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EXHIBIT 1 - SELLING AGENT AGREEMENT
$1,000,000,000
International Business Machines Corporation
IBM Notes
SELLING AGENT AGREEMENT
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June 28, 2002
ABN AMRO Financial Services, Inc.
327 Plaza Real
Suite 225
Boca Raton, FL33432
A.G. Edwards & Sons, Inc.
One North Jefferson Avenue
St. Louis, MO 63103
Edward Jones & Co., L.P.
12555 Manchester
Des Peres, MO 63131
Fidelity Capital Markets, a division of National Financial Services LLC
World Trade Center
200 Seaport Ave, Z2H
Boston, MA 02210
Merrill Lynch, Pierce, Fenner & Smith Incorporated
World Financial Center, North Tower
Attn MTN Product Management
New York, NY 10281-1307
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Prudential Securities
One New York Plaza
15th Floor
New York, NY 10292-2015
Salomon Smith Barney Inc.
388 Greenwich Street
New York, NY 10013
Charles Schwab & Co., Inc.
101 Montgomery Street
San Francisco, CA 94101
UBS PaineWebber Inc.
800 Harbor Blvd.
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Attn Taxable Dept-Corporate Desk
Weehawken, NJ 07087
Ladies and Gentlemen:
1. INTRODUCTION. International Business Machines Corporation, a New York
corporation (the "Issuer"), confirms its agreement with each of you
(individually an "Agent" and collectively the "Agents") with respect to the
issue and sale from time to time by the Issuer on or after the date hereof of up
to $1,000,000,000 in aggregate initial offering price of its Medium-Term Debt
Securities (or for Medium-Term Debt Securities denominated in currencies or
currency units other than U.S. dollars, the equivalent thereof based on the
prevailing exchange rates at the respective times such Medium-Term Securities
are first offered) (the "Securities") issued under Article Three of the
Indenture dated as of October 1, 1993, as supplemented by the First Supplemental
Indenture thereto dated as of December 15, 1995 (the "Indenture"), between the
Issuer and JPMorgan Chase Bank, as trustee (the "Trustee"). The Securities will
be issued, and the terms thereof established, from time to time by the Issuer in
accordance with the Indenture and the Procedures (as defined in Section 3(d)
hereof).
2. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer represents and
warrants to, and agrees with, each Agent as follows:
(a) Registration statements of the Issuer (Nos. 333-37034, 333-70521),
relating to securities of the Issuer (collectively the "Registered Securities"),
including the Securities, have been filed with the Securities and Exchange
Commission (the "Commission") and have become effective (such registration
statements, as amended as of the Closing Date (as defined in Section 3(e)
hereof), including all exhibits and schedules, if any, thereto and all material
incorporated by reference therein, being hereinafter collectively referred to as
the "Registration Statement," the prospectus dated June 20, 2000, which is
included in Registration Statement No. 333-37034 and the Prospectus Supplement
dated June 28, 2002, a form of which has been delivered to you, as supplemented
as of the Closing Date, including all material incorporated by reference
therein, being hereinafter referred to as the "Prospectus"). Any reference in
this Agreement to amending or supplementing the Prospectus shall be deemed to
include the filing of materials incorporated by reference in the Prospectus
after the Closing Date and any reference in this Agreement to any amendment or
supplement to the Prospectus shall be deemed to include any such materials
incorporated by reference in the Prospectus after the Closing Date.
(b) On the effective date of each registration statement included in the
definition of Registration Statement, such registration statement conformed, and
on the Closing Date, the Prospectus as then amended or supplemented will
conform, in all material respects to the requirements of the Securities Act of
1933
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(the "Act"), the Securities Exchange Act of 1934 (the "Exchange Act"), the Trust
Indenture Act of 1939 (the "Trust Indenture Act") and the rules and regulations
of the Commission thereunder (the "Rules and Regulations"), and on its effective
date each registration statement did not, and such Prospectus will not, include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, except that the foregoing does not apply to statements in or
omissions from any of such documents based upon written information furnished to
the Issuer by any Agent specifically for use therein.
3. APPOINTMENT AS AGENT; SOLICITATION AS AGENT. (a) Subject to the terms
and conditions stated herein, the Issuer hereby appoints each of the Agents an
agent of the Issuer for the purpose of soliciting or receiving offers to
purchase the Securities from the Issuer by others. Nothing contained in this
Agreement shall be construed to prevent the Issuer from selling at any time to
any person any other series of debt securities, directly or in continuous
offerings on its own behalf, in a firm commitment underwriting pursuant to an
underwriting agreement. Each Agent agrees to use its reasonable efforts to
solicit purchases of the Securities on the terms and subject to the conditions
set forth herein and in the Procedures (as defined below). Nothing contained in
this Agreement obligates Issuer to sell any Securities or the Agents to buy the
Securities at any time unless an order for such Securities has been accepted.
(b) On the basis of the representations and warranties contained herein,
but subject to the terms and conditions herein set forth, each Agent agrees, as
agent of the Issuer, to solicit offers to purchase the Securities upon the terms
and conditions set forth in the Prospectus, as from time to time amended or
supplemented. Upon receipt of notice from the Issuer as contemplated by Section
4(b) hereof, the Agents shall suspend solicitation of offers to purchase the
Securities until such time as the Issuer shall have furnished them with an
amendment or supplement to the Registration Statement or the Prospectus, as the
case may be, contemplated by Section 4(b) and shall have advised the Agents that
such solicitation may be resumed. The Issuer reserves the right, in its sole
discretion, to suspend solicitation of offers to purchase the Securities
commencing at any time for any period of time or permanently. Upon receipt of
notice from the Issuer, the Agents will forthwith suspend solicitation of offers
to purchase the Securities from the Issuer until such time as the Issuer has
advised the Agents that such solicitation may be resumed. During any such
suspension, the Issuer's obligations under Sections 6(a), 6(b), 6(c) and 6(d)
shall be suspended, except with respect to Securities held by an Agent for
resale during the first 180 days after the Agent's purchase thereof and
identified in a notice from the Agent to the Issuer as being held by such Agent
for resale during such period. Unless otherwise mutually agreed upon between the
Issuer and the Agent soliciting such offer, the Agents are authorized to solicit
offers to purchase Securities only in fully registered form in denominations of
$1,000 or any multiple thereof. The authorized denominations of Securities not
denominated in U.S. dollars will be
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determined by the Issuer at the time of sale. ABN AMRO Financial Services, Inc.
(the "Purchasing Agent") shall communicate to the Issuer, orally or in writing,
each reasonable offer to purchase the Securities received by it as Agent. You
are not authorized to appoint subagents or to engage the service of any other
broker or dealer in connection with the offer or sale of the Securities without
the consent of the Issuer; PROVIDED, HOWEVER, the Purchasing Agent may engage
the service of any other broker or dealer without the consent of the Issuer. The
Purchasing Agent will, however, on a periodic basis, provide the Issuer with a
listing of those brokers or dealers so engaged. The Issuer shall have the sole
right to accept offers to purchase the Securities and may reject any such offer,
in whole or in part. Each Agent shall have the right, in its discretion
reasonably exercised, without notice to the Issuer, to reject any offer to
purchase the Securities received by it, in whole or in part, unless such an
offer has been accepted by such Agent, and any such rejection shall not be
deemed a breach of its agreement contained herein. No Security which the Issuer
has agreed to sell pursuant to this Agreement shall be deemed to have been
purchased and paid for, or sold, by the Issuer until such Security shall have
been delivered to the purchaser thereof against payment by such purchaser.
(c) At the time of delivery of, and payment for, any Securities sold by
the Issuer as a result of a solicitation made by, or offer to purchase received
by, an Agent, the Issuer agrees to pay the Purchasing Agent a commission in
accordance with the schedule set forth in Exhibit A hereto, unless otherwise
agreed. Notwithstanding the foregoing, for Securities that bear a zero interest
rate and are issued at a substantial discount from the principal amount payable
at the date that such Security matures (a "Zero-Coupon Note"), the Issuer agrees
to pay the Purchasing Agent, as consideration for soliciting the sale of the
Zero-Coupon Notes, a commission in the form of a discount equal to the
percentages of the initial offering price of each Zero-Coupon Note sold not in
excess of the commission set forth in Exhibit A hereto. The Purchasing Agent and
the other Agents will share the commission in such proportions as they may
agree.
(d) Administrative procedures respecting the sale of Securities (the
"Procedures") shall be agreed upon from time to time by the Agents and the
Issuer. The initial Procedures, which are set forth in Exhibit B hereto, shall
remain in effect until changed by agreement among the Issuer and the Agents.
Each Agent and the Issuer agree to perform the respective duties and obligations
specifically provided to be performed by each of them herein and in the
Procedures. The Issuer will furnish to the Trustee a copy of the Procedures as
from time to time in effect.
(e) The documents required to be delivered by Section 5 hereof shall be
delivered at the offices of the Issuer in Armonk, New York, or counsel for the
Issuer in New York City, not later than 10:00 A.M., New York City time, on the
date of this Agreement or at such other place, and at such later time and date
as
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may be mutually agreed by the Issuer and the Purchasing Agent, such time and
date being herein called the "Closing Date."
(f) Unless otherwise authorized by the Issuer, all Securities shall be
sold to the public at a purchase price not to exceed 100% of the principal
amount thereof, plus accrued interest, if any, with the exception of Zero-Coupon
Notes. Zero-Coupon Notes shall be sold to the public at a purchase price no
greater than an amount, expressed as a percentage of the principal face amount
of such Securities, equal to (i) the net proceeds to the Issuer on the sale of
such Securities, plus (ii) any commission paid to the Agents, plus (iii) accrued
interest, if any. Such purchase price shall be set forth in the confirmation
statement of the Selling Group (as defined in Exhibit B) member responsible for
such sale, and delivered to the purchaser along with a copy of the Prospectus
(if not previously delivered) and Pricing Supplement.
4. CERTAIN AGREEMENTS OF THE ISSUER. The Issuer agrees with the Agents
that, in connection with each offering of Securities, (a) The Issuer will advise
Purchasing Agent promptly of any proposal to amend or supplement the
Registration Statement or the Prospectus (other than an amendment or supplement
(i) providing solely for a change in the terms of the Securities, (ii) by means
of the filing of materials incorporated by reference in the Prospectus, (iii)
relating to an offering by the Issuer of Registered Securities other than the
Securities or (iv) that is a pricing amendment or supplement relating to
Securities the purchase of which was not solicited by any Agent) and will afford
the Agents a reasonable opportunity to comment on any such proposed amendment or
supplement; and the Issuer will also advise Purchasing Agent of the filing of
any such amendment or supplement and of the institution by the Commission of any
stop order proceedings in respect of the Registration Statement or of any part
thereof and will use its best efforts to prevent the issuance of any such stop
order and to obtain as soon as possible its lifting, if issued.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then amended or supplemented would include an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were made
when such Prospectus is delivered, not misleading, or if it is necessary at any
time to amend the Registration Statement or the Prospectus to comply with the
Act, the Exchange Act or the Rules and Regulations (other than as contemplated
in the parenthetical clause of Section 4(a) hereof), the Issuer will promptly
notify each Agent to suspend solicitation of offers to purchase the Securities;
and if the Issuer shall decide so to amend or supplement the Registration
Statement or the Prospectus, it will promptly advise each Agent by telephone
(with confirmation in writing) and will promptly prepare and file with the
Commission an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance. Notwithstanding the
foregoing, if, at the time of any notification
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to suspend solicitations, any Agent shall own any of the Securities with the
intention of reselling them as contemplated by Section 11 hereof, or the Issuer
has accepted an offer to purchase Securities but the related settlement has not
occurred, the Issuer, subject to the provisions of subsection (a) of this
Section, will promptly prepare and file with the Commission an amendment or
supplement which will correct such statement or omission or an amendment which
will effect such compliance.
(c) The Issuer, during the period when a prospectus relating to the
Securities is required to be delivered under the Act, will file promptly all
documents required to be filed with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act. The Issuer will promptly furnish each
Agent with copies of all material press releases or announcements to the general
public which are not filed with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act and are not otherwise available on the IBM home
page on the Internet, at "http://www.ibm.com." The Issuer will also immediately
notify each Agent of any downgrading in the rating of the Securities or any
other debt securities of the Issuer, any proposal to downgrade the rating of the
Securities or any other debt securities of the Issuer, or any review of the
current rating of the Securities or other debt securities of the Issuer, by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the Act), as soon as the Issuer learns of such downgrading
or proposal to downgrade.
(d) The Issuer will furnish to each Agent copies of the Prospectus and
all amendments and supplements thereto, and all amendments to the Registration
Statement after the date hereof (other than an amendment or supplement (i)
relating to an offering by the Issuer of Registered Securities other than the
Securities or (ii) that solely specifies the terms of the Securities the
purchase of which was not solicited by any Agent), in each case as soon as
available and in such quantities as are reasonably requested.
(e) The Issuer, after consultation with the Purchasing Agent, will
arrange for the qualification of the Securities for sale and the termination of
their eligibility for investment under the laws of such jurisdictions as the
Agents designate and will continue such qualifications in effect so long as
required for the distribution of the Securities.
(f) So long as any Securities are outstanding, if so requested by the
Purchasing Agent, the Issuer will furnish to the Agents, (i) as soon as
practicable after the end of each fiscal year, a copy of its annual report to
stockholders for such year, (ii) as soon as available, a copy of each report or
definitive proxy statement of the Issuer, if any, filed with the Commission
under the Exchange Act or mailed to stockholders, and (iii) from time to time,
such other information concerning the Issuer as the Purchasing Agent may
reasonably request.
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(g) Unless otherwise agreed, the Issuer will pay all expenses incident
to the performance of its obligations under this Agreement and will reimburse
each Agent for any expenses (including fees and disbursements of counsel)
incurred by it in connection with qualification of the Securities for sale and
determination of their eligibility for investment under the laws of such
jurisdictions as such Agent may designate and the printing of memoranda relating
thereto, for any fees charged by investment rating agencies for the rating of
the Securities, for expenses incurred in distributing the Prospectus and all
supplements thereto, any preliminary prospectuses and any preliminary prospectus
supplements, to each Agent and for the reasonable fees and disbursements of
counsel to the Agents.
(h) (i) If the Issuer and the Purchasing Agent mutually agree to list
Securities on an exchange, the Issuer will use its reasonable efforts, in
cooperation with the Agents, to cause such Securities to be accepted for listing
on any such exchange, in each case as the Issuer and the Purchasing Agent shall
deem to be appropriate. In connection with any such agreement to list Securities
on an exchange, the Issuer shall use its reasonable efforts to obtain such
listing promptly and shall furnish any and all documents, instruments,
information and undertakings that may be reasonably necessary or advisable in
order to obtain and maintain the listing. (ii) So long as any Security remains
outstanding and listed on an exchange, if the Prospectus as then amended or
supplemented would include any untrue statement of a material fact or omit to
state any material fact relating to any matter described in the Prospectus the
inclusion of which was required by the listing rules and regulations of such
exchange on which any Securities are listed (the "LISTING RULES") or by such
exchange, the Issuer agrees to provide to the Purchasing Agent information about
the change or matter and to amend or supplement the Prospectus in order to
comply with the Listing Rules or as otherwise requested by that exchange. (iii)
The Issuer further agrees to use reasonable efforts to comply with any
undertakings given by it from time to time to any exchange on which any
Securities are listed.
(i) To notify the Purchasing Agent promptly in writing in the event
that the Issuer does not have a security listed on the New York Stock Exchange.
5. CONDITIONS OF OBLIGATIONS. The obligation of each Agent, whether acting
as agent of the Issuer or as principal under this Agreement, at any time to
solicit offers to purchase the Securities is subject to the accuracy, on the
date hereof, on the Closing Date, on the date of each such solicitation, and at
each of the times of acceptance and of delivery referred to in Section 6(a)
hereof and at each Representation Date (as defined in Section 6(b)), of the
representations and warranties of the Issuer herein, to the accuracy, on each
such date, of the statements of the Issuer's officers in any certificates made
pursuant to the provisions hereof, to the performance, on or prior to each such
date, by the Issuer
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of its obligations hereunder, and to each of the following additional conditions
precedent:
(a) No stop order suspending the effectiveness of the Registration
Statement or of any part thereof shall have been issued and no proceedings for
that purpose shall have been instituted or, to the knowledge of the Issuer or
any Agent, shall be contemplated by the Commission.
(b) The Prospectus, as amended or supplemented as of the Closing Date,
the date of such solicitation or any Representation Date, shall not contain any
untrue statement of fact which, in the opinion of any Agent, is material or
omits to state a fact which, in the opinion of any Agent, is material and is
required to be stated therein or is necessary to make the statements therein not
misleading.
(c) There shall not have occurred between each trade and settlement date
(i) any change, or any development involving a prospective change, in or
affecting particularly the business or properties of the Issuer or its
subsidiaries which, in the judgment of such Agent, materially impairs the
investment quality of the Securities; (ii) any downgrading in the rating of the
Issuer's debt securities or public announcement that such debt securities are
under surveillance or review, with possible negative implications, by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the Act); (iii) any suspension or limitation of trading in
securities generally on the New York Stock Exchange, or any setting of minimum
prices for trading on such exchange, or any suspension of trading of any
securities of the Issuer on any exchange or in the over-the-counter market; (iv)
any banking moratorium declared by Federal or New York authorities; (v) any
outbreak or escalation of major hostilities in which the United States, or with
respect to any Security, any currency of a country in which that Security is
denominated, is involved, any declaration of war by Congress, any material
adverse change in financial markets, or any other substantial national or
international calamity or emergency if, in the judgment of such Agent, the
effect of any such outbreak, escalation, declaration, material adverse change,
calamity or emergency makes it impractical or inadvisable to proceed with
solicitations of purchases of, or sales of, Securities, or (vi) action by any
governmental authority or any material change, or any development involving a
prospective material change, involving currency exchange rates or exchange
controls, which makes it impracticable or inadvisable in the judgment of the any
Agent to proceed with the public offering of the Securities or enforce contracts
for the sale of such Securities.
(d) At the Closing Date, the Agents shall have received:
(i) the opinion of the General Counsel of the Issuer (or any
Assistant General Counsel, Associate General Counsel, or other
internal Counsel of or representing the Issuer having knowledge of
and competence in securities or other financial matters; the "Issuer
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Counsel"), or, at the election of the Issuer, the opinion of
Cravath, Swaine & Moore, outside counsel for the Issuer, dated the
Closing Date, to the effect that:
(A) the Issuer (x) has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of New York, with full corporate power and
authority to own its properties and conduct its business as
described in the Prospectus and (y) is duly qualified to do
business as a foreign corporation and is in good standing
under the laws of each jurisdiction within the United States
which requires such qualification wherein it owns or leases
material properties or conducts material business where such
failure so to qualify may have a material adverse effect on
the financial condition, earnings, business or properties of
the Issuer;
(B) to the knowledge of opining counsel, there is no
pending or threatened action, suit or proceeding before any
court or governmental agency, authority or body or any
arbitrator involving the Issuer or any of its subsidiaries, of
a character required to be disclosed in the Registration
Statement which is not adequately disclosed in the Prospectus,
and there is no franchise, contract or other document of a
character required to be described in the Registration
Statement or Prospectus, or to be filed as an exhibit, which
is not described or filed as required; and the statements in
the Prospectus describing the terms of the Securities and the
provisions of the Indenture fairly summarize the matters
therein described;
(C) none of the issue and sale of the Securities, the
consummation of any other of the transactions contemplated
herein or the fulfillment of the terms hereof will conflict
with, result in a breach of, or constitute a default under,
(x) the charter or by-laws of the Issuer; (y) the terms of any
indenture or other agreement or instrument known to such
counsel and to which the Issuer or any of its subsidiaries is
a party or bound, or (z) any order or regulation known to such
counsel to be applicable to the Issuer or any of its
subsidiaries of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction
over the Issuer or any of its subsidiaries;
(D) the authorized Securities conform in all material
respects to the description thereof contained in the
Prospectus;
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(E) the Indenture has been duly authorized, executed and
delivered by the Issuer, has been duly qualified under the
Trust Indenture Act and constitutes a valid and binding
instrument enforceable against the Issuer in accordance with
its terms (subject to applicable bankruptcy, reorganization,
insolvency, fraudulent transfer, moratorium or other similar
laws affecting creditors' rights generally from time to time
in effect and to general principles of equity, regardless of
whether such enforceability is considered in a proceeding in
equity or at law); and the Securities have been duly
authorized by resolutions of the Board of Directors of the
Issuer for issuance for a period beginning on the effective
date of the Registration Statement and ending upon sale of all
Securities authorized thereunder (the "Period"), subject to
the establishment of certain terms of the Securities by
officers of the Issuer authorized by such resolutions to
establish such terms, and, when the terms of any such Security
have been established as provided in such resolutions and in
the Indenture and such has been executed and authenticated
during such period in accordance with the provisions of the
Indenture and delivered to and paid for by the purchaser
thereof in accordance with the terms of this Agreement, each
such Security, assuming it does not violate any applicable law
then binding on the Issuer, will constitute a valid and
binding obligation of the Issuer entitled to the benefits of
the Indenture;
(F) the Registration Statement and any amendments
thereto have become effective under the Act, and, to the
knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement, as amended, has
been issued, and no proceedings for that purpose have been
instituted or threatened;
(G) this Agreement has been duly authorized, executed
and delivered by the Issuer; and
(H) no consent, approval, authorization or order of any
United States Federal or New York governmental agency or
regulatory body is required for the consummation of the
transactions contemplated herein, except such as have been
obtained under the Act and such as may be required under the
blue sky laws of any jurisdiction in connection with the issue
and sale of the Securities and such other approvals (specified
in such opinion) as have been obtained.
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(ii) such opining counsel shall also furnish a letter, dated
the Closing Date, that shall state that such counsel has no reason
to believe that: (A) the Registration Statement or any amendment
thereof at the time it became effective contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus, as amended or
supplemented, includes an untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading (in each case, except for the financial
statements and other information of an accounting or financial
nature included therein, and the Statement of Eligibility (Form
T-1), included as an exhibit to the Registration Statement, as to
which such counsel need express no view); and (B) the Registration
Statement and the Prospectus as amended or supplemented (except the
financial statements and other information of an accounting or
financial nature included therein, and the Statement of Eligibility
(Form T-1), included as an exhibit to the Registration Statement, as
to which such counsel need express no view), were not appropriately
responsive in all material respects to the requirements of the Act
and the Trust Indenture Act and the applicable rules and regulations
thereunder.
(e) At the Closing Date, the Agents shall have received a certificate,
dated the Closing Date, of the President or any Vice President, and by the
Treasurer, Controller, or Secretary or any Assistant Treasurer, Assistant
Controller or Assistant Secretary of the Issuer in which such officers, to the
best of their knowledge after reasonable investigation, shall state that (i) the
representations and warranties of the Issuer in this Agreement are true and
correct, (ii) the Issuer has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to the
Closing Date, (iii) no stop order suspending the effectiveness of the
Registration Statement or of any part thereof has been issued and no proceedings
for that purpose have been instituted or are threatened by the Commission, and
(iv) subsequent to the date of the most recent financial statements in the
Prospectus, there has been no material adverse change in the financial position
or results of operations of the Issuer and its subsidiaries, except as set forth
in or contemplated by the Prospectus or as described in such certificate.
(f) At the Closing Date, the Agents shall have received a letter, dated
such date, of Pricewaterhouse Coopers LLP ("PWC"), confirming that they are
independent public accountants within the meaning of the Act and the Exchange
Act and the respective applicable published Rules and Regulations thereunder,
that the response, if any, to Item 10 of the Registration Statement is correct
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insofar as it relates to them and stating in effect that: (i) in their opinion,
the audited financial statements and schedules thereto included or incorporated
in the Registration Statement and Prospectus and reported on by them comply as
to form in all material respects with the applicable accounting requirements of
the Exchange Act and the related published Rules and Regulations thereunder with
respect to financial statements and financial statement schedules included or
incorporated in annual reports on Form 10-K under the Exchange Act; (ii) on the
basis of a reading of the unaudited financial statements included or
incorporated in the Registration Statement and Prospectus and of the latest
unaudited financial statements made available by the Issuer and its
subsidiaries; carrying out certain specified procedures (but not an examination
in accordance with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the comments set
forth in such letter; a reading of the minutes of the Board of Directors of the
Issuer and the Pricing Committee appointed by the Board of Directors of the
Issuer, if any; and inquiries of certain officials of the Issuer who have
responsibility for financial and accounting matters as to transactions and
events subsequent to the date of the most recent financial statements included
or incorporated in the Registration Statement and the Prospectus, nothing came
to their attention that caused them to believe that:
(A) any unaudited financial statements included or incorporated in the
Registration Statement and Prospectus do not comply as to form in all
material respects with applicable accounting requirements and with the
published rules and regulations of the Commission with respect to financial
statements included or incorporated in quarterly reports on Form 10-Q under
the Exchange Act; or said unaudited financial statements are not fairly
presented (except as permitted by Form 10-Q) in conformity with generally
accepted accounting principles applied on a basis substantially consistent
with that of the audited financial statements included or incorporated in
the Registration Statement and Prospectus; or
(B) any unaudited capsule information included or incorporated in the
Registration Statement and Prospectus does not agree with the amounts set
forth in the unaudited consolidated financial statements from which it was
derived or was not determined on a basis substantially consistent with that
of the audited financial statements included or incorporated in the
Registration Statement and Prospectus; and (iii) they have performed
certain other procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature (which is
limited to accounting, financial or statistical information derived from
the general accounting records of the Issuer) set forth in the Registration
Statement and the Prospectus, including the information included or
incorporated in Items 1 and 7 of the Issuer's Annual Report on Form 10-K
incorporated therein or in "Management's Discussion and Analysis of
Financial Condition and
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Results of Operations" included or incorporated in any of the Issuer's
Quarterly Reports on Form 10-Q incorporated therein, agrees with the
accounting records of the Issuer and its subsidiaries, excluding any
questions of legal interpretation.
References to the Registration Statement and the Prospectus in this
subsection (f) are to such documents as amended and supplemented at the date of
the letter.
(g) The Agents shall have received from Davis Polk & Wardwell, counsel for
the Agents, such opinion or opinions, dated the Closing Date, with respect to
the validity of the Securities, the Registration Statement, the Prospectus and
other related matters as they may require, and the Issuer shall have furnished
to such counsel such documents as they request for the purpose of enabling them
to pass upon such matters.
(h) With respect to any Security denominated in a currency other than the
U.S. dollar, more than one currency or a composite currency or any Security the
principal or interest of which is indexed to such currency, currencies or
composite currency, there shall not have occurred a suspension or material
limitation in foreign exchange trading in such currency, currencies or composite
currency by a major international bank, a general moratorium on commercial
banking activities in the country or countries issuing such currency, currencies
or composite currency, the outbreak or escalation of hostilities involving, the
occurrence of any material adverse change in the existing financial, political
or economic conditions of, or the declaration of war or a national emergency by,
the country or countries issuing such currency, currencies or composite currency
or the imposition or proposal of exchange controls by any governmental authority
in the country or countries issuing such currency, currencies or composite
currency.
The obligation of each Agent, as agent of the Issuer, under this Agreement
to solicit offers to purchase Securities at any time after the end of the Period
is also subject to the delivery to the Agents before that date and thereafter,
periodically as appropriate, of an opinion from either Issuer Counsel or
Cravath, Swaine & Moore, to the effect of subparagraph (d)(i)(E) above with
respect to the Securities to be issued during the period set forth therein
(which shall include the period of contemplated solicitation) and such other
documents and certificates (including an opinion of Davis Polk & Wardwell to the
effect of subparagraph (g) above) as the Agents may reasonably request before
that date and the Issuer shall have furnished to Davis Polk & Wardwell such
documents as they may reasonably request before that date for the purpose of
enabling them to render such opinion.
The Issuer will furnish the Agents with such conformed copies of such
opinions, certificates, letters and documents as they reasonably request.
14
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6. ADDITIONAL COVENANTS OF THE ISSUER. The Issuer agrees that (a) Each
acceptance by the Issuer of an offer for the purchase of Securities (whether
through the Purchasing Agent as agent or to the Purchasing Agent as principal)
and each delivery of Securities (whether through an Agent as agent or to one or
more Agents as principal) shall be deemed to be an affirmation that its
representations and warranties contained in this Agreement are true and correct
at the time of such acceptance and a covenant that such representations and
warranties will be true and correct at the time of delivery to the purchaser of
the Securities relating to such acceptance as though made at and as of each such
time, it being understood that such representations and warranties shall relate
to the Prospectus as amended or supplemented at each such time. Each such
acceptance by the Issuer of an offer for the purchase of Securities shall be
deemed to constitute an additional representation, warranty and agreement by the
Issuer that, as of the settlement date for the sale of such securities, after
giving effect to the issuance of such Securities, of any other Securities to be
issued on or prior to such settlement date and of any other Registered
Securities to be issued and sold by the Issuer on or prior to such settlement
date, the aggregate amount of Registered Securities (including any Securities)
which have been issued and sold by the Issuer will not exceed the amount of
Registered Securities registered pursuant to the Registration Statement.
(b) Each time that the Registration Statement or the Prospectus shall be
amended or supplemented (other than by an amendment or supplement (i) that
relates to an offering by the Issuer of Registered Securities other than the
Securities or (ii) that solely specifies the terms of the Securities) (each such
time being herein referred to as a "Representation Date"), the Issuer shall,
concurrently with such amendment or supplement, furnish the Agents with a
certificate, dated the date of delivery thereof, of the President or any Vice
President, and by the Treasurer, the Controller, the Secretary or any Assistant
Treasurer, Assistant Controller or Assistant Secretary of the Issuer, in form
satisfactory to the Agents, to the effect that the statements contained in the
certificate covering the matters set forth in Section 5(e) hereof which was last
furnished to the Agents are true and correct at the time of such amendment or
supplement as though made at and as of such time (except that such statements
shall be deemed to relate to the Registration Statement and the Prospectus as
amended or supplemented at such time and except that the statements contained in
the certificate covering the matters set forth in clause (ii) of Section 5(e)
shall be deemed to relate to the time of delivery of such certificate) or, in
lieu of such certificate, a certificate of the same tenor as the certificate
referred to in Section 5(e), modified as necessary to relate to the Registration
Statement and the Prospectus as amended or supplemented at the time of delivery
of such certificate and, in the case of the matters set forth in clause (ii) of
Section 5(e), to the time of delivery of such certificate; provided, however,
that the Issuer shall deliver such certificate with respect to a Representation
Date arising from the incorporation by reference into the Prospectus of a
current report on Form 8-K or a quarterly report on Form 10-Q only upon the
reasonable request of the Agents.
15
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(c) At each Representation Date, the Issuer shall, if reasonably requested
by the Purchasing Agent, concurrently furnish the Agents with a written opinion
or opinions, dated the date of such Representation Date, of Issuer Counsel or
Cravath, Swaine & Moore, in form satisfactory to the Agents, to the effect set
forth in Section 5(d) hereof, but modified, as necessary, to relate to the
Registration Statement and the Prospectus as amended or supplemented at such
Representation Date; provided, however, that in lieu of such opinion or
opinions, counsel may furnish the Agents with a letter or letters to the effect
that the Agents may rely on a prior opinion delivered under Section 5(d) or this
Section 6(c) to the same extent as if it were dated the date of such letter
(except that statements in such prior opinion shall be deemed to relate to the
Registration Statement and the Prospectus as amended or supplemented at such
Representation Date).
(d) At each Representation Date on which the Registration Statement or the
Prospectus shall be amended or supplemented to include additional financial
information as a result of filing of the Issuer's Annual Report on Form 10-K, or
upon the reasonable request of the Purchasing Agent, the Issuer shall cause PWC
concurrently to furnish the Agents with a letter, addressed jointly to the
Issuer and the Agents and dated the date of such Representation Date, in form
and substance satisfactory to the Agents, to the effect set forth in Section
5(f) hereof but modified to relate to the Registration Statement and the
Prospectus as amended or supplemented at such Representation Date, with such
changes as may be necessary to reflect changes in the financial statements and
other information derived from the accounting records of the Issuer; provided,
however, that if the Registration Statement or the Prospectus is amended or
supplemented solely to include financial information as of and for a fiscal
quarter, PWC may limit the scope of such letter to the audited financial
statements included in such amendment or supplement unless there is contained
therein any other accounting, financial or statistical information that, in the
reasonable judgment of the Agents, should be covered by such letter, in which
event such letter shall also cover such other information and procedures as
shall be agreed upon by the Agents.
(e) The Issuer agrees that any obligation of a person who has agreed to
purchase Securities as the result of solicitation by any Agent pursuant hereto
to make payment for and take delivery of such Securities shall be subject to (i)
the accuracy, on the related settlement date fixed pursuant to the Procedures,
of the Issuer's representation and warranty deemed to be made to the Agents
pursuant to the last sentence of subsection (a) of this Section 6, and (ii) the
satisfaction, on such settlement date, of each of the conditions set forth in
Sections 5(a), (b) and (c), it being understood that under no circumstance shall
any Agent have any duty or obligation to exercise the judgment permitted under
Section 5(b) or (c) on behalf of any such person.
(f) The Issuer agrees to make generally available to its security holders
"earning statements" satisfying the provisions of Section 11(a) of the
Securities
16
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Act of 1933 and Rule 158 thereunder, which requirement is deemed satisfied under
such Rule through the Issuer's timely filing of periodic reports under Section
13 or 15(d) of the Exchange Act of 1934.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Issuer agrees to indemnify and
hold harmless each Agent and each person who controls such Agent within the
meaning of either the Act or the Exchange Act against any and all losses,
claims, damages, liabilities, or expenses, 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, liabilities, or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement relating to
the Securities as originally filed or in any amendment thereto, or in any
preliminary prospectus or the Prospectus, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agrees to reimburse each Agent for any legal or other expenses reasonably
incurred by such Agent in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that (i) the Issuer
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any of such
documents in reliance upon and in conformity with written information furnished
to the Issuer by any Agent specifically for use in connection with the
preparation thereof and (ii) such indemnity with respect to any preliminary
prospectus or the Prospectus shall not inure to the benefit of any Agent (or any
person controlling such Agent) through which the person asserting any such loss,
claim, damage or liability purchased the Securities which are the subject
thereof if such person did not receive a copy of the Prospectus (or the
Prospectus as so amended or supplemented),excluding documents incorporated
therein by reference, at or prior to the earlier of the confirmation of the sale
of such Securities or the delivery of the Securities to such person in any case
where such delivery is required by the Act and the untrue statement or omission
of a material fact contained in any preliminary prospectus or the Prospectus was
corrected in the Prospectus (or the Prospectus as amended or supplemented prior
to the confirmation of the sale of such Securities to such person). This
indemnity agreement will be in addition to any liability which the Issuer may
otherwise have.
(b) Each Agent agrees to indemnify and hold harmless the Issuer, each of
its directors, each of its officers who signed the Registration Statement or any
amendment thereto, and each person who controls the Issuer within the meaning of
either the Act or the Exchange Act, to the same extent as the foregoing
indemnity from the Issuer to such Agent, but only with reference to written
information relating to such Agent furnished to the Issuer by such Agent
specifically for use in the Registration Statement and Prospectus referred to in
the
17
<Page>
foregoing indemnity. This indemnity agreement will be in addition to any
liability which such Agent may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 7, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 7. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent
that it may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel satisfactory to such indemnified party; provided,
however, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by the Agents in the case of subparagraph (a),
representing the indemnified parties under subparagraph (a) who are parties to
such action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party; and except that, if clause (i)
or (iii) is applicable, such liability shall be only in respect of the counsel
referred to in such clause (i) or (iii).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a) of this
Section 7 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Issuer on grounds of policy or otherwise, the
Issuer and each Agent shall contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred in
connection
18
<Page>
with investigating or defending same) to which the Issuer and such Agents may be
subject in such proportion so that each Agent is responsible for that portion
represented by the percentage that the sum of aggregate commissions received by
such Agent pursuant to Section 3(c) hereof in connection with the sale of the
Securities to which such loss, claim, damage or liability relates bears to the
aggregate principal amount of such Securities, and the Issuer is responsible for
the balance; provided, however, that (y) in no case shall any Agent be
responsible for any amount in excess of the commissions received by it for such
Securities to which such loss, claim, damage or liability relates, and (z) no
person found liable for fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
was found not liable for such fraudulent misrepresentation. For purposes of this
Section 7, each person who controls any Agent within the meaning of either the
Act or the Exchange Act shall have the same rights to contribution as such
Agent, and each person who controls the Issuer within the meaning of either the
Act or the Exchange Act, each officer of the Issuer who shall have signed the
Registration Statement or any amendment thereto, and each director of the Issuer
shall have the same rights to contribution as the Issuer, subject in each case
to clause (y) of this paragraph (d). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this paragraph (d), notify such
party or parties from whom contribution may be sought, but the omission to
notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have hereunder or
otherwise than under this paragraph (d).
8. STATUS OF EACH AGENT. In soliciting offers to purchase the Securities
from the Issuer pursuant to this Agreement and in assuming its other obligations
hereunder (other than offers to purchase pursuant to Section 11 hereof), each
Agent is acting solely as agent for the Issuer and not as principal. Each Agent
will make reasonable efforts to assist the Issuer in obtaining performance by
each purchaser whose offer to purchase Securities from the Issuer has been
solicited by such Agent and accepted by the Issuer, but such Agent shall have no
liability to the Issuer in the event any such purchase is not consummated for
any reason. If the Issuer shall default on its obligations to deliver Securities
to a purchaser who has agreed to purchase Securities as a result of solicitation
by any Agent pursuant hereto, and whose offer the Issuer has accepted, the
Issuer (i) shall hold the Agents harmless against any loss, claim or damages
arising from or as a result of such default by the Issuer, and (ii) in
particular, shall pay to the Agents any commission to which they would be
entitled in connection with such sale.
9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, covenants, representations, warranties and other
statements of the Issuer or its officers and of the Agents set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any
19
<Page>
Agent, the Issuer or any of their respective representatives, officers or
directors or any controlling person and will survive delivery of and payment for
the Securities. If this Agreement is terminated pursuant to Section 10 or for
any other reason, the Issuer shall remain responsible for the expenses to be
paid or reimbursed by it pursuant to Section 4(g) and the obligations of the
Issuer under Section 4(f) and Section 6(f) and the respective obligations of the
Issuer and the Agents pursuant to Section 7 shall remain in effect. In addition,
if any such termination shall occur either (i) at a time when any Agent shall
own any of the Securities with the intention of reselling them as contemplated
by Section 11 hereof or (ii) after the Issuer has accepted an offer to purchase
Securities solicited by any Agent pursuant hereto and prior to the related
settlement, the obligations of the Issuer under the last sentence of Section
4(b), under Sections 4(a), 4(c), 4(d), 4(e) and Section 6 and, in the case of a
termination occurring as described in (ii) above, under Section 3(c) and under
the last sentence of Section 8, shall also remain in effect.
10. TERMINATION. This Agreement may be terminated at any time by
either party hereto upon the giving of five business days written notice of such
termination to the other party hereto. In the event of any such termination,
neither party shall have any liability to the other party hereto, except for
obligations hereunder which expressly survive the termination of this Agreement
and except that, if at the time of termination an offer for the purchase of
Securities shall have been accepted by the Issuer but the time of delivery to
the purchaser or his agent of the Security or Securities relating thereto shall
not yet have occurred, the Issuer shall have the obligations provided herein
with respect to such Security or Securities.
Subsequent to the execution of a Terms Agreement, (i) the Purchasing Agent
may terminate such Terms Agreement, and (ii), if the Purchasing Agent does not
elect to terminate such Terms Agreement pursuant to clause (i) of this sentence,
upon the request of an Agent with respect to Securities to be purchased through
the Purchasing Agent by such Agent, the Purchasing Agent shall terminate such
Terms Agreement to the extent of the Securities that were to be purchased
through the Purchasing Agent by such requesting Agent, in each case immediately
upon notice to the Issuer, at any time prior to the Settlement Date relating
thereto, if there shall have occurred any of the circumstances as described in
sections 5(c)(i) through 5(c)(vi) above.
11. PURCHASE AS PRINCIPAL. Each sale of Securities to an Agent as
principal shall be made in accordance with the terms of this Agreement and a
separate agreement, substantially in the form of Exhibit C hereto, to be entered
into on behalf of such Agent(s) by the Purchasing Agent, which will provide for
the sale of such Securities to, and the purchase and reoffering thereof by, the
Purchasing Agent as principal. Each such separate agreement (which may be an
oral agreement and confirmed in writing as described below between the
Purchasing Agent and the Issuer) is herein referred to as a "Terms Agreement".
20
<Page>
A Terms Agreement may also specify certain provisions relating to the reoffering
of such Securities by the Purchasing Agent. The Purchasing Agent's agreement to
purchase Securities pursuant to any Terms Agreement shall be deemed to have been
made on the basis of the representations, warranties and agreements of the
Issuer herein contained and shall be subject to the terms and conditions herein
set forth. Except pursuant to a Terms Agreement, under no circumstances shall
you be obligated to purchase any Securities for your own account. Each Terms
Agreement, whether oral (and confirmed in writing which may be by facsimile
transmission) or in writing, shall describe the Securities to be purchased
pursuant thereto by the Purchasing Agent as principal, and may specify, among
other things, the principal amount of Securities to be purchased, the interest
rate or formula and maturity date or dates of such Securities, the interest
payment dates, if any, the price to be paid to the Issuer for such Securities,
the initial public offering price at which the Securities are proposed to be
reoffered, and the time and place of delivery of and payment for such Securities
(the "Settlement Date"), whether the Securities provide for a survivor's option
or for optional redemption by the Issuer and on what terms and conditions, and
any other relevant terms. Terms Agreements may take the form of an exchange of
any standard form of written telecommunication between the Purchasing Agent and
the Issuer.
In connection with the resale of the Securities purchased, you are not
authorized to appoint subagents or to engage the service of any other broker or
dealer, nor may you reallow any portion of the discount paid to you by the
Issuer in excess of the designated reallowance portion; PROVIDED, HOWEVER, that
the Purchasing Agent may engage the service of any other broker or dealer
without the consent of the Issuer. The Purchasing Agent will however, on a
periodic basis, provide the Issuer with a listing of those brokers or dealers so
engaged. Unless authorized by the Purchasing Agent in each instance, each Agent
agrees not to purchase and sell Securities for which an order from a client has
not been received.
Each purchase of Securities by the Purchasing Agent from the Issuer shall
be at a discount from the principal amount of each such Security on the date of
issue not in excess of the applicable commission set forth in Exhibit A hereto.
Notwithstanding the foregoing, for Zero-Coupon Notes, each purchase of
Zero-Coupon Notes by the Purchasing Agent from the Issuer shall be at a discount
from the initial offering price of each such Security on the date of issue not
in excess of the applicable commission set forth in Exhibit A hereto.
12. NOTICES. Except as otherwise provided herein, all notices and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if mailed or transmitted by any standard form of telecommunication.
Except as otherwise provided in the Procedures:
To the Issuer:
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Notices to International Business Machines Corporation shall be directed to it
in care of the Assistant Treasurer, Operations, New Orchard Road, Armonk, New
York 10504, Attention: Assistant Treasurer (Fax: 914-499-2883),
with a copy to:
Corporate Legal Department, New Orchard Road, Mail Stop 329, Armonk, New York
10504, Attention: Securities Counsel-IBM Corporation (Fax: 914-499-6445).
To the Purchasing Agent on behalf of the Agents:
Notices to ABN AMRO Financial Services, Inc. shall be directed to it at ABN AMRO
Financial Services, Inc., 327 Plaza Real, Suite 225, Boca Raton, FL 33432,
Attention: Compliance Officer (Fax:561-361-1248).
In the case of any party hereto, alternatively notice may be directed to
such other address or person as such party shall specify to each other party by
a notice given in accordance given in accordance with the provisions of this
Section 12. Any such notice shall take effect at the time of receipt.
13. SUCCESSORS. This Agreement will inure to the benefit of and be binding
upon the parties hereto, their respective successors, the officers and directors
and controlling persons referred to in Section 7 and, to the extent provided in
Section 6(e), any person who has agreed to purchase Securities from the Issuer
as the result of solicitation by any Agent pursuant hereto, and no other person
will have any right or obligation hereunder.
14. GOVERNING LAW; COUNTERPARTS. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to the conflicts of laws principles thereof. This Agreement may be
executed in counterparts and the executed counterparts shall together constitute
a single instrument.
15. ENTIRE AGREEMENT. This Agreement incorporates the entire agreement
between the parties hereto with respect to the transactions contemplated herein.
All prior negotiations and agreements between the parties are merged in, and
superseded by, this Agreement and there are no agreements, representations or
warranties between the parties other than those set forth or provided for
herein.
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If the foregoing correctly sets forth our agreement, please indicate your
acceptance hereof in the space provided for that purpose below.
Very truly yours,
INTERNATIONAL BUSINESS MACHINES CORPORATION
/s/ Cassio A. Calil
- ---------------------------
By: Cassio A. Calil
Title: Assistant Treasurer
23
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CONFIRMED AND ACCEPTED, as of the date first above written:
ABN AMRO FINANCIAL SERVICES, INC.
/s/ Douglas H. Bretz
- ---------------------------
By: Douglas H. Bretz
Title: Group Vice President
A.G. EDWARDS & SONS, INC.
/s/ John F. Fechter
- ---------------------------
By: John F. Fechter
Title: Vice President
EDWARD JONES & CO., L.P.
/s/ Phil Schwab
- ---------------------------
By: Phil Schwab
Title: General Principal
FIDELITY CAPITAL MARKETS, A DIVISION OF NATIONAL FINANCIAL SERVICES LLC
/s/ Andrew Fay
- ---------------------------
By: Andrew Fay
Title: Vice President
MERRILL LYNCH, PIERCE, FENNER & Smith Incorporated
/s/ Scott G. Primrose
- ---------------------------
By: Scott G. Primrose
Title: Authorized Signatory
24
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MORGAN STANLEY & CO. INCORPORATED
/s/ Harold J. Hendershot III
- ---------------------------------
By: Harold J. Hendershot III
Title: Executive Director
PRUDENTIAL SECURITIES
/s/ Frederick John Tate, Jr.
- ---------------------------------
By: Frederick John Tate, Jr.
Title: Managing Director
SALOMON SMITH BARNEY INC.
/s/ Martha D. Bailey
- ---------------------------------
By: Martha D. Bailey
Title: Senior Vice President
CHARLES SCHWAB & CO., INC.
/s/ Mark Mesinger
- ---------------------------------
By: Mark Mesinger
Title: Vice President, Fixed Income Trading
UBS PAINEWEBBER INC.
/s/ James Leblanc
- ---------------------------------
By: James Leblanc
Title: Senior Vice President
25
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EXHIBIT A
International Business Machine Corporation
IBM Notes
DEALER AGENT PROGRAM
The following Concessions are payable as a percentage of the non-discounted
Price to Public of each Note sold through the Purchasing Agent.
<Table>
12 months to less than 23 months................. 0.200%
23 months to less than 35 months................. 0.400%
35 months to less than 47 months................. 0.625%
47 months to less than 59 months................. 0.750%
59 months to less than 71 months................. 1.000%
71 months to less than 83 months................. 1.100%
83 months to less than 95 months................. 1.200%
95 months to less than 107 months................ 1.300%
107 months to less than 119 months............... 1.400%
119 months to less than 131 months............... 1.500%
131 months to less than 143 months............... 1.600%
143 months to less than 179 months............... 1.750%
179 months to less than 239 months.............. 2.000%
239 months to 360 months......................... 2.500%
</Table>
A-1
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EXHIBIT B
International Business Machines Corporation
(the "ISSUER")
$1,000,000,000
IBM Notes
WITH MATURITIES OF 1 YEAR OR MORE FROM DATE OF ISSUE
ADMINISTRATIVE PROCEDURES
IBM Notes with maturities of 1 year or more from date of issue (the
"NOTES") are offered on a continuing basis by the Issuer. The Notes will be
offered by ABN AMRO Financial Services, Inc. (the "PURCHASING AGENT") and
A.G. Edwards & Sons, Inc., Edward Jones & Co., L.P., Fidelity Capital
Markets, a division of National Finacial Services LLC, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated,
Prudential Securities, Salomon Smith Barney Inc., Charles Schwab & Co.,
Inc. and UBS PaineWebber Inc. (collectively, the "AGENTS") pursuant to a
Selling Agent Agreement among the Issuer and the Agents dated as of the
date hereof (the "SELLING AGENT AGREEMENT") and one or more terms
agreements substantially in the form attached to the Selling Agent
Agreement as Exhibit C (each a "TERMS AGREEMENT"). The Notes are being
resold by the Purchasing Agent (and by any Agent that purchases them from
the Purchasing Agent) to (i) customers of the Agents or (ii) selected
broker-dealers (the "SELLING GROUP") for distribution to their customers
pursuant to a Master Selected Dealers Agreement (a "DEALERS AGREEMENT")
attached hereto as Exhibit E. The Agents have agreed to use their
reasonable best efforts to solicit offers to purchase Notes. The Notes will
be senior debt and have been registered with the Securities and Exchange
Commission (the "COMMISSION"). JPMorgan Chase Bank is trustee (the
"TRUSTEE") under an Indenture, dated as of October 1, 1993, as supplemented
by a First Supplemental Indenture dated as of December 15, 1995 as further
amended or supplemented from time to time, between the Issuer and the
Trustee (the "INDENTURE") covering the Notes. Pursuant to the terms of the
Indenture, the trustee also will serve as authenticating agent, issuing
agent and paying agent.
Each tranche of Notes will be issued in book-entry form and represented by
one or more fully registered global notes without coupons (each, a "GLOBAL
NOTE") (in Master Note Format) held by the Trustee, as agent for the
Depository Trust Corporation ("DTC") and recorded in the book-entry system
maintained by DTC. Each Global Note will have the annual interest rate,
maturity and other terms set forth in the relevant Pricing Supplement (as
defined in the Selling Agent Agreement). Owners of beneficial interests in
a Global Note will be entitled to physical delivery of Notes issued in
certificated form equal in principal amount to
B-1
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their respective beneficial interests only upon certain limited
circumstances described in the Indenture.
Administrative procedures and specific terms of the offering are explained
below. Administrative responsibilities will be handled for the Issuer by
competent individuals in its Treasury Operations Group; accountable
document control and record-keeping responsibilities will similarly be
performed by the Treasury Operations Group. The Issuer will advise the
Agents and the Trustee in writing of those persons handling administrative
responsibilities with whom the Agents and the Trustee are to communicate
regarding offers to purchase Notes and the details of their delivery.
Notes will be issued in accordance with the administrative procedures set
forth herein. To the extent the procedures set forth below conflict with or
omit certain of the provisions of the Notes, the Indenture, the Selling
Agent Agreement or the Prospectus and the Pricing Supplement (together, the
"PROSPECTUS"), the relevant provisions of the Notes, the Indenture, the
Selling Agent Agreement and the Prospectus shall control. Capitalized terms
used herein that are not otherwise defined shall have the meanings ascribed
thereto in the Selling Agent Agreement, the Prospectus in the form most
recently filed with the Commission pursuant to Rule 424 of the Securities
Act, or the Indenture.
ADMINISTRATIVE PROCEDURES FOR NOTES
In connection with the qualification of Notes for eligibility in the
book-entry system maintained by DTC, the Trustee will perform the
custodial, document control and administrative functions described below,
in accordance with its obligations under a Letter of Representations from
the Issuer and the Trustee to DTC, dated June 28, 2002, and a Medium-Term
Note Certificate Agreement between the Trustee and DTC (the "CERTIFICATE
AGREEMENT"), dated December 2, 1988, and its obligations as a participant
in DTC, including DTC's Same-Day Funds Settlement System ("SDFS"). The
procedures set forth below may be modified in compliance with DTC's then
applicable procedures and upon agreement by the Issuer, the Trustee and the
Purchasing Agent.
Maturities: Each Note will mature on a date (the "MATURITY DATE") not
less than one year after the date of delivery by the Issuer
of such Note. Notes will mature on any date selected by the
initial purchaser and agreed to by the Issuer. "MATURITY"
when used with respect to any Note means the date on which
the outstanding principal amount of such Note becomes due
and payable in full in accordance with its terms, whether at
its Maturity Date or by declaration of acceleration, call
for redemption, repayment or otherwise.
Issuance: All Notes will be represented initially by a single Global
Note (in the Form of a Master Note). Each Note will be dated
and issued as of the
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date of its authentication by the Trustee.
Each Note will bear an original issue date (the "ORIGINAL
ISSUE DATE"). The Original Issue Date shall remain the same
for all Notes subsequently issued upon registration of
transfer, exchange or substitution of an original Note
regardless of their dates of authentication.
Identification The Issuer has received from the CUSIP Service Bureau (the
Numbers: "CUSIP SERVICE BUREAU") of Standard & Poor's Corporation
("STANDARD & POOR'S") one series of CUSIP numbers consisting
of approximately 900 CUSIP numbers for future assignment to
Global Notes. The Issuer will provide DTC and the Trustee
with a list of such CUSIP numbers. The Issuer will assign
CUSIP numbers as described below under Settlement Procedure
"B". DTC will notify the CUSIP Service Bureau periodically
of the CUSIP numbers that the Issuer has assigned to Global
Notes. The Issuer will reserve additional CUSIP numbers when
necessary for assignment to Global Notes and will provide
the Trustee and DTC with the list of additional CUSIP
numbers so obtained.
Registration: Unless otherwise specified by DTC, Global Notes will be
issued only in fully registered form without coupons. Each
Global Note will be registered in the name of Cede & Co., as
nominee for DTC, on the Note Register maintained under the
Indenture by the Trustee. The beneficial owner of a Note (or
one or more indirect participants in DTC designated by such
owner) will designate one or more participants in DTC (with
respect to such Note, the "PARTICIPANTS") to act as agent or
agents for such owner in connection with the book-entry
system maintained by DTC, and DTC will record in book-entry
form, in accordance with instructions provided by such
Participants, a credit balance with respect to such
beneficial owner of such Note in the account of such
Participants. The ownership interest of such beneficial
owner in such Note will be recorded through the records of
such Participants or through the separate records of such
Participants and one or more indirect participants in DTC.
Transfers: Transfers of interests in a Global Note will be accomplished
by book entries made by DTC and, in turn, by Participants
(and in certain cases, one or more indirect participants in
DTC) acting on behalf of beneficial transferors and
transferees of such interests.
Denominations: Notes will be issued in denominations of $1,000 or more (in
multiples of $1,000). Global Notes will be denominated in
principal or face amounts not in excess of $500,000,000. If
one or more Notes having an aggregate principal or face
amount in excess of $500,000,000 would, but for the
preceding sentence, be represented by a single Global Note,
then one Global Note will be issued to represent each
$500,000,000
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principal or face amount of such Note or Notes and an
additional Global Note will be issued to represent any
remaining principal amount of such Note or Notes. In such
case, each of the Global Notes representing such Note or
Notes shall be assigned the same CUSIP number.
Issue Price: Unless otherwise specified in an applicable Pricing
Supplement, each Note will be issued at the percentage of
principal amount specified in the Prospectus relating to
such Note.
Interest: Each Note will bear interest at a fixed rate, which may be
zero during all or any part of the term in the case of
certain Notes issued at a price representing a substantial
discount from the principal amount payable at Maturity.
Interest on each Note will accrue from the Issue Date of
such Note for the first interest period and from the most
recent Interest Payment Date to which interest has been paid
for all subsequent interest periods. Except as set forth
hereafter, each payment of interest on a Note will include
interest accrued to but excluding, as the case may be, the
Interest Payment Date or the date of Maturity (other than a
Maturity Date of a Note occurring on the 31st day of a month
in which case such payment of interest will include interest
accrued to but excluding the 30th day of such month). Any
payment of principal, premium or interest required to be
made on a day that is not a Business Day (as defined below)
may be made on the next succeeding Business Day and no
interest shall accrue as a result of any such delayed
payment.
Each pending deposit message described under Settlement
Procedure "C" below will be routed to Standard & Poor's,
which will use the message to include certain information
regarding the related Notes in the appropriate daily bond
report published by Standard & Poor's.
Each Note will bear interest from and including its Issue
Date at the rate per annum set forth thereon and in the
applicable Pricing Supplement until the principal amount
thereof is paid, or made available for payment, in full.
Unless otherwise specified in the applicable Pricing
Supplement, interest on each Note (other than a Zero-Coupon
Note) will be payable either monthly, quarterly,
semi-annually or annually on each Interest Payment Date and
at Maturity (or on the date of redemption or repayment if a
Note is repurchased by the Issuer prior to maturity pursuant
to mandatory or optional redemption provisions or the
Survivor's Option). Interest will be payable to the person
in whose name a Note is registered at the close of business
on the Regular Record Date next preceding each Interest
Payment Date; PROVIDED, HOWEVER, that interest payable at
Maturity, on a date of redemption or in connection with the
exercise of the Survivor's Option will be payable to the
person to whom principal shall be payable.
Any payment of principal, and premium, if any, or interest
required to
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be made on a Note on a day which is not a Business Day need
not be made on such day, but may be made on the next
succeeding Business Day with the same force and effect as if
made on such day, and no additional interest shall accrue as
a result of such delayed payment. Unless otherwise specified
in the applicable Pricing Supplement, any interest on the
Notes will be computed on the basis of a 360-day year of
twelve 30-day months. The interest rates the Issuer will
agree to pay on newly-issued Notes are subject to change
without notice by the Issuer from time to time, but no such
change will affect any Notes already issued or as to which
an offer to purchase has been accepted by the Issuer.
Unless otherwise specified in the applicable Pricing
Supplement, the Interest Payment Dates for a Note that
provides for monthly interest payments shall be the
fifteenth day of each calendar month (or the next Business
Day if not a Business Day), commencing in the calendar month
that next succeeds the month in which the Note is issued. In
the case of a Note that provides for quarterly interest
payments, the Interest Payment Dates shall be the fifteenth
day of each third month (or the next Business Day if not a
Business Day), commencing in the third succeeding calendar
month following the month in which the Note is issued. In
the case of a Note that provides for semi-annual interest
payments, the Interest Payment dates shall be the fifteenth
day of each sixth month (or the next Business Day if not a
Business Day), commencing in the sixth succeeding calendar
month following the month in which the Note is issued. In
the case of a Note that provides for annual interest
payments, the Interest Payment Date shall be the fifteenth
day of every twelfth month (or the next Business Day if not
a Business Day), commencing in the twelfth succeeding
calendar month following the month in which the Note is
issued. The Regular Record Date with respect to any Interest
Payment Date shall be the date fifteen calendar days prior
to such Interest Payment Date, whether or not such date
shall be a Business Day; PROVIDED, HOWEVER, that interest
payable at Maturity will be payable to the person to whom
principal shall be payable.
Each payment of interest on a Note shall include accrued
interest from and including the Issue Date or from and
including the last day in respect of which interest has been
paid (or duly provided for), as the case may be, to, but
excluding, the Interest Payment Date or Maturity Date, as
the case may be.
Calculation Unless otherwise specified in the applicable Pricing
of Interest: Supplement, interest on the Notes (including interest for
partial periods) will be calculated on the basis of a
360-day year of twelve 30-day months. (Examples of interest
calculations are as follows: October 1, 2002 to April 1,
2003 equals 6 months and 0 days, or 180 days; the interest
paid
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equals 180/360 times the annual rate of interest times the
principal amount of the Note. The period from December 3,
2002 to April 1, 2003 equals 3 months and 28 days, or 118
days; the interest payable equals 118/360 times the annual
rate of interest times the principal amount of the Note.)
Business Day: "Business Day" means, unless otherwise specified in the
applicable Pricing Supplement, any day, other than a
Saturday or Sunday, that meets the following applicable
requirement: such day is not a day on which banking
institutions are authorized or required by law, regulation
or executive order to be closed in the City of New York.
Payments of PAYMENTS OF PRINCIPAL AND INTEREST. Promptly after each
Principal and Regular Record Date, the Trustee will deliver to the Issuer
Interest: and DTC a written notice specifying by CUSIP number the
amount of interest, if any, to be paid on each Global Note
on the following Interest Payment Date (other than an
Interest Payment Date coinciding with a Maturity Date) and
the total of such amounts. DTC will confirm the amount
payable on each Global Note on such Interest Payment Date by
reference to the daily bond reports published by Standard &
Poor's. On such Interest Payment Date, the Issuer will pay
to the Trustee, and the Trustee in turn will pay to DTC,
such total amount of interest due (other than on the
Maturity Date), at the times and in the manner set forth
below under "Manner of Payment". If any Interest Payment
Date for any Note is not a Business Day, the payment due on
such day shall be made on the next succeeding Business Day
and no interest shall accrue on such payment for the period
from and after such Interest Payment Date.
PAYMENTS ON THE MATURITY DATE. On or about the first
Business Day of each month, the Trustee will deliver to the
Issuer and DTC a written list of principal, premium, if any,
and interest to be paid on each Global Note representing
Notes maturing or subject to redemption (pursuant to a
sinking fund or otherwise) or repayment ("MATURITY") in the
following month. The Trustee, the Issuer and DTC will
confirm the amounts of such principal, premium, if any, and
interest payments with respect to each Global Note on or
about the fifth Business Day preceding the Maturity Date of
such Global Note. On the Maturity Date, the Issuer will pay
to the Trustee, and the Trustee in turn will pay to DTC, the
principal amount of such Global Note, together with interest
and premium, if any, due on such Maturity Date, at the times
and in the manner set forth below under "Manner of Payment".
If the Maturity Date of any Global Note is not a Business
Day, the payment due on such day shall be made on the next
succeeding Business Day and no interest shall accrue on such
payment for the period from and after such Maturity Date.
Promptly after payment to DTC of the principal and interest
due on the Maturity Date of such Global Note and all other
Notes represented by such Global Note, the Trustee will
cancel and
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destroy such Global Note in accordance with the Indenture
and so advise the Issuer.
MANNER OF PAYMENT. The total amount of any principal,
premium, if any, and interest due on Global Notes on any
Interest Payment Date or at Maturity shall be paid by the
Issuer to the Trustee in immediately available funds on such
date. The Issuer will make such payment on such Global Notes
by instructing the Trustee to withdraw funds from an account
maintained by the Issuer with JPMorgan Chase Bank, by wire
transfer to DTC or as otherwise agreed with the Trustee. The
Issuer will confirm such instructions in writing to the
Trustee. Prior to 10:00 a.m., New York City time, on the
Maturity Date or as soon as possible thereafter, the Trustee
will make payment to DTC in accordance with existing
arrangements between DTC and the Trustee, in funds available
for immediate use by DTC, each payment of interest,
principal and premium, if any, due on a Global Note on such
date. On each Interest Payment Date (other than on the
Maturity Date) the Trustee will pay DTC such interest
payments in same-day funds in accordance with existing
arrangements between the Trustee and DTC. Thereafter, on
each such date, DTC will pay, in accordance with its SDFS
operating procedures then in effect, such amounts in funds
available for immediate use to the respective Participants
with payments in amounts proportionate to their respective
holdings in principal amount of beneficial interest in such
Global Note as are recorded in the book-entry system
maintained by DTC. Neither the Issuer nor the Trustee shall
have any direct responsibility or liability for the payment
by DTC of the principal of, or premium, if any, or interest
on, the Notes to such Participants.
WITHHOLDING TAXES. The amount of any taxes required under
applicable law to be withheld from any interest payment on a
Note will be determined and withheld by the Participant,
indirect participant in DTC or other person responsible for
forwarding payments and materials directly to the beneficial
owner of such Note.
Procedure for Rate The Issuer and the Agents will discuss, from time to time,
Setting and the aggregate principal amounts of, the Maturities, the
Posting: Issue Price and the interest rates to be borne by Notes that
may be sold as a result of the solicitation of orders by the
Agents. If the Issuer decides to set interest rates borne by
any Notes in respect of which the Agents are to solicit
orders (the setting of such interest rates to be referred to
herein as "POSTING"), or if the Issuer decides to change
interest rates previously posted by it, it will promptly
advise the Agents of the prices and interest rates to be
posted.
The Issuer will assign a separate CUSIP number for each
tranche of Notes to be posted, and will so advise and notify
the Trustee and Purchasing Agent of said assignment by
telephone and/or by telecopier
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or other form of electronic transmission. The Purchasing
Agent will, in turn, include the assigned CUSIP number on
all Posting notices communicated to the Agents and Selling
Group members.
Offering of Notes: In the event that there is a Posting, the Purchasing Agent
will communicate to each of the Agents and Selling Group
members the aggregate principal amount and Maturities of,
along with the interest rates to be borne by, each tranche
of Notes that is the subject of the Posting. Thereafter, the
Purchasing Agent, along with the other Agents and the
Selling Group, will solicit offers to purchase the Notes
accordingly.
Purchase of Notes The Purchasing Agent will, no later than 4:00 p.m. (New York
by the Purchasing City time) on the sixth day subsequent to the day on which
Agent: such Posting occurs, or if such sixth day is not a Business
Day, on the preceding Business Day, or on such other
Business Day and time as shall be mutually agreed upon by
the Issuer and the Agents (any such day, a "TRADE DAY"), (i)
complete, execute and deliver to the Issuer a Terms
Agreement that sets forth, among other things, the amount of
each tranche that the Purchasing Agent is offering to
purchase or (ii) inform the Issuer that none of the Notes of
a particular tranche will be purchased by the Purchasing
Agent.
Acceptance and Unless otherwise agreed by the Issuer and the Agents, the
Rejection of Issuer has the sole right to accept orders to purchase Notes
Orders: and may reject any such order in whole or in part. Unless
otherwise instructed by the Issuer, the Purchasing Agent
will promptly advise the Issuer by telephone of all offers
to purchase Notes received by it, other than those rejected
by it in whole or in part in the reasonable exercise of its
discretion. No order for less than $1,000 principal amount
of Notes will be accepted.
Upon receipt of a completed and executed Terms Agreement
from the Purchasing Agent, the Issuer will (i) promptly
execute and return such Terms Agreement to the Purchasing
Agent or (ii) inform the Purchasing Agent that its offer to
purchase the Notes of a particular tranche has been
rejected, in whole or in part. The Purchasing Agent will
thereafter promptly inform the other Agents and
participating Selling Group members of the action taken by
the Issuer.
Preparation of If any offer to purchase a Note is accepted by or on behalf
Pricing of the Issuer, the Issuer will provide a Pricing Supplement
Supplement: (substantially in the form attached to the Selling Agent
Agreement as Exhibit D) reflecting the terms of such Note
and will have filed such Pricing Supplement with the
Commission in accordance with the applicable paragraph of
Rule 424(b) under the Act and will supply a copy thereof (or
additional copies if requested) to the Purchasing Agent, by
no later than 11:00 a.m. on the second Business Day
immediately following the Trade Day, and one
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copy to the Trustee. The Purchasing Agent will cause a
Prospectus and Pricing Supplement to be delivered to each of
the other Agents and Selling Group members that purchased
such Notes, and each of these, in turn, will, pursuant to
the terms of the Selling Agent Agreement and the Master
Selected Dealer Agreement, cause to be delivered a copy of
the applicable Pricing Supplement to each purchaser of Notes
from such Agent or Selling Group member.
In each instance that a Pricing Supplement is prepared, the
Agents will affix the Pricing Supplement to Prospectuses
prior to their use. Outdated Pricing Supplements and the
Prospectuses to which they are attached (other than those
retained for files) will be destroyed.
Delivery of Subject to "Suspension of Solicitation; Amendment or
Confirmation and Supplement" below, the Agents will deliver a Prospectus
Prospectus to (including the Pricing Supplement) as herein described with
Purchaser by respect to each Note sold by it.
Purchasing Agent:
For each offer to purchase a Note solicited by an Agent and
accepted by or on behalf of the Issuer, the Purchasing Agent
will issue a confirmation to the purchaser, with a copy to
the Issuer, setting forth the terms of such Note and other
applicable details described above and delivery and payment
instructions. In addition, the Purchasing Agent will deliver
to such purchaser the Prospectus (including the Pricing
Supplement) in relation to such Note prior to or together
with the earlier of any written offer of such Note, delivery
of the confirmation of sale or delivery of the Note.
Settlement: The receipt of immediately available funds by the Issuer in
payment for Notes and the authentication and issuance of the
Global Note representing such Notes shall constitute
"SETTLEMENT" with respect to such Note. All orders accepted
by the Issuer will be settled within one to three Business
Days pursuant to the timetable for Settlement set forth
below, unless the Issuer and the purchaser agree to
Settlement on a later date, and shall be specified upon
acceptance of such offer; PROVIDED, HOWEVER, that
in all cases the Issuer will notify the Trustee on the date
issuance instructions are given.
Settlement In the event of a purchase of Notes by any Agent, as
Procedures: principal, appropriate Settlement details, if different from
those set forth below, will be set forth in the applicable
Terms Agreement to be entered into between such Agent and
the Issuer pursuant to the Selling Agent Agreement.
Settlement Procedures with regard to each Note sold by an
Agent, as agent for the Issuer, shall be as follows:
A. After the acceptance of an offer by the Issuer with
respect to a Note, the Purchasing Agent will
communicate the following
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details of the terms of such offer (the "NOTE SALE
INFORMATION") to the Issuer by telephone confirmed in
writing or by facsimile transmission or other
acceptable written means:
1. Principal amount of the purchase;
2. Interest Rate;
3. Interest Payment Dates;
4. Settlement Date;
5. Maturity Date;
6. Purchase Price;
7. Purchasing Agent's commission determined pursuant to
the Selling Agent Agreement;
8. Net proceeds to the Issuer;
9. Trade Date;
10. If a Note is redeemable by the Issuer, such of the
following as are applicable:
i. The date on and after which such Note may be redeemed
(the "REDEMPTION COMMENCEMENT DATE"),
ii. Initial redemption price (% of par), and
iii. Amount (% of par) that the initial redemption price
shall decline (but not below par) on each anniversary
of the Redemption Commencement Date;
11. Whether the Note has the Survivor's Option;
12. If a Discount Note, the total amount of original issue
discount, the yield to maturity and the initial
accrual period of original issue discount;
13. DTC Participant Number of the institution through
which the customer will hold the beneficial interest
in the Global Note; and
14. Such other terms as are necessary to complete the
applicable form of Note.
B. The Issuer will advise the Trustee by telephone
(confirmed in writing and signed by an authorized
person at any time on the
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same date) or by facsimile transmission signed by an
authorized person of the information set forth in
Settlement Procedure "A" above and the name of the
Purchasing Agent. The Issuer will assign a CUSIP
number to the Global Security representing such Note.
The Issuer will notify the Trustee and the Purchasing
Agent of such CUSIP number by telephone as soon as
practicable.
C. The Trustee will communicate to DTC and the Purchasing
Agent through DTC's Participant Terminal System, a
pending deposit message specifying the following
Settlement information:
1. The information received in accordance with Settlement
Procedure "A".
2. The numbers of the participant accounts maintained by
DTC on behalf of the Trustee and the Purchasing Agent.
3. The initial Interest Payment Date for such Note,
number of days by which such date succeeds the related
DTC record date (which term means the Regular Record
Date), and if then calculated, the amount of interest
payable on such Initial Interest Payment Date (which
amount shall have been confirmed by the Trustee).
4. The CUSIP number of the Global Note representing such
Notes.
5. The frequency of interest.
6. Whether such Global Note represents any other Notes
issued or to be issued (to the extent then known).
D. DTC will credit such Note to the participant account
of the Trustee maintained by DTC.
E. The Trustee will complete and deliver a Global Note
representing such Note in a form that has been
approved by the Issuer, the Agents and the Trustee.
F. The Trustee will authenticate the Global Note
representing such Note and maintain possession of such
Global Note.
G. The Trustee will enter an SDFS deliver order through
DTC's Participant Terminal System instructing DTC to
(i) debit such Note to the Trustee's participant
account and credit such Note to the participant
account of the Agent maintained by DTC and (ii) debit
the settlement account of the Agent and credit the
settlement account of the Trustee maintained by DTC,
in an amount equal to the price of such Note less the
Purchasing
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Agent's commission. The entry of such a deliver order
shall be deemed to constitute a representation and
warranty by the Trustee to DTC that (a) the Global
Note representing such Note has been issued and
authenticated and (b) the Trustee is holding such
Global Note pursuant to the Certificate Agreement.
H. The Purchasing Agent will enter an SDFS deliver order
through DTC's Participant Terminal System instructing
DTC to (i) debit such Note to the Purchasing Agent's
participant account and credit such Note to the
participant accounts of the Participants to whom such
Note is to be credited maintained by DTC and (ii)
debit the settlement accounts of such Participants and
credit the settlement account of the Purchasing Agent
maintained by DTC, in an amount equal to the price of
the Note so credited to their accounts.
I. Transfers of funds in accordance with SDFS deliver
orders described in Settlement Procedures "G" and "H"
will be settled in accordance with SDFS operating
procedures in effect on the Settlement Date.
J. The Trustee will credit to an account of the Issuer
maintained at JPMorgan Chase, New York, NY funds
available for immediate use in an amount equal to the
amount credited to the Trustee's DTC participant
account in accordance with Settlement Procedure "G".
K. The Trustee will send a copy of the Global Note
representing such Note by first-class mail to the
Issuer, or make such other arrangements as the
Issuer and the Trustee agree.
L. The Purchasing Agent will confirm the purchase of each
Note to the purchaser thereof either by transmitting
to the Participant to whose account such Note has been
credited a confirmation order through DTC's
Participant Terminal System or by mailing a written
confirmation to such purchaser. In all cases the
Prospectus, as most recently amended or supplemented,
must accompany or precede such confirmation.
M. Upon request by the Issuer, the Trustee will send to
the Issuer a statement setting forth the principal
amount of Notes outstanding as of that date under the
Indenture and setting forth the CUSIP number(s)
assigned to, and a brief description of, any orders
which the Issuer has advised the Trustee but which
have not yet been settled.
Settlement In the event of a purchase of Notes by the Purchasing Agent,
Procedures as principal, appropriate Settlement details, if different
from those set forth
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Timetable: below, will be set forth in the applicable Terms Agreement
to be entered into between the Purchasing Agent and the
Issuer pursuant to the Selling Agent Agreement.
For orders of Notes solicited by an Agent, as agent, and
accepted by the Issuer, Settlement Procedures "A" through
"M" shall be completed as soon as possible but not later
than the respective times (New York City time) set forth
below:
Settlement: PROCEDURE TIME
A 4:00 p.m. on the Trade Day.
B 5:00 p.m. on the Trade Day.
C 2:00 p.m. on the Business Day before the
Settlement Date.
D 10:00 a.m. on the Settlement Date.
E 12:00 p.m. on the Settlement Date.
F 12:30 p.m. on the Settlement Date.
G-H 2:00 p.m. on the Settlement Date.
I 4:45 p.m. on the Settlement Date.
J-L 5:00 p.m. on the Settlement Date
M At the request of the Issuer.
NOTE: The Prospectus as most recently amended or
supplemented must accompany or precede any written
confirmation given to the customer (Settlement Procedure
"L"). Settlement Procedure "I" is subject to extension in
accordance with any extension Fedwire closing deadlines and
in the other events specified in the SDFS operating
procedures in effect on the Settlement Date.
If Settlement of a Note is rescheduled or cancelled, the
Trustee will deliver to DTC, through DTC's Participant
Terminal System, a cancellation message to such effect by no
later than 2:00 p.m., New York City time, on the Business
Day immediately preceding the scheduled Settlement Date.
Failure to Settle: If the Trustee fails to enter an SDFS deliver order with
respect to a Note pursuant to Settlement Procedure "G", the
Trustee may deliver to DTC, through DTC's Participant
Terminal System, as soon as practicable a withdrawal message
instructing DTC to debit such Note to the participant
account of the Trustee maintained at DTC. DTC will process
the withdrawal message; PROVIDED, THAT, such participant
account contains Notes having the same terms and having a
principal amount that is at least equal to the principal
amount of such Note to be debited. If withdrawal messages
are processed with respect to all the Notes issued or to be
issued represented by a Global Note, the Trustee will cancel
such Global Note in accordance with the Indenture, make
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appropriate entries in its records and so advise the Issuer.
