EXHIBIT 2
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the issuer or
its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
INTERNATIONAL BUSINESS MACHINES CORPORATION
4.750% Note due 2012
CUSIP 459200BA8
ISIN US459200BA86
COMMON CODE 015879572
No.:
INTERNATIONAL BUSINESS MACHINES CORPORATION, a corporation duly organized
and existing under the laws of the State of New York (herein called the
"Company", which term includes any successor corporation under the Indenture
referred to on the reverse hereof), for value received, hereby promises to pay
to CEDE & CO., or registered assigns, the principal sum of [ooooooooooo]
Dollars ($oooooooooo), at the office or agency of the Company in the Borough
of Manhattan, The City and State of New York, or any other office or agency
designated by the Company for that purpose, on November 29, 2012, in such coin
or currency of the United States as at the time of payment shall be legal
tender for the payment of public and private debts, and to pay interest,
semi-annually on May 29 and November 29 of each year, commencing May 29, 2003,
on said principal sum at said office or agency, in like coin or currency, at
the rate of 4.750% per annum, from the May 29 or November 29, as the case may
be, next preceding the date of this Note to which interest has been paid,
unless the date hereof is a date to which interest has been paid, in which
case from the date of this Note, or unless no interest has been paid on the
Notes (as defined on the reverse hereof), in which case from November 27,
2002, until payment of said principal sum has been made or duly provided for.
Notwithstanding the foregoing, if the date hereof is after May 14 or November
14, as the case may be, and before the following May 29 or November 29, this
Note shall bear interest from such May 29 or November 29; provided, however,
that if the Company shall default in the payment of interest due on such May
29 or
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November 29, then this Note shall bear interest from the next preceding May 29
or November 29 to which interest has been paid, or, if no interest has been
paid on the Notes, from November 27, 2002. The interest so payable on any May
29 or November 29 will, subject to certain exceptions provided in the
Indenture referred to on the reverse hereof, be paid to the person in whose
name this Note is registered at the close of business on the May 14 or
November 14, as the case may be, preceding such May 29 or November 29, unless
the Company shall default in the payment of interest due on such interest
payment date, in which case such defaulted interest, at the option of the
Company, may be paid to the person in whose name this Note is registered at
the close of business on a special record date for the payment of such
defaulted interest established by notice to the registered holders of Notes
not less than ten days preceding such special record date or may be paid in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed. Payment of interest may,
at the option of the Company, be made by check mailed to the registered
address of the person entitled thereto. Interest on this Note will be
calculated on the basis of a 360 day year consisting of twelve thirty day
months.
Reference is made to the further provisions of this Note set forth on the
reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.
This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication
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hereon shall have been signed by the Trustee under the Indenture referred to
on the reverse hereof.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: November 27, 2002 INTERNATIONAL BUSINESS
MACHINES CORPORATION
[SEAL]
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION by
-------------------------------
This is one of the
Securities of the Series
designated herein issued
under the within-
mentioned Indenture. by
-------------------------------
JPMORGAN CHASE BANK, as Trustee
by
------------------------------
Authorized Signatory
This security is one of a duly authorized issue of unsecured debentures,
notes or other evidences of indebtedness of the Company (hereinafter called
the "Securities"), of the series hereinafter specified, all issued or to be
issued under an indenture dated as of October 1, 1993, duly executed and
delivered by the Company to JPMorgan Chase Bank, a New York banking
corporation, as trustee (hereinafter called the "Trustee"), as supplemented by
the First Supplemental Indenture dated as of December 15, 1995, between the
Company and the Trustee, as trustee (hereinafter called the "Indenture"), to
which Indenture and all indentures supplemental thereto reference is hereby
made for a description of the respective rights and duties thereunder of the
Trustee, the Company and the holders of the Securities. The Securities may be
issued in one or more series, which different series may be issued in various
aggregate principal amounts, may mature at different times, may bear interest
at different rates, may have different conversion prices (if any), may be
subject to different redemption provisions, may be subject to different
sinking, purchase or analogous funds, may be subject to different covenants
and Events of Default and may otherwise vary as in the Indenture provided.
This security is one of a
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series designated as the 4.750% Notes due 2012 of the Company (hereinafter
called the "Notes") issued under the Indenture.
In case an Event of Default with respect to the Notes, as defined in the
Indenture, shall have occurred and be continuing, the principal hereof
together with interest accrued thereon, if any, may be declared, and upon such
declaration shall become, due and payable, in the manner, with the effect and
subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the Securities at the time outstanding of all series to be
affected (acting as one class), to execute supplemental indentures adding any
provisions to or changing in any manner or eliminating any of the provisions
of the Indenture or of any supplemental indenture or modifying in any manner
the rights of the holders of the Securities of such series to be affected;
provided, however, that no such supplemental indenture shall, among other
things, (i) change the fixed maturity of the principal of, or any installment
of principal of or interest on, or the currency of payment of, any Security;
(ii) reduce the principal amount thereof or the rate of interest thereon or
any premium payable upon the redemption thereof; (iii) impair the right to
institute suit for the enforcement of any such payment on or after the fixed
maturity thereof (or, in the case of redemption, on or after the redemption
date); (iv) reduce the percentage in principal amount of the outstanding
Securities of any series, the consent of whose holders is required for any
such supplemental indenture, or the consent of whose holders is required for
any waiver (of compliance with certain provisions of the Indenture or certain
defaults thereunder and their consequences) provided for in the Indenture; (v)
change any obligation of the Company, with respect to outstanding Securities
of a series, to maintain an office or agency in the places and for the
purposes specified in the Indenture for such series; or (vi) modify any of the
foregoing provisions or the provisions for the waiver of certain covenants and
defaults, except to increase any applicable percentage of the aggregate
principal amount of outstanding Securities the consent of the holders of which
is required or to provide with respect to any particular series the right to
condition the effectiveness of any supplemental indenture as to that series on
the consent of
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the holders of a specified percentage of the aggregate principal amount of
outstanding Securities of such series or to provide that certain other
provisions of the Indenture cannot be modified or waived without the consent
of the holder of each outstanding Security affected thereby. It is also
provided in the Indenture that the holders of a majority in aggregate
principal amount of the Securities of a series at the time outstanding may on
behalf of the holders of all the Securities of such series waive any past
default under the Indenture with respect to such series and its consequences,
except a default in the payment of the principal of, premium, if any, or
interest, if any, on any Security of such series or in respect of a covenant
or provision which cannot be modified without the consent of the Holder of
each outstanding Security of the series affected. Any such consent or waiver
by the holder of this Note shall be conclusive and binding upon such holder
and upon all future holders and owners of this Note and any Notes which may be
issued in exchange or substitution herefor, irrespective of whether or not any
notation thereof is made upon this Note or such other Notes.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, if any, and interest on
this Note at the place, at the respective times, at the rate and in the coin
or currency herein prescribed.
The Indenture permits the Company to Discharge its obligations with
respect to the Notes on the 91st day following the satisfaction of the
conditions set forth in the Indenture, which include the deposit with the
Trustee of money or U.S. Government Obligations or a combination thereof
sufficient to pay and discharge each installment of principal of (including
premium, if any, on) and interest, if any, on the outstanding Notes.
If the Company shall, in accordance with Section 901 of the Indenture,
consolidate with or merge into any other corporation or convey or transfer its
properties and assets substantially as an entirety to any Person, the
successor shall succeed to, and be substituted for, the Person named as the
"Company" on the face of this Note, all on the terms set forth in the
Indenture.
The Notes are issuable in registered form without coupons in
denominations of $1,000 and any integral multiple
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of $1,000. In the manner and subject to the limitations provided in the
Indenture, but without the payment of any service charge, Notes may be
exchanged for an equal aggregate principal amount of Notes of other authorized
denominations at the office or agency of the Company maintained for such
purpose in the Borough of Manhattan, The City and State of New York.
The Notes may be redeemed as a whole or in part, at the option of the
Company at any time, upon mailing a notice of such redemption not less than 30
nor more than 60 days prior to the date fixed for redemption to the holders of
the Notes at their last registered addresses, all as provided in the
Indenture, at a redemption price equal to the greater of (i) 100% of the
principal amount of the Notes to be redeemed and (ii) the sum of the present
values of the Remaining Scheduled Payments thereon discounted to the
redemption date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate plus 12.5 basis points, plus in
either case accrued interest on the principal amount being redeemed to the
date of redemption.
"Treasury Rate" means, with respect to any redemption date,(i) the yield,
under the heading which represents the average for the immediately preceding
week, appearing in the most recently published statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Board of Governors of the Federal Reserve System and which establishes yields
on actively traded United States Treasury securities adjusted to constant
maturity under the caption "Treasury Constant Maturities," for the maturity
corresponding to the Comparable Treasury Issue (if no maturity is within three
months before or after the maturity date for the Notes, yields for the two
published maturities most closely corresponding to the Comparable Treasury
Issue shall be determined and the Treasury Rate shall be interpolated or
extrapolated from such yields on a straight line basis, rounding to the
nearest month) or (ii) if such release (or any successor release) is not
published during the week preceding the calculation date or does not contain
such yields, the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, calculated using a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such redemption date. The Treasury
Rate shall be calculated on the third Business Day (as defined in the
Indenture) preceding the redemption date.
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"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable
to the remaining term of the Notes to be redeemed that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Notes.
"Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by the Company.
"Comparable Treasury Price" means with respect to any redemption date,
(i) the average of the Reference Treasury Dealer Quotations for such
redemption date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations, or (ii) if the Trustee obtains fewer than four
such Reference Treasury Deal Quotations, the average of all such quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined
by the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 3:30 p.m. New York
City time on the third Business Day (as defined in the Indenture) preceding
such redemption date.
"Reference Treasury Dealer" means each of J.P. Morgan Securities Inc.,
Morgan Stanley & Co. Incorporated, Salomon Smith Barney Inc. and one other
treasury dealer selected by the Company and their respective successors;
provided, however, that if any of the foregoing shall cease to be a primary
U.S. Government securities dealer (a "Primary Treasury Dealer"), the Company
shall substitute therefor another Primary Treasury Dealer.
"Remaining Scheduled Payments" means, with respect to any Note, the
remaining scheduled payments of the principal thereof to be redeemed and
interest thereon that would be due after the related redemption date but for
such redemption; provided, however, that, if such redemption date is not an
interest payment date with respect to such Note, the amount of the next
succeeding scheduled interest payment thereon will be reduced by the amount of
interest accrued thereon to such redemption date.
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The Company will, subject to the exceptions and limitations set forth
below, pay as additional interest on this Note such additional amounts as are
necessary in order that the net payment by the Company or a paying agent of
the principal of and interest on the Notes to a holder who is not a United
States person (as defined below), after deduction for any present or future
tax, assessment or other governmental charge of the United States or a
political subdivision or taxing authority of or in the United States, imposed
by withholding with respect to the payment, will not be less than the amount
provided in this Note to be then due and payable; provided, however, that the
foregoing obligation to pay additional amounts shall not apply:
(1) to any tax, assessment or other governmental charge that is
imposed or withheld solely by reason of the holder, or a fiduciary,
settlor, beneficiary, member or shareholder of the holder if the holder
is an estate, trust, partnership or corporation, or a person holding a
power over an estate or trust administered by a fiduciary holder, being
considered as:
(a) being or having been present or engaged in a trade or business
in the United States or having had a permanent establishment in the
United States;
(b) having a current or former relationship with the United States,
including a relationship as a citizen or resident of the United
States;
(c) being or having been a foreign or domestic personal holding
company, a passive foreign investment company or a controlled
foreign corporation with respect to the United States or a
corporation that has accumulated earnings to avoid United States
federal income tax;
(d) being or having been a "10-percent shareholder" of the Company
as defined in section 871(h)(3) of the United States Internal
Revenue Code or any successor provision; or
(e) being a bank receiving payments on an extension of credit made
pursuant to a loan agreement entered into in the ordinary course of
its trade or business;
9
(2) to any holder that is not the sole beneficial owner of the
Notes, or a portion of the Notes, or that is a fiduciary or partnership,
but only to the extent that a beneficiary or settlor with respect to the
fiduciary, a beneficial owner or member of the partnership would not have
been entitled to the payment of an additional amount had the beneficiary,
settlor, beneficial owner or member received directly its beneficial or
distributive share of the payment;
(3) to any tax, assessment or other governmental charge that is
imposed otherwise or withheld solely by reason of a failure of the holder
or any other person to comply with certification, identification or
information reporting requirements concerning the nationality, residence,
identity or connection with the United States of the holder or beneficial
owner of the Notes, if compliance is required by statute, by regulation
of the United States Treasury Department or by an applicable income tax
treaty to which the United States is a party as a precondition to
exemption from such tax, assessment or other governmental charge;
(4) to any tax, assessment or other governmental charge that is
imposed otherwise than by withholding by the Company or a paying agent
from the payment;
(5) to any tax, assessment or other governmental charge that is
imposed or withheld solely by reason of a change in law, regulation or
administrative or judicial interpretation that becomes effective more
than 15 days after the payment becomes due or is duly provided for,
whichever occurs later;
(6) to any estate, inheritance, gift, sales, excise, transfer,
wealth or personal property tax or similar tax, assessment or other
governmental charge;
(7) to any tax, assessment or other governmental charge required to
be withheld by any paying agent from any payment of principal of or
interest on any Notes, if such payment can be made without such
withholding by any other paying agent;
(8) to any Notes where such withholding is imposed on a payment to
an individual and is required to be made pursuant to any European Union
Directive on the taxation of savings implementing the conclusions of the
ECOFIN Council meeting of 26th to 27th November, 2000
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or any law implementing or complying with, or introduced in order to
conform to, such Directive;
(9) to any Notes presented for payment by, or on behalf of, a holder
who would have been able to avoid such withholding or deduction by
presenting the relevant Notes to another paying agent in a member state
of the European Union; or
(10) in the case of any combination of items (1), (2), (3), (4),
(5), (6), (7), (8) and (9).
This Note is subject in all cases to any tax, fiscal or other law or
regulation or administrative or judicial interpretation applicable to this
Note. Except as specifically provided in this Note, the Company shall not be
required to make any payment with respect to any tax, assessment or other
governmental charge imposed by any government or a political subdivision or
taxing authority of or in any government or political subdivision.
As used in this Note, the term "United States" means the United States of
America (including the states and the District of Columbia) and its
territories, possessions and other areas subject to its jurisdiction, "United
States person" means any individual who is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States, any state of the United States or the
District of Columbia (other than a partnership that is not treated as a United
States person under any applicable Treasury regulations), or any estate or
trust the income of which is subject to United States federal income taxation
regardless of its source.
If, as a result of any change in, or amendment to, the laws (or any
regulations or rulings promulgated under the laws) of the United States (or
any political subdivision or taxing authority of or in the United States), or
any change in, or amendments to, an official position regarding the
application or interpretation of such laws, regulations or rulings, which
change or amendment is announced or becomes effective on or after November 20,
2002, the Company becomes or, based upon a written opinion of independent
counsel selected by the Company, will become obligated to pay additional
amounts as described above with respect to this Note, then the Company may at
its option redeem, in whole, but not in part, this Note on not less than 30
nor more than 60 days prior notice, at a redemption price equal to 100% of
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its principal amount, together with interest accrued but unpaid on this Note
to the date fixed for redemption.
Upon due presentation for registration of transfer of this Note at the
office or agency of the Company for such registration in the Borough of
Manhattan, The City and State of New York, or any other office or agency
designated by the Company for such purpose, a new Note or Notes of authorized
denominations for an equal aggregate principal amount will be issued to the
transferee in exchange herefor, subject to the limitations provided in the
Indenture, without charge except for any tax or other governmental charge
imposed in connection therewith.
Prior to due presentment for registration of transfer of this Note, the
Company, the Trustee and any agent of the Company or the Trustee may deem and
treat the registered holder hereof as the absolute owner of this Note (whether
or not this Note shall be overdue) for the purpose of receiving payment of the
principal of, premium, if any, and interest on this Note, as herein provided,
and for all other purposes, and neither the Company nor the Trustee nor any
agent of the Company or the Trustee shall be affected by any notice of the
contrary. All payments made to or upon the order of such registered holder
shall, to the extent of the sum or sums paid, effectually satisfy and
discharge liability for moneys payable on this Note.
No recourse for the payment of the principal of, premium, if any, or
interest on this Note, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in the Indenture or any indenture supplemental thereto or in any
Note, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, officer or director, as
such, past, present or future, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation, whether
by virtue of any constitution, statute or rule of law or by the enforcement of
any assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
Unless otherwise defined in this Note, all terms used in this Note which
are defined in the Indenture shall have the meanings assigned to them in the
Indenture.
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THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK.