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
5.375% Note due 2009
CUSIP 459200 AT8
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 , 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 February 1, 2009, 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 February 1 and August 1 of each year, on
said principal sum at said office or agency, in like coin or currency, at
the rate of 5.375% per annum, from the February 1 or August 1, 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
February 1, 1999, until payment of said principal sum has been made or duly
provided for. Notwithstanding the foregoing, if the date hereof is after
January 15 or July 15, as the case may be, and before the following
February 1 or August 1, this Note shall bear interest from such February 1
or August 1; provided, however, that if the Company shall default in the
payment of interest due on such February 1 or August 1, then this Note
shall bear interest from the next preceding February 1 or August 1 to which
interest has been paid, or, if no interest has been paid on the Notes, from
February 1,
1999. The interest so payable on any February 1 or August 1 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 such January 15 or July 15, as the case may be, next
preceding such February 1 or August 1, 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.
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
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: February 1, 1999 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 Note 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 the Indenture provided. This Note is
one of a series
designated as the 5.375% Notes due 2009 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, 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 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 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 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 ten 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 preceding the 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 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 Trustee after consultation with 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 (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, Morgan Stanley & Co.
Incorporated, Bear, Stearns & Co. Inc., Chase Securities Inc., Credit
Suisse First Boston Corporation, Goldman, Sachs & Co., Lehman Brothers
Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and, Salomon Smith
Barney Inc. 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 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.
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, 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.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.