The CUSIP number assigned to such Global Note shall, in
accordance with CUSIP Service Bureau procedures, be
cancelled and not immediately reassigned. If withdrawal
messages are processed with respect to one or more, but not
all, of the Notes represented by a Global Note, the Trustee
will exchange such Global Note for two Global Notes, one of
which shall represent such Notes and shall be cancelled
immediately after issuance, and the other of which shall
represent the remaining Notes previously represented by the
surrendered Global Note and shall bear the CUSIP number of
the surrendered Global Note. If the purchase price for any
Note is not timely paid to the Participants with respect to
such Note by the beneficial purchaser thereof (or a person,
including an indirect participant in DTC, acting on behalf
of such purchaser), such Participants and, in turn, the
related Agent may enter SDFS deliver orders through DTC's
participant Terminal System reversing the orders entered
pursuant to Settlement Procedures "G" and "H", respectively.
Thereafter, the Trustee will deliver the withdrawal message
and take the related actions described in the preceding
paragraph. If such failure shall have occurred for any
reason other than default by the Agent in the performance of
its obligations hereunder or under the Selling Agent
Agreement, the Issuer will reimburse the Agent on an
equitable basis for its loss of the use of funds during the
period when they were credited to the account of the Issuer.
Notwithstanding the foregoing, upon any failure to settle
with respect to a Note, DTC may take any actions in
accordance with its SDFS operating procedures then in
effect. In the event of a failure to settle with respect to
one or more, but not all, of Notes that were to have been
represented by a Global Note, the Trustee will provide, in
accordance with Settlement Procedures "D" and "E", for the
authentication and issuance of a Global Note representing
the other Notes to have been represented by such Global Note
and will make appropriate entries in its records.
Procedure for Rate Each time a decision has been reached to change rates, the
Changes: Issuer will promptly advise the Agents of the new rates, who
will forthwith suspend solicitation of purchases of Notes at
the prior rates. The Agents may telephone the Issuer with
recommendations as to the changed interest rates.
Suspension of Subject to the Issuer's representations, warranties and
Solicitation; covenants contained in the Selling Agent Agreement, the
Amendment or Issuer may instruct the Agents to suspend at any time for
Supplement: any period of time or permanently, the solicitation of
orders to purchase Notes. Upon receipt of such instructions
(which may be given orally), each Agent will forthwith
suspend solicitation until such time as the Issuer has
advised it that
B-14
<Page>
solicitation of offers to purchase may be resumed.
In the event that at the time the Issuer suspends
solicitation of offers to purchase there shall be any orders
outstanding for settlement, the Issuer will promptly advise
the Agents and the Trustee whether such orders may be
settled and whether copies of the Prospectus as in effect at
the time of the suspension may be delivered in connection
with the settlement of such orders. The Issuer will have the
sole responsibility for such decision and for any
arrangements which may be made in the event that the Issuer
determines that such orders may not be settled or that
copies of such Prospectus may not be so delivered.
If the Issuer decides to amend or supplement the
Registration Statement or the Prospectus, it will promptly
advise the Agents and furnish the Agents and the Trustee
with the proposed amendment or supplement and with such
certificates and opinions as are required, all to the extent
required by and in accordance with the terms of the Selling
Agent Agreement. Subject to the provisions of the Selling
Agent Agreement, the Issuer may file with the Commission any
supplement to the Prospectus relating to the Notes. The
Issuer will provide the Agents and the Trustee with copies
of any such supplement, and confirm to the Agents that such
supplement has been filed with the Commission.
Trustee Not to Risk Nothing herein shall be deemed to require the Trustee to
Funds: risk or expend its own funds in connection with any payment
to the Issuer, or the Agents or the purchasers, it being
understood by all parties that payments made by the Trustee
to either the Issuer or the Agents shall be made only to the
extent that funds are provided to the Trustee for such
purpose.
Advertising Costs: The Issuer shall have the sole right to approve the form and
substance of any advertising an Agent may initiate in
connection with such Agent's solicitation to purchase the
Notes. The expense of such advertising will be solely the
responsibility of such Agent, unless otherwise agreed to by
the Issuer.
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<Page>
EXHIBIT C
International Business Machines Corporation
IBM Notes
TERMS AGREEMENT
____________, 200_
International Business Machines Corporation
____________
____________
The undersigned agrees to purchase the following aggregate principal amount of
Notes:
$______________
The terms of such Notes shall be as follows:
CUSIP Number:_____________________
Interest Rate:________________%
Maturity Date:____________________
Price to Public:__________________
Agent's Concession:____________%
Settlement Date, Time and Place:_____________________________
Survivor's Option:_________________________________
Interest Payment Dates:___________________
Optional Redemption, if any:______________
Initial Redemption Date:______________
Redemption Price: Initially % of Principal Amount and declining
_______% of the
Principal Amount on each anniversary of the Initial Redemption
Date until the
Redemption Price is 100% of the Principal Amount.
[Any other terms and conditions agreed to by such Agent and International
Business Machines Corporation]
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ABN AMRO FINANCIAL
SERVICES, INC.
By:
--------------------
Name:
Title:
ACCEPTED:
International Business Machines Corporation
By:
----------------------------------------
Name:
Title
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<Page>
EXHIBIT D
FORM OF PRICING SUPPLEMENT
Registration No. 333-37034
Filed Pursuant to Rule 424(b)(3)
International Business Machines Corporation
IBM Notes
With Maturities of 1 year or More from Date of Issue
This is a Pricing Supplement. It describes the Fixed Rate Notes being issued
under the $1,000,000,000 Medium Note Program of International Business Machines
Corporation. This document adds to, or 'supplements' the description of the
Notes which are referred to in the accompanying Prospectus Supplement and
Prospectus. This document provides specific pricing and other relevant
information about the specific Notes we are issuing in this particular
transaction. This Pricing Supplement also amends the terms and conditions of the
Prospectus Supplement and Prospectus to the extent that the description of the
Notes in this Pricing Supplement is different from the terms which have been set
forth in the Prospectus Supplement and Prospectus.
Pricing Supplement No. __ Trade Date: __/__/__
(To Prospectus Supplement dated June 28, 2002) Issue Date: __/__/__
The date of this Pricing Supplement is _______ __, ___
<Table>
<Caption>
CUSIP
or
Common Principal Interest Maturity Price to
Code Amount Rate Date Public
----------- --------- -------- ------------- --------
</Table>
D-1
<Page>
<Table>
<Caption>
Interest
Payment
Frequency Survivor's Subject to Dates and terms of redemption
(begin date) Option Redemption (including the redemption price)
-------------- ---------- ---------- --------------------------------
</Table>
<Table>
<Caption>
Proceeds to Discounts and
Issuer Commissions Reallowance Dealer
----------- ------------- ----------- ------
</Table>
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EXHIBIT E
FORM OF MASTER SELECTED DEALER AGREEMENT
[Name of Broker-Dealer]
[Broker-Dealer's Address]
Dear Selected Dealer:
In connection with public offerings of securities after the date
hereof for which we are acting as manager of an underwriting syndicate or are
otherwise responsible for the distribution of securities to the public by means
of an offering of securities for sale to selected dealers, you may be offered
the right as such a selected dealer to purchase as principal a portion of such
securities. This will confirm our mutual agreement as to the general terms and
conditions applicable to your participation in any such selected dealer group
organized by us as follows.
1. APPLICABILITY OF THIS AGREEMENT. The terms and conditions of this
Agreement shall be applicable to any public offering of securities
("SECURITIES") pursuant to a registration statement filed under the
Securities Act of 1933 (the "SECURITIES ACT"), or exempt from
registration thereunder (other than a public offering of Securities
effected wholly outside the United States of America), wherein ABN
AMRO Financial Services, Inc. ("AAFS") (acting for its own account or
for the account of any underwriting or similar group or syndicate) is
responsible for managing or otherwise implementing the sale of the
Securities to selected broker-dealers ("SELECTED DEALERS") and has
expressly informed you that such terms and conditions shall be
applicable. Any such offering of Securities to you as a Selected
Dealer is hereinafter called an "OFFERING". In the case of any
Offering where we are acting for the account of any underwriting or
similar group or syndicate ("UNDERWRITERS"), the terms and conditions
of this Agreement shall be for the benefit of, and binding upon, such
Underwriters, including, in the case of any Offering where we are
acting with others as representatives of Underwriters, such other
representatives.
2. CONDITIONS OF OFFERING; ACCEPTANCE AND PURCHASES. Any Offering will be
subject to delivery of the Securities and their acceptance by us and
any other Underwriters, may be subject to the approval of all legal
matters by counsel and the satisfaction of other conditions, and may
be made on the basis of reservation of Securities or an allotment
against subscription. We will advise you by telegram, telex or other
form of written communication ("WRITTEN COMMUNICATION", which term, in
the case of any Offering described in Section 3(a) or 3(b) hereof, may
include a prospectus or
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offering circular) of the particular method and supplementary terms
and conditions (including, without limitation, the information as to
prices and offering date referred to in Section 3(c) hereof) of any
Offering in which you are invited to participate. To the extent such
supplementary terms and conditions are inconsistent with any provision
herein, such terms and conditions shall supersede any such provision.
Unless otherwise indicated in any such Written Communication,
acceptances and other communications by you with respect to an
Offering should be sent to ABN AMRO Financial Services, Inc., 327
Plaza Real, Suite 225, Boca Raton, Florida 33432 (Telecopy: (561)
416-6180). We reserve the right to reject any acceptance in whole or
in part. Unless notified otherwise by us, Securities purchased by you
shall be paid for on such date as we shall determine, on one business
day's prior notice to you, by certified or official bank check, in an
amount equal to the Public Offering Prices (as hereinafter defined)
or, if we shall so advise you, at such Public Offering Price less the
Concession (as hereinafter defined), payable in immediately available
funds to the order of ABN AMRO Financial Services, Inc., against
delivery of the Securities. If Securities are purchased and paid for
at such Public Offering Price, such Concession will be paid after the
termination of the provisions of Section 3(c) hereof with respect to
such Securities. Notwithstanding the foregoing, unless notified
otherwise by us, payment for and delivery of Securities purchased by
you shall be made through the facilities of The Depository Trust
Company, if you are a member, unless you have otherwise notified us
prior to the date specified in a Written Communication to you from us
or, if you are not a member, settlement may be made through a
correspondent who is a member pursuant to instructions which you will
send to us prior to such specified date.
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
a. REGISTERED OFFERINGS. In the case of any Offering of
Securities that are registered under the Securities Act
("REGISTERED OFFERING"), we shall provide you with such
number of copies of each preliminary prospectus and of the
final prospectus relating thereto as you may reasonably
request for the purposes contemplated by the Securities Act
and the Securities Exchange Act of 1934 (the "EXCHANGE ACT")
and the applicable rules and regulations of the Securities
and Exchange Commission (the "COMMISSION") thereunder. You
represent and warrant that you are familiar with Rule 15c2-8
under the Exchange Act relating to the distribution of
preliminary and final prospectuses and agree that you will
comply therewith. You agree to make a record of your
distribution of each preliminary prospectus and, when
furnished with copies of any revised preliminary prospectus,
you will, upon our request, promptly forward copies thereof
to each person to whom you have
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<Page>
theretofore distributed a preliminary prospectus. You agree
that in purchasing Securities in a Registered Offering you
will rely upon no statement whatsoever, written or oral,
other than the statements in the final prospectus delivered
to you by us. You will not be authorized by the issuer or
other seller of Securities offered pursuant to a prospectus
or by any Underwriter to give any information or to make any
representation not contained in the prospectus in connection
with the sale of such Securities.
b. OFFERINGS PURSUANT TO OFFERING CIRCULAR. In the case of any
Offering of Securities, other than a Registered Offering,
which is made pursuant to an offering circular or other
document comparable to a prospectus in a Registered
Offering, including, without limitation, an Offering of
"exempted securities" as defined in Section 3(a)(12) of the
Exchange Act (an "EXEMPTED SECURITIES OFFERING"), we shall
provide you with such number of copies of each preliminary
offering circular and of the final offering circular
relating thereto as you may reasonably request. You agree
that you will comply with the applicable Federal and state
laws, and the applicable rules and regulations of any
regulatory body promulgated thereunder, governing the use
and distribution of offering circulars by brokers or
dealers. You agree that in purchasing Securities pursuant to
an offering circular you will rely upon no statements
whatsoever, written or oral, other than the statements in
the final offering circular delivered to you by us. You will
not be authorized by the issuer or other seller of
Securities offered pursuant to an offering circular or by
any Underwriter to give any information or to make any
representation not contained in the offering circular in
connection with the sale of such Securities.
c. OFFER AND SALE TO THE PUBLIC. With respect to any Offering
of Securities, we will inform you by a Written Communication
of the public offering price, the selling concession, the
reallowance (if any) to broker-dealers and the time when you
may commence selling Securities to the public. After such
public offering has commenced, we may change the public
offering price, the selling concession and the reallowance
(if any) to broker-dealers. The offering price, selling
concession and reallowance (if any) to broker-dealers at any
time in effect with respect to an Offering are hereinafter
referred to, respectively, as the "PUBLIC OFFERING PRICE",
the "CONCESSION" and the "REALLOWANCE". With respect to each
Offering of Securities, until the provisions of this Section
3(c) shall be terminated pursuant to Section 5 hereof, you
agree to offer Securities to the public at no more than the
Public Offering Price. If notified by us, you may sell
securities to the public at a lesser
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<Page>
negotiated price than the Public Offering Price, but in an
amount not to exceed the Concession. If a Reallowance is in
effect, a reallowance from the Public Offering Price not in
excess of such Reallowance may be allowed as consideration
for services rendered in distribution to broker-dealers (i)
who are actually engaged in the investment banking or
securities business, (ii) who execute the written agreement
prescribed by Rule 2740(c) of the Conduct Rules of the
National Association of Securities Dealers. Inc. (the
"NASD") and (iii) who, if they are foreign banks,
broker-dealers or institutions not eligible for membership
in the NASD, represent to you that they will promptly
reoffer such Securities at the Public Offering Price and
will abide by the conditions with respect to foreign banks,
broker-dealers and institutions set forth in Section 3(e)
hereof.
