AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 21, 2003
REGISTRATION NO. 333- (1)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
INTERNATIONAL BUSINESS MACHINES CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 13-0871985
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
------------------------
ARMONK, NEW YORK 10504
(914) 499-1900
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
ANDREW BONZANI
ASSOCIATE GENERAL COUNSEL AND ASSISTANT SECRETARY
INTERNATIONAL BUSINESS MACHINES CORPORATION
ARMONK, NEW YORK 10504
(914) 499-1900
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box: /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: /X/
------------------------
CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS OF PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE AGGREGATE AMOUNT OF
REGISTERED REGISTERED(A) OFFERING PRICE(A)(B) REGISTRATION FEE(1)
Debt Securities.........................
Preferred Stock(c)......................
Depositary Shares(c).................... $20,000,000,000(1) 100% $1,840,000(1)
Capital Stock(c)........................
Warrants................................
(COVER CONTINUED ON FOLLOWING PAGE)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(a) Subject to Rule 462(b) under the Securities Act, in no event will the
aggregate initial offering price of the securities issued under this
Registration Statement exceed $20,000,000,000, or if any securities are
issued in any foreign currency units, the U.S. dollar equivalent of
$20,000,000,000. For Debt Securities issued with an original issue discount,
the amount to be registered is calculated as the initial accreted value of
such Debt Securities.
(b) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(o).
(c) In addition to any Preferred Stock, Depositary Shares or Capital Stock that
may be issued directly under this Registration Statement, there are being
registered hereunder an indeterminate number of shares of Preferred Stock,
Depositary Shares or Capital Stock as may be issued upon conversion or
exchange of Debt Securities, Preferred Stock or Depositary Shares, as the
case may be. No separate consideration will be received for any shares of
Preferred Stock, Depositary Shares or Capital Stock so issued upon
conversion or exchange.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
------------------------
(1) Pursuant to Rule 457(p) of the Rules and Regulations of the Securities and
Exchange Commission under the Securities Act of 1933, and Securities Act
Release No. 7943, dated January 26, 2001, International Business Machines
Corporation, as the parent and 100% owner of IBM Credit LLC, formerly IBM
Credit Corporation, (CIK number 353524), (IBMCR), is hereby sourcing the
full amount of the registration fee for the securities registered herein
($1,840,000) from the registration fees remaining available for use under
IBMCR's S-3 Debt Shelf Registration Statement (SEC File No. 333-86615, which
was filed with the SEC on September 7, 1999).
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION JANUARY 21, 2003
PROSPECTUS
INTERNATIONAL BUSINESS MACHINES CORPORATION
New Orchard Road
Armonk, New York 10504
(914) 499-1900
$20,000,000,000
DEBT SECURITIES
PREFERRED STOCK
DEPOSITARY SHARES
CAPITAL STOCK
WARRANTS
---------------------
WE WILL PROVIDE SPECIFIC TERMS OF THESE SECURITIES IN SUPPLEMENTS TO THIS
PROSPECTUS.
YOU SHOULD READ THIS PROSPECTUS AND ANY SUPPLEMENT CAREFULLY BEFORE YOU INVEST.
------------------------
These securities have not been approved by the Securities and Exchange
Commission or any state securities commission, nor have these organizations
determined that this prospectus is accurate or complete. Any representation to
the contrary is a criminal offense.
The date of this prospectus is , 2003.
SUMMARY
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the terms
of our securities, you should carefully read this document with the attached
prospectus supplement. Together these documents will give the specific terms of
the securities we are offering. You should also read the documents we have
incorporated by reference into this prospectus for information on us and our
financial statements. Certain capitalized terms used in this summary are defined
elsewhere in this prospectus.
THE SECURITIES WE MAY OFFER
This prospectus is part of a registration statement (No. 333- ) that we
filed with the SEC utilizing a "shelf" registration process. Under this shelf
process, we may offer from time to time up to $20,000,000,000 of any of the
following securities, either separately or in units: DEBT, PREFERRED STOCK,
DEPOSITARY SHARES, CAPITAL STOCK AND WARRANTS. This prospectus provides you with
a general description of the securities we may offer. Each time we offer
securities, we will provide you with a prospectus supplement that will describe
the specific amounts, prices and terms of the securities being offered. The
prospectus supplement may also add, update or change information contained in
this prospectus.
DEBT SECURITIES
We may offer unsecured general obligations of our company, which may be
senior or subordinated. The senior debt securities and the subordinated debt
securities are together referred to in this prospectus as the "debt securities".
The senior debt securities will have the same rank as all of our other
unsecured, unsubordinated debt. The subordinated debt securities will be
entitled to payment only after payment on our senior indebtedness. Senior
indebtedness includes all indebtedness for money borrowed by us, except
indebtedness that is stated to be not superior to, or to have the same rank as,
the subordinated debt securities. In addition, the subordinated debt securities
will be effectively subordinated to creditors of our subsidiaries.
The senior debt securities will be issued under an indenture between us and
JPMorgan Chase Bank, as the trustee. The subordinated debt securities will be
issued under an indenture between us and the trustee we name in the prospectus
supplement. We have summarized general features of the debt securities from the
indentures. We encourage you to read the indentures which are exhibits to the
registration statement and our recent periodic and current reports that we file
with the SEC.
GENERAL INDENTURE PROVISIONS THAT APPLY TO SENIOR AND SUBORDINATED DEBT
SECURITIES
Neither indenture limits the amount of debt that we may issue. In addition,
neither indenture provides holders any protection should there be a
recapitalization or restructuring involving our company.
The indentures allow us to merge or consolidate with another company, or to
sell all or most of our assets to another company. If these events occur, the
other company will be required to assume our responsibilities relating to the
debt securities, and we will be released from all liabilities and obligations.
The indentures provide that holders of a majority of the outstanding
principal amount of any series of debt securities may vote to change our
obligations or your rights concerning that series. However, to change the amount
or timing of principal, interest or other payments under the debt securities,
every holder in the series must consent.
We may discharge our obligations under the indenture relating to the senior
debt securities by depositing with the trustee sufficient funds or government
obligations to pay the senior debt securities when due.
2
EVENTS OF DEFAULT. Each indenture provides that the following are events of
default:
- If we do not pay interest for 30 days after its due date.
- If we do not pay principal or premium when due.
- If we do not make any sinking fund payment for 30 days after its due date.
- If we continue to breach a covenant for 90 days after notice.
- If we enter bankruptcy or become insolvent.
If an event of default occurs under any series of debt securities, the
trustee or holders of 25% of the outstanding principal amount of that series may
declare the principal amount of the series immediately payable. However, holders
of a majority of the principal amount may rescind this action.
GENERAL INDENTURE PROVISIONS THAT APPLY ONLY TO SENIOR DEBT SECURITIES
The indenture relating to the senior debt securities contains covenants
restricting our ability to incur secured indebtedness and enter into sale and
leaseback transactions.
GENERAL INDENTURE PROVISIONS THAT APPLY ONLY TO SUBORDINATED DEBT SECURITIES
The subordinated debt securities will be subordinated to all senior
indebtedness. In addition, claims of our subsidiaries' creditors generally will
have priority with respect to the subsidiaries' assets and earnings over the
claims of our creditors, including holders of the subordinated debt securities.
The subordinated debt securities, therefore, will be effectively subordinated to
creditors of our subsidiaries.
The indenture relating to the subordinated debt securities does not provide
holders any protection in the event of a highly leveraged transaction.
PREFERRED STOCK AND DEPOSITARY SHARES
We may issue our preferred stