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
6.50% Debenture due 2028
CUSIP 459200 AS0
No.: R $
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 Dollars ($ ), at the office or agency of the
Company in the Borough of Manhattan, The City and State of New York, on
January 15, 2028, in such coin or currency of the United States of America
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 January 15 and
July 15 of each year, on said principal sum at said office or agency, in
like coin or currency, at the rate of 6.50% per annum, from the January 15
or the July 15, as the case may be, next preceding the date of this
Debenture 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
Debenture, or unless no interest has been paid on the Debentures (as
defined on the reverse hereof), in which case from January 9, 1998, until
payment of said principal sum has been made or duly provided for.
Notwithstanding the foregoing, if the date hereof is after January 1 or
July 1, as the case may be, and before the following January 15 or July 15,
this Debenture shall bear interest from such January 15 or July 15;
provided, however, that if the Company shall default in the payment of
interest due on such January 15 or July 15, then this Debenture shall bear
interest from the next preceding January 15 or July 15 to
2
which interest has been paid, or, if no interest has been paid on the
Debentures, from January 9, 1998. The interest so payable on any January 15
or July 15 will, subject to certain exceptions provided in the Indenture
referred to on the reverse hereof, be paid to the person in whose name this
Debenture is registered at the close of business on such January 1 or July
1, as the case may be, next preceding such January 15 or July 15, 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 Debenture 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 Debentures 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 Debentures 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.
Reference is made to the further provisions of this Debenture 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 Debenture shall not be valid or become obligatory for any purpose
until the certificate of authentication
3
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: January 9, 1998 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______________________________
THE CHASE MANHATTAN BANK, as Trustee
by ______________________________
Authorized Signatory
This Debenture 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
(hereinafter called the "Indenture"), duly executed and delivered by the
Company to The Chase Manhattan Bank, a New York banking corporation, as
trustee (hereinafter called the "Trustee"), 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
4
the Indenture provided. This Debenture is one of a series designated as the
6.50% Debentures due 2028 of the Company (hereinafter called the
"Debentures") issued under the Indenture, limited in aggregate principal
amount to $700,000,000.
In case an Event of Default with respect to the Debentures, 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, 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
5
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 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 Debenture shall be conclusive and
binding upon such holder and upon all future holders and owners of this
Debenture and any Debentures which may be issued in exchange or
substitution herefor, irrespective of whether or not any notation thereof
is made upon this Debenture or such other Debentures.
No reference herein to the Indenture and no provision of this
Debenture 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 Debenture 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 Debentures 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 Debentures.
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
6
shall succeed to, and be substituted for, the Person named as the "Company"
on the face of this Debenture, all on the terms set forth in the Indenture.
The Debentures are issuable in registered form without coupons in
denominations of $1,000 and any integral multiple of $1,000. In the manner
and subject to the limitations provided in the Indenture, but without the
payment of any service charge, Debentures may be exchanged for an equal
aggregate principal amount of Debentures 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 Debentures 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 Debentures 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 Debentures 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, the rate
per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming 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.
"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 Debentures 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 Debentures.
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by the Trustee after consultation with the Company.
7
"Comparable Treasury Price" means with respect to any redemption date,
(i) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on
the third business day preceding such redemption date, as set forth in the
daily statistical release (or any successor release) published by the
Federal Reserve Bank of New York and designated "Composite 3:30 p.m.
Quotations for U.S. Government Securities" or (ii) if such release (or any
successor release) is not published or does not contain such prices on such
business day, (A) the average of the Reference Treasury Dealer Quotations
for such redemption date, after excluding the highest and lowest such
Reference Treasury Dealer Quotations, or (B) 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 (expected in each case as a percentage of its principal
amount) quoted in writing to the Trustee by such Reference Treasury Dealer
at 5:00 p.m. on the third business day preceding such redemption date.
"Reference Treasury Dealer" means each of, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Bear, Stearns & Co. Inc., Chase Securities
Inc., Credit Suisse First Boston Corporation, Goldman, Sachs & Co., Lehman
Brothers Inc. and Morgan Stanley & Co. Incorporated, and their respective
successors; provided, however, that if any of the foregoing shall cease to
be a primary U.S. Government securities dealer in New York City (a "Primary
Treasury Dealer"), the Company shall substitute therefor another Primary
Treasury Dealer.
"Remaining Scheduled Payments" means, with respect to any Debenture,
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 Debenture, the amount
of the next succeeding scheduled interest payment thereon will be reduced
by the amount of interest accrued thereon to such redemption date.
8
Upon due presentation for registration of transfer of this Debenture
at the office or agency of the Company for such registration in the Borough
of Manhattan, The City and State of New York, a new Debenture or Debentures
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
Debenture, 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 Debenture (whether or not this Debenture shall be overdue)
for the purpose of receiving payment of the principal of, premium, if any,
and interest on this Debenture, 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 Debenture.
No recourse for the payment of the principal of, premium, if any, or
interest on this Debenture, 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 Debenture, 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 Debenture, all terms used in this
Debenture which are defined in the Indenture shall have the meanings
assigned to them in the Indenture.
THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.