d. OVER-ALLOTMENT; STABILIZATION; UNSOLD ALLOTMENTS. We may,
with respect to any Offering, be authorized to over-allot in
arranging sales to Selected Dealers, to purchase and sell
Securities for long or short account and to stabilize or
maintain the market price of the Securities. You agree not
to purchase and sell Securities for which an order from a
client has not been received without our consent in each
instance. You further agree that, upon our request at any
time and from time to time prior to the termination of the
provisions of Section 3(c) hereof with respect to any
Offering, you will report to us the amount of Securities
purchased by you pursuant to such Offering which then remain
unsold by you and will, upon our request at any such time,
sell to us for our account or the account of one or more
Underwriters such amount of such unsold Securities as we may
designate at the Public Offering Price less an amount to be
determined by us not in excess of the Concession. If, prior
to the later of (i) the termination of the provisions of
Section 3(c) hereof with respect to any Offering or (ii) the
covering by us of any short position created by us in
connection with such Offering for our account or the account
of one or more Underwriters, we purchase or contract to
purchase for our account or the account of one or more
Underwriters in the open market or otherwise any Securities
purchased by you under this Agreement as part of such
Offering, you agree to pay us on demand an amount equal to
the Concession with respect to such Securities (unless you
shall have purchased such Securities pursuant to Section 2
hereof at the Public Offering Price in which case we shall
not be obligated to pay such Concession to you pursuant to
Section 2) plus transfer taxes and broker's commissions or
dealer's mark-up, if any, paid in connection with such
purchase or contract to purchase.
E-4
<Page>
e. NASD. You represent and warrant that you are actually
engaged in the investment banking or securities business. In
addition, you further represent and warrant that you are
either (i) a member in good standing of the NASD, (ii) a
foreign bank, broker-dealer or institution not eligible for
membership in the NASD which agrees not to make any sales
within the United States, its territories or its possessions
or to persons who are citizens thereof or residents therein,
and in making any other sales to comply with the NASD's
interpretation with respect to free riding and withholding,
or (iii), solely in connection with an Exempted Securities
Offering, a bank, as defined in Section 3(a)(6) of the
Exchange Act, that does not otherwise fall within provision
(i) or (ii) of this sentence (a "BANK"). You further
represent, by your participation in an Offering, that you
have provided to us all documents and other information
required to be filed with respect to you, any related person
or any person associated with you or any such related person
pursuant to the supplementary requirements of the NASD's
interpretation with respect to review of corporate financing
as such requirements relate to such Offering.
You agree that, in connection with any purchase or sale of
the Securities wherein a selling Concession, discount or
other allowance is received or granted, (1) you will comply
with the provisions of Rule 2740 of the Conduct Rules of the
NASD, (2) if you are a non-NASD member broker or dealer in a
foreign country, you will also comply (a), as though you
were an NASD member, with the provision of Rules 2730, 2740
and 2750 of the Conduct Rules and (b) with Rule 2420 of the
Conduct Rules as that Rule applies to a non-NASD member
broker or dealer in a foreign country and (3), in connection
with an Exempted Securities Offering, if you are a Bank, you
will also comply, as though you were an NASD member, with
the provision of Rules 2730, 2740 and 2750 of the Conduct
Rules.
You further agree that, in connection with any purchase of
securities from us that is not otherwise covered by the
terms of this Agreement (whether we are acting as manager,
as a member of an underwriting syndicate or a selling group
or otherwise), if a selling Concession, discount or other
allowance is granted to you, clauses (1), (2) and (3) of the
preceding paragraph will be applicable.
f. RELATIONSHIP AMONG UNDERWRITERS AND SELECTED DEALERS. We may
buy Securities from or sell Securities to any Underwriter or
Selected Dealer and the Underwriters (if any) and the
Selected Dealers may purchase Securities from and sell
Securities to each
E-5
<Page>
other at the Public Offering Price less all or any part of
the Reallowance. You are not authorized to act as agent for
us, any Underwriter or the issuer or other seller of any
Securities in offering Securities to the public or
otherwise. Neither we nor any Underwriter shall be under any
obligation to you except for obligations assumed hereby or
in any Written Communication from us in connection with any
Offering. Nothing contained herein or in any Written
Communication from us shall constitute the Selected Dealers
an association or partners with us or any Underwriter or
with one another. If the Selected Dealers, among themselves
or with the Underwriters, should be deemed to constitute a
partnership for Federal income tax purposes, then you elect
to be excluded from the application of Subchapter K, Chapter
1, Subtitle A of the Internal Revenue Code of 1986 and agree
not to take any position inconsistent with that election.
You authorize us, in our discretion, to execute and file on
your behalf such evidence of that election as may be
required by the Internal Revenue Service. In connection with
any Offering, you shall be liable for your proportionate
amount of any tax, claim, demand or liability that may be
asserted against you alone or against one or more Selected
Dealers participating in such Offering, or against us or the
Underwriters, based upon the claim that the Selected Dealers
(including you), or any of them, constitute an association,
an unincorporated business or other entity, including, in
each case, your proportionate amount of any expense incurred
in defending against any such tax, claim, demand or
liability.
g. BLUE SKY LAWS. Upon application to us, we shall inform you
as to any advice we have received from counsel concerning
the jurisdictions in which Securities have been qualified
for sale or are exempt under the securities or blue sky laws
of such jurisdictions, but we do not assume any obligation
or responsibility as to your right to sell Securities in any
such jurisdiction.
h. COMPLIANCE WITH LAW. You agree that in selling Securities
pursuant to any Offering (which agreement shall also be for
the benefit of the issuer or other seller of such
Securities) you will comply with all applicable laws, rules
and regulations, including the applicable provisions of the
Securities Act and the Exchange Act, the applicable rules
and regulations of the Securities and Exchange Commission
thereunder, the applicable rules and regulations of the
NASD, the applicable rules and regulations of any securities
exchange having jurisdiction over the Offering and the
applicable laws, rules and regulations specified in Section
3(b) hereof.
E-6
<Page>
i. REGISTRATION OF THE SECURITIES. You are aware that no action
has been or will be taken by the issuer of the Securities
that would permit the offer or sale of the Securities or
possession or distribution of the Prospectus or any other
offering material relating to the Securities in any
jurisdiction where action for that purpose is required,
other than registering the Securities under the Securities
Act in the case of a Registered Offering. Accordingly, you
agree that you will observe all applicable laws and
regulations in each jurisdiction in or from which you may
directly or indirectly acquire, offer, sell, or deliver
Securities or have in your possession or distribute the
Prospectus or any other offering material relating to the
Securities, and you will obtain any consent, approval or
permission required by you for the purchase, offer, or sale
by you of the Securities under the laws and regulations in
force in any such jurisdiction to which you are subject or
in which you make such purchase, offer, or sale. Neither the
issuer of the Securities nor AAFS or any Selected Dealers or
Underwriters shall have any responsibility for determining
what compliance is necessary by you or for your obtaining
such consents, approvals, or permissions. You further agree
that you will take no action that will impose any
obligations on the issuer of the Securities, AAFS, or any
Selected Dealers or Underwriters. Subject as provided above,
you shall, unless prohibited by applicable law, furnish to
each person to whom you offer, sell or deliver Securities a
copy of the Prospectus (as then amended or supplemented) or
(unless delivery of the Prospectus is required by applicable
law) inform each such person that a copy thereof (as then
amended or supplemented) will be made available upon
request. You are not authorized to give any information or
to make any representation not contained in the Prospectus
or the documents incorporated by reference or specifically
referred to therein in connection with the offer and sale of
the Securities. In the case of an Exempted Securities
Offering, all references to "Prospectus" in this section
shall be interpreted to mean "offering circular."
4. INDEMNIFICATION. You agree to indemnify and hold harmless ABN
AMRO Financial Services, Inc., the issuer of the Securities, each
person, if any, who controls (within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange
Act) ABN AMRO Financial Services, Inc. or the issuer of the
Securities, and their respective directors, officers and
employees from and against any and all losses, liabilities, costs
or claims (or actions in respect thereof) (collectively,
"LOSSES") to which any of them may become subject (including all
reasonable costs of investigating, disputing or defending any
such claim or action), insofar as
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<Page>
such Losses arise out of or are in connection with the breach of
any representation, warranty or agreement made by you herein.
If any claim, demand, action or proceeding (including any
governmental investigation) shall be brought or alleged against
an indemnified party in respect of which indemnity is to be
sought against an indemnifying party, the indemnified party shall
promptly notify the indemnifying party in writing, and the
indemnifying party, upon request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party
to represent the indemnified party and any others the indemnified
party may designate in such proceeding and shall pay the
reasonable fees and expenses of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the reasonable fees
and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of
such counsel, (ii) the indemnifying party has failed within a
reasonable time to retain counsel reasonably satisfactory to such
indemnified party or (iii) the named parties to any such
proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. It is
agreed that the indemnifying party shall not, in connection with
any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees and expenses of more than one
separate law firm (in addition to local counsel where necessary)
for all such indemnified parties. Such firm shall be designated
in writing by the indemnified party. The indemnifying party shall
not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or
if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of
such proceeding.
The indemnity agreements contained in this Section and the
representations and warranties by you in this Agreement shall
remain operative and in full force and effect regardless of: (i)
any termination of this Agreement; (ii) any investigation made by
an indemnified party or on such party's behalf or any person
controlling an indemnified party or by or on behalf of the
indemnifying party, its directors or officers or any person
controlling the indemnifying party; and (iii) acceptance of and
payment for any Securities.
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5. TERMINATION, SUPPLEMENTS AND AMENDMENTS. This Agreement
constitutes the entire agreement of the parties with regard to
the subject matter hereof and supercedes all prior oral or
written agreements between the parties hereto or their
predecessors with regard to the subject matter hereof. This
Agreement may be terminated by Written Communication from you to
AAFS or from AAFS to you. Until so terminated, this Agreement
shall continue in full force and effect. This Agreement may be
supplemented or amended by us by written notice thereof to you,
and any such supplement or amendment to this Agreement shall be
effective with respect to any Offering to which this Agreement
applies after the date you received such supplement or amendment.
Each reference to "this Agreement" herein shall, as appropriate,
be to this Agreement as so amended and supplemented. The terms
and conditions set forth in Section 3(c) hereof with regard to
any Offering will terminate at the close of business on the 30th
day after the commencement of the public offering of the
Securities to which such Offering relates, but in our discretion
may be extended by us for a further period not exceeding 30 days
and in our discretion, whether or not extended, may be terminated
at any earlier time.
6. SUCCESSORS AND ASSIGNS. This Agreement shall be binding on, and
inure to the benefit of, the parties hereto and other persons
specified in Section 1 hereof, and the respective successors and
assigns of each of them.
7. GOVERNING LAW. This Agreement and the terms and conditions set
forth herein with respect to any Offering together with such
supplementary terms and conditions with respect to such Offering
as may be contained in any Written Communication from us to you
in connection therewith shall be governed by, and construed in
accordance with, the laws of the State of New York.
Please confirm by signing and returning to us the enclosed copy
of this Agreement that your subscription to, or your acceptance of any
reservation of, any Securities pursuant to an Offering shall constitute (i)
acceptance of and agreement to the terms and conditions of this Agreement (as
supplemented and amended pursuant to Section 5 hereof) together with and subject
to any supplementary terms and conditions contained in any Written Communication
from us in connection with such Offering, all of which shall constitute a
binding agreement between you and us, individually or as representative of any
Underwriters, (ii) confirmation that your representations and warranties set
forth in Section 3 hereof are true and correct at that time, (iii) confirmation
that your agreements set forth in Sections 2 and 3 hereof have been and will be
fully performed by you to the extent and at the times required thereby and (iv)
in the case of any Offering described in Section 3(a) and 3(b) hereof,
acknowledgment that you have requested and received from us sufficient copies of
the final prospectus or
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offering circular, as the case may be, with respect to such Offering in order to
comply with your undertakings in Section 3(a) or 3(b) hereof.
Very truly yours,
ABN AMRO FINANCIAL
SERVICES, INC.
By:
--------------------------
Name:
Title:
CONFIRMED: ________ __, 200_
(NAME OF BROKER-DEALER)
By:
-----------------------------------------
Name:
Title:
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