INTERNATIONAL BUSINESS MACHINES CORPORATION
Debt Securities
$700,000,000 6.50% Debentures due 2028
UNDERWRITING AGREEMENT
New York, New York
To the Representatives named in Schedule I hereto January 6, 1998
of the Underwriters named in Schedule II hereto
Dear Sirs:
International Business Machines Corporation, a New York corporation
(the "Company"), proposes to sell to the underwriters named in Schedule II
hereto (the "Underwriters"), for whom you are acting as representatives
(the "Representatives"), the principal amount of its Securities identified
in Schedule I hereto (the "Securities"), to be issued under an indenture
dated as of October 1, 1993 (the "Indenture"), between the Company and The
Chase Manhattan Bank, as trustee (the "Trustee"), as supplemented by the
First Supplemental Indenture dated as of December 15, 1995. If the firm or
firms listed in Schedule II hereto include only the firm or firms listed in
Schedule I hereto, then the terms "Underwriters" and "Representatives", as
used herein shall each be deemed to refer to such firm or firms.
1. Representations and Warranties. The Company represents and warrants
to, and agrees with each Underwriter that:
(a) The Company meets the requirements for use of Form S-3 under
the Securities Act of 1933 (the "Act") and has filed with the
Securities and Exchange Commission (the "Commission") a registration
statement or statements (the file number or numbers of which is or are
set forth in Schedule I hereto), including a related preliminary
prospectus, on such Form for the registration under the Act of the
offering and sale of the Securities. The Company may have filed one or
more amendments thereto, including the related preliminary prospectus,
and has filed a preliminary prospectus in accordance with Rules 415
and 424(b)(5), each of which has previously been furnished to you. The
Company will next file with the Commission one of the following: (i)
prior to effectiveness of such registration statement, a further
amendment thereto, including the form of final prospectus, (ii) a
final prospectus 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
Quarterly Report on Form 10-Q for the three month period ended March
31, 1997, 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 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
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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 against payment by the several Underwriters
through the Representatives of the purchase price thereof to or upon the
order of the Company by certified or official bank check or checks payable,
or wire transfers, in immediately available funds. The Debentures shall
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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 (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.
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(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
all documents relating to the offering.
(b) The several Underwriters will pay the reasonable fees and
disbursements of outside counsel for the Company 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 Price Waterhouse LLP relating to the preparation of the letter
required by Section 5(e) of this Agreement.
5. Conditions to the Obligations of the Underwriters. The obligations
of the Underwriters to purchase the Underwriters' Securities shall be
subject to the accuracy of the representations and warranties on the part
of the Company contained herein as of the Execution Time, as of the date of
the effectiveness of any amendment to the Registration Statement filed
prior to the Closing Date (including the filing of any document
incorporated by reference therein) and as of the Closing Date, to the
accuracy of the statements of the Company made in any certificates pursuant
to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions:
(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 or an Associate General Counsel of the Company, dated the
Closing Date, to the effect that:
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(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 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
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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
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
8
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.
(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, Price Waterhouse LLP shall have
furnished to the Representatives a letter or letters (which may refer
to a letter previously delivered to one or more of the
Representatives), dated as of the Closing Date, in form and substance
satisfactory to the Representatives, confirming
9
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 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
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or supplemented, and in Exhibit 12 to the Registration Statement
(including selected accounting, financial or statistical information
included or incorporated in the Company's Annual Report on Form 10-K
incorporated in the Prospectus or any of the Company's Quarterly
Reports on Form l0-Q incorporated therein), agrees with the general
ledger of the Company and its subsidiaries, excluding any questions of
legal interpretation.
References to the Prospectus in this paragraph (e) include any
supplements thereto at the date of the letter.
(f) Subsequent to the respective dates of which information is
given in the Registration Statement and the Prospectus, there shall
not have been (i) any change or decrease specified in the letter or
letters referred to in paragraph (e) of this Section 5 or (ii) any
change, or any development involving a prospective change, in or
affecting the business or properties of the Company and its
subsidiaries the effect of which, in any case referred to in clause
(i) or (ii) above, is, in the judgment of the Representatives, so
material and adverse as to make it impractical or inadvisable to
proceed with the public offering or the delivery of the Securities as
contemplated by the Registration Statement and the Prospectus.
(g) Prior to the Closing Date, the Company shall have furnished
to the Representatives such further information, certificates and
documents as the Representatives may reasonably request.
(h) The Company shall have accepted Delayed Delivery Contracts in
any case where sales of Contract Securities arranged by the
Underwriters have been approved by the Company.
(i) Subsequent to the Execution Time, there shall not have been
any decrease in the ratings of any of the Securities by ▇▇▇▇▇'▇
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
11
statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement for
the registration of the Securities as originally filed or in any amendment
thereof, or in any Preliminary Prospectus or the Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and agrees to reimburse each such indemnified party for any
legal or other expenses reasonably incurred, as incurred, by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that (i) the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Underwriter through the Representatives
specifically for use in connection with the preparation thereof, and (ii)
such indemnity with respect to any Preliminary Prospectus shall not inure
to the benefit of any Underwriter (or any person controlling such
Underwriter) from whom the person asserting any such loss, claim, damage or
liability purchased the Securities which are the subject thereof if such
person did not receive a 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
12
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 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
13
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under
this Agreement, the remaining Underwriters shall be obligated severally to
take up and pay for (in the respective proportions which the amount of
Securities set forth opposite their names in Schedule II hereto bears to
the aggregate amount of Securities set forth opposite the names of all the
remaining Underwriters) the Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase; provided, however, that in the
event that the aggregate amount of Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase shall exceed 10%
of the aggregate amount of Securities set forth in Schedule II hereto, the
remaining Underwriters shall have the right to purchase all, but shall not
be under any obligation to purchase any, of the Securities, and if such
nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter
or the Company. In the event of a default by any Underwriter as set forth
in this Section 8, the Closing Date shall be postponed for such period, not
exceeding seven days, as the Representatives shall determine in order that
the required changes in the Registration Statement and the Final Prospectus
or in any other documents or arrangements may be effected. Nothing
contained in this Agreement shall relieve any defaulting Underwriter of its
liability, if any, to the Company and any nondefaulting Underwriter for
damages occasioned by its default hereunder.
9. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company
prior to delivery of and payment for the Securities, if prior to 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.
14
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.
▇▇▇▇▇▇▇ Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
Chase Securities Inc.
Credit Suisse First Boston Corporation
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
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 January 6, 1998.
Registration No. 333-40669.
Representatives:
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
World Financial Center-North ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Chase Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-2020
Credit Suisse First Boston Corporation
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Brothers Inc.
Three World Financial Center
New York, New York 10285-2400
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Title, Purchase Price and Description of Securities:
Title: 6.50% Debentures due 2028.
Principal amount: $700,000,000.
Purchase price: 98.369% of the principal amount of Debentures plus accrued
interest from January 9, 1998.
Offering price: 99.244% of the principal amount of Debentures plus accrued
interest from January 9, 1998.
Interest: Payable on January 15 and July 15 of each year, commencing on
July 15, 1998.
Sinking fund provisions: None.
Redemption provisions: The Debentures are redeemable as a whole or in part,
at the option of the Company at any time, at a redemption price equal
to the greater of (i) 100% of the principal amount of such Debentures
and (ii) the sum of the present values of the Remaining Scheduled
Payments (as defined in the Prospectus) thereon discounted at the
Treasury Rate (as defined in the Prospectus) plus 12.5 basis points,
plus in either case accrued interest to the date of redemption.
Closing Date, Time and Location: January 9, 1998, 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 Price Waterhouse LLP delivered pursuant to Section 5(e): As set
forth in a schedule delivered on the date hereof on behalf of the
Underwriters.
Schedule II
International Business Machines Corporation
$700,000,000 6.50% Debentures Due 2028
Underwriters Principal Amount of
------------ Debentures to be Purchased
--------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ $100,000,000
Incorporated.....
Bear, ▇▇▇▇▇▇▇ & Co. Inc...... 100,000,000
Chase Securities Inc......... 100,000,000
Credit Suisse First Boston
Corporation ............... 100,000,000
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.......... 100,000,000
▇▇▇▇▇▇ Brothers Inc.......... 100,000,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated 100,000,000
-----------
Total................... $700,000,000
============
Schedule III
Delayed Delivery Contract
[Insert name and address
of lead Representative]
,199
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 , 199 , (the "Delivery Date"), $ principal amount of the
Company's (the "Securities") offered by the Company's Final Prospectus
dated , 199 , receipt of a copy of which is hereby acknowledged, at a
purchase price of % of the principal amount thereof, plus accrued , if any,
thereon from , 19 , 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.
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_______________________________________
