a prospective change, in or affecting the business
or properties of the Company and its subsidiaries the effect of which, in
any case referred to in clause (i) or (ii) above, is, in the judgment of
the Representatives, so material and adverse as to make it impractical or
inadvisable to proceed with the public offering or the delivery of the
Securities as contemplated by the Registration Statement and the
Prospectus.
11
(g) Prior to the Closing Date, the Company shall have furnished to
the Representatives such further information, certificates and documents
as the Representatives may reasonably request.
(h) The Company shall have accepted Delayed Delivery Contracts in
any case where sales of Contract Securities arranged by the Underwriters
have been approved by the Company.
(i) Subsequent to the Execution Time, there shall not have been any
decrease in the ratings of any of the Securities by ▇▇▇▇▇'▇ Investor's
Service, Inc. ("▇▇▇▇▇'▇") or Standard & Poor's Corporation ("S&P") and
neither ▇▇▇▇▇'▇ nor S&P shall have publicly announced that it has placed
any of the Securities on a credit watch with negative implications.
If any of the conditions specified in this Section 5 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or
if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in
form and substance to the Representatives and their counsel, this Agreement
and all obligations of the Underwriters hereunder may be cancelled at, or at
any time prior to, the Closing Date by the Representatives. Notice of such
cancelation shall be given to the Company in writing or by telephone or
telegraph confirmed in writing.
6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale of the Securities
provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 5 hereof is not satisfied
or because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or comply with any provision hereof other than by
reason of a default by any of the Underwriters, the Company will reimburse the
Underwriters severally upon demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the proposed purchase and sale of the Securities.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person who controls any
Underwriter within the meaning of either the Act or the Exchange Act against
any and all losses, claims, damages or liabilities, joint or several, to which
they or any of them may become subject under the Act, the Exchange Act or
other Federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement for the registration of the Securities as originally filed or in any
amendment thereof, or in any Preliminary Prospectus or the Prospectus, or in
any amendment thereof or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and agrees to reimburse each such indemnified party for any legal or other
expenses reasonably incurred, as incurred, by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that (i) the Company will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any
Underwriter through the Representatives specifically for use in connection
with the preparation thereof, and (ii) such indemnity with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter (or
any person controlling such Underwriter) from whom the person asserting any
12
such loss, claim, damage or liability purchased the Securities which are
the subject thereof if such person did not receive a copy of the Prospectus
(or the Prospectus as supplemented) excluding documents incorporated therein
by reference at or prior to the confirmation of the sale of such Securities to
such person in any case where such delivery is required by the Act and the
untrue statement or omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus (or the Prospectus as supplemented
prior to the confirmation of the sale of such Securities to such person). This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person who controls the Company within
the meaning of either the Act or the Exchange Act, to the same extent as
the foregoing indemnity from the Company to each Underwriter, but only
with reference to written information relating to such Underwriter
furnished to the Company by or on behalf of such Underwriter through the
Representatives specifically for use in the preparation of the documents
referred to in the foregoing indemnity. This indemnity agreement will be
in addition to any liability which any Underwriter may otherwise have.
The Company acknowledges that the statements set forth in the last
paragraph of the cover page of the Prospectus and under the heading
"Underwriting" or "Plan of Distribution" and, if Schedule I hereto
provides for sales of Securities pursuant to delayed delivery
arrangements, in the last sentence under the heading "Delayed Delivery
Arrangements" in any Preliminary Prospectus and the Prospectus,
constitute the only information furnished in writing by or on behalf of
the several Underwriters for inclusion in any Preliminary Prospectus or
the Prospectus, and you, as the Representatives, confirm that such
statements are correct.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may
have to any indemnified party otherwise than under this Section 7. In
case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to appoint counsel satisfactory to
such indemnified party to represent the indemnified party in such action;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties which are different from
or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate
counsel to defend such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to appoint counsel to defend such
action and approval by the indemnified party of counsel, the indemnifying
party will not be liable to such indemnified party under this Section 7
for any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof unless (i) the indemnified
party shall have employed separate counsel in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to any local counsel), approved by the
Representatives in the case of paragraph (a) of this Section 7,
representing the indemnified parties under such paragraph (a) who are
parties to such action), (ii) the indemnifying party shall not have
employed counsel
13
reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement
of the action or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party; and except that, if clause (i) or (iii) is
applicable, such liability shall be only in respect of the counsel
referred to in such clause (i) or (iii).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a)
of this Section 7 is due in accordance with its terms but is for any
reason held by a court to be unavailable from the Company on grounds of
policy or otherwise, the Company and the Underwriters shall contribute to
the aggregate losses, claims, damages and liabilities (including legal or
other expenses reasonably incurred in connection with investigating or
defending same) to which the Company and one or more of the Underwriters
may be subject in such proportion so that the Underwriters are
responsible for that portion represented by the percentage that the
underwriting discount bears to the sum of such discount and the purchase
price of the Securities set forth on Schedule I hereto and the Company is
responsible for the balance; provided, however, that (y) in no case shall
any Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the Securities) be responsible
for any amount in excess of the underwriting discount applicable to the
Securities purchased by such Underwriter hereunder and (z) no person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. For purposes of this
Section 7, each person who controls an Underwriter within the meaning of
either the Act or the Exchange Act shall have the same rights to
contribution as such Underwriter, and each person who controls the
Company within the meaning of either the Act or the Exchange Act, each
officer of the Company who shall have signed the Registration Statement
and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to clauses (y) and (z)
of this paragraph (d). Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect of which a claim for contribution may be
made against another party or parties under this paragraph (d), notify
such party or parties from whom contribution may be sought, but the
omission to so notify such party or parties shall not relieve the party
or parties from whom contribution may be sought from any other obligation
it or they may have hereunder or otherwise than under this paragraph (d).
8. DEFAULT BY AN UNDERWRITER. If any one or more Underwriters shall fail
to purchase and pay for any of the Securities agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule II hereto bears to the aggregate amount
of Securities set forth opposite the names of all the remaining Underwriters)
the Securities which the defaulting Underwriter or Underwriters agreed but
failed to purchase; provided, however, that in the event that the aggregate
amount of Securities which the defaulting Underwriter or Underwriters agreed
but failed to purchase shall exceed 10% of the aggregate amount of Securities
set forth in Schedule II hereto, the remaining Underwriters shall have the
right to purchase all, but shall not be under any obligation to purchase any,
of the Securities, and if such nondefaulting Underwriters do not purchase all
the Securities, this Agreement will terminate without liability to any
nondefaulting Underwriter or the Company. In the event of a default by any
Underwriter as set forth in this Section 8, the Closing Date shall be
14
postponed for such period, not exceeding seven days, as the
Representatives shall determine in order that the required changes in the
Registration Statement and the Final Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall
relieve any defaulting Underwriter of its liability, if any, to the Company
and any nondefaulting Underwriter for damages occasioned by its default
hereunder.
9. TERMINATION. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company
prior to delivery of and payment for the Securities, if prior to such time (i)
trading in securities generally on the New York Stock Exchange shall have been
suspended or limited or minimum prices shall have been established on such
Exchange, (ii) a banking moratorium shall have been declared either by Federal
or New York State authorities or (iii) there shall have occurred any outbreak
or material escalation of hostilities or other calamity or crisis the effect
of which on the financial markets of the United States is such as to make it,
in the judgment of the Representatives, impracticable to market the
Securities.
10. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective agreement
representations, warranties, indemnities and other statements of the Company
or its officers and of the Underwriters set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors or controlling persons referred to in Section 7
hereof, and will survive delivery of and payment for the Securities. The
provisions of Sections 6 and 7 hereof shall survive the termination or
cancellation of this Agreement.
11. NOTICES. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telegraphed and confirmed to them, at the address
specified in Schedule I hereto; or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it, at Armonk, New York 10504;
attention of the Treasurer.
12. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 7
hereof, and no other person will have any right or obligation hereunder.
13. APPLICABLE LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
15
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company and the several Underwriters.
Very truly yours,
INTERNATIONAL BUSINESS MACHINES
CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Treasurer
The foregoing Agreement is hereby
confirmed and accepted on the
date specified in Schedule I hereto.
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
By: ▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇.
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇.
Title: Vice President
For themselves and the other several
Underwriters, if any, named in
Schedule II to the foregoing Agreement.
Schedule I
Underwriting Agreement dated September 5, 2002.
Registration No. 333-37034.
Representatives: ▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
Title, Purchase Price and Description of Securities:
Title: 4.25% Notes due 2009
Principal amount: $600,000,000
Purchase price: 98.75% of the principal amount of Notes plus accrued
interest from September 10, 2002
Offering price: 99.15% of the principal amount of Notes plus accrued
interest from September 10, 2002.
Interest: Payable on March 15 and September 15 of each year, commencing
on March 15, 2003.
Sinking fund provisions: None.
Redemption provisions: The Securities are redeemable by the Company in
whole at par upon the occurrence of certain tax events as described
in the prospectus supplement dated the date of this Agreement.
Closing Date, Time and Location: September 10, 2002, 10:00 A.M., at the
offices of Cravath, Swaine & ▇▇▇▇▇, Worldwide Plaza, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇.
Delayed Delivery Arrangements: None.
Items specified pursuant to Section 5(e)(iii) to be covered by the letter from
PricewaterhouseCoopers LLC delivered pursuant to Section 5(e): As set
forth in a schedule delivered on the date hereof on behalf of the
Underwriters.
Other Terms:
1. Section 4(A)(f) is hereby deleted in its entirety.
2. Section 4(B)(c) is amended to read as follows:
" (c) The Representatives will pay in aggregate $100,000 to the
Company as partial reimbursement of the fees of ▇▇▇▇▇'▇ Investors
Service, Inc. and Standard & Poor's Ratings Group, a division of the
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., relating to the rating of the
Securities."
3. Section 4(B)is hereby amended by adding at the end of Section 4(B) the
following Section 4(B)(i).
" (i) The Representatives will pay in aggregate $55,200 to the
Company as reimbursement of the fees of the Commission, relating to
the filing of the Registration Statement and the Prospectus as they
relate to the Notes and an additional $300,000 as a reimbursement of
expenses related to the offering and payment of other amounts."
4. Each of the Underwriters has agreed that it will not offer, sell, or
deliver any of the Securities, directly or indirectly, or distribute
the prospectus supplement or prospectus or any other offering material
2
relating to the Securities, in or from any jurisdiction except under
circumstances that will, to the best of the Underwriters' knowledge
and belief, result in compliance with the applicable laws and
regulations and which will not impose any obligations on the Company.
The Underwriters also agree to abide by the following offering
restrictions:
United Kingdom
Each underwriter has represented and agreed that it and each of its
affiliates:
o has not offered or sold and, prior to the six months after the
date of issue of the Notes will not offer or sell any of the
Securities to persons in the United Kingdom except to persons
whose ordinary activities involve them in acquiring, holding,
managing, or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in
circumstances which have not results and will not result in an
offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995 or the
Financial Services and Markets Act 2000;
o has complied and will comply with all applicable provisions of
the Financial Services and Markets Act 2000 with respect to
anything done by it in relation to the Notes in, from or
otherwise involving the United Kingdom; and
o has only communicated or caused to be communicated and will only
communicate or cause to be communicated any invitation or inducement to
engage in investment activity (within the meaning of Section 21 of the
Financial Services and Markets Act 2000) received by it in connection
with the issue or sale of the notes in circumstances in which Section
21(1) of the Financial Services and Markets Act 2000 does not apply to
IBM.
Germany
No selling prospectus (Verkaufsprospekt) has been or will be
published in respect of the Notes and each Underwriter will be required
to comply with the German Securities Selling Prospectus Act (Wertpapier-
Verkaufsprospektgesetz) of December 13, 1990, as amended.
The Netherlands
The Notes are being issued under the Euro-securities exemption
pursuant to Article 6 of the Exemption Regulation (Vrijstellinsregeling
Wet Toezicht Effectenverkeer) of December 21, 1995, as amended, of The
Netherlands' Securities Market Supervision Act 1995 (Wet Toezicht
Effectenverkeer) and accordingly each Underwriter has represented and
agreed that it has not publicly promoted and will not publicly promote
the offer or sale of the Notes by conducting a generalized advertising or
cold-calling campaign within or outside The Netherlands.
The Republic of France
The Notes are being issued outside the Republic of France and each
Underwriter has represented and agreed that, in connection with their
initial distribution, it has not offered or sold and will not offer or
sell, directly or indirectly, any of the Notes to the public in the
Republic of France and that it has not distributed and will not
distribute or cause to be distributed to the public in the Republic of
France this prospectus supplement or any other offering material relating
to the Notes.
3
Japan
The Notes have not been and will not be registered under the
Securities and Exchange Law of Japan (the "SEL") and each of its
affiliates has represented and agreed that it has not offered or sold,
and it will not offer or sell, directly or indirectly, any of the Notes
in or to residents of Japan or to any persons for reoffering or resale,
directly or indirectly, in Japan or to any resident of Japan, except
pursuant to an exemption from the registration requirements of the SEL
available thereunder and otherwise in compliance with the SEL and the
other relevant laws, regulations and guidelines of Japan.
Hong Kong
Each of the Underwriters and each of its affiliates has represented
and agreed that it has not offered or sold, and it will not offer or
sell, the Notes by means of any document to persons in Hong Kong other
than persons whose ordinary business it is to buy or sell shares or
debentures, whether as principal or agent, or otherwise in circumstances
which do not constitute an offer to the public within the meaning of the
Hong Kong Companies Ordinance (Chapter 32 of the Laws of Hong Kong).
Schedule II
International Business Machines Corporation
$600,000,000 4.25% Notes due 2009
Underwriters Principal Amount of
Notes to be Purchased
▇.▇. ▇▇▇▇▇▇ Securities Inc. $255,000,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated 255,000,000
ABN AMRO Incorporated 5,294,100
Banc of America Securities LLC 5,294,100
Banc One Capital Markets, Inc. 5,294,100
Barclays Capital Inc. 5,294,100
BNP Paribas Securities Corp. 5,294,100
Credit Suisse First Boston Corporation 5,294,100
Deutsche Bank Securities Inc. 5,294,100
Dresdner Kleinwort ▇▇▇▇▇▇▇▇▇▇▇--
Grantchester, Inc. 5,294,100
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. 5,294,100
HSBC Securities (USA) Inc. 5,294,100
ING Financial Markets LLC 5,294,100
▇▇▇▇▇▇ Brothers Inc. 5,294,100
The Royal Bank of Scotland plc 5,294,100
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. 5,294,100
UBS Warburg LLC 5,294,100
▇▇▇▇▇▇▇▇ Capital Partners, L.P. 5,294,100
The ▇▇▇▇▇▇▇▇ Capital Group, L.P. 5,294,400
Total................................. $600,000,000
============
Schedule III
Delayed Delivery Contract
[Insert names and addresses
of lead Representatives]
, 200
Dear Sirs:
The undersigned hereby agrees to purchase from International Business
Machines Corporation (the "Company"), and the Company agrees to sell to the
undersigned, on , 200 , (the "Delivery Date"), $
principal amount of the Company's (the
"Securities") offered by the Company's Final Prospectus dated ,
200 , receipt of a copy of which is hereby acknowledged, at a purchase price
of % of the principal amount thereof, plus accrued xxxxxx, if any,
thereon from , 200 , to the date of payment and delivery, and on
the further terms and conditions set forth in this contract.
Payment for the Securities to be purchased by the undersigned shall be
made on or before 11:00 A.M. on the Delivery Date to or upon the order of the
Company in New York Clearing House (next day) funds, at your office or at such
other place as shall be agreed between the Company and the undersigned upon
delivery to the undersigned of the Securities in definitive, fully registered
form and in such authorized denominations and registered in such names as the
undersigned may request by written or telegraphic communication addressed to
the Company not less than five full business days prior to the Delivery Date.
If no request is received, the Securities will be registered in the name of
the undersigned and issued in a denomination equal to the aggregate principal
amount of Securities to be purchased by the undersigned on the Delivery Date.
The obligation of the undersigned to take delivery of and make payment
for Securities on the Delivery Date, and the obligation of the Company to sell
and deliver Securities on the Delivery Date, shall be subject to the
conditions (and neither party shall incur any liability by reason of the
failure thereof) that (1) the purchase of Securities to be made by the
undersigned, which purchase the undersigned represents is not prohibited on
the date hereof, shall not on the Delivery Date be prohibited under the laws
of the jurisdiction to which the undersigned is subject, and (2) the Company,
on or before the Delivery Date, shall have sold to certain underwriters (the
"Underwriters") such principal amount of the Securities as is to be sold to
them pursuant to the Underwriting Agreement referred to in the Final
Prospectus mentioned above. Promptly after completion of such sale to the
Underwriters, the Company will mail or deliver to the undersigned at its
address set forth below notice to such effect, accompanied by a copy of the
opinion of counsel for the Company delivered to the Underwriters in connection
therewith. The obligation of the undersigned to take delivery of and make
payment for the Securities, and the obligation of the Company to cause the
Securities to be sold and delivered, shall not be affected by the failure of
any purchaser to take delivery of and make payment for the Securities pursuant
to other contracts similar to this contract.
This contract will inure to the benefit of and be binding upon the
parties hereto and their respective successors, but will not be assignable by
either party hereto without the written consent of the other.
It is understood that acceptance of this contract and other similar
contracts is in the Company's sole discretion and, without limiting the
foregoing, need not be on a first come, first served basis. If this contract
is acceptable to the Company, it is required that the Company sign the form of
acceptance below and mail or deliver one of the counterparts hereof to the
undersigned at its address set forth below. This will become a binding
contract between the Company and the undersigned, as of the date first above
written, when such counterpart is so mailed or delivered.
2
This agreement shall be governed by and construed in accordance with the
laws of the State of New York.
Very truly yours,
--------------------------------
(Name of Purchaser)
By
-----------------------------
(Signature and Title)
--------------------------------
(Address)
Accepted:
INTERNATIONAL BUSINESS MACHINES
CORPORATION
By
---------------------------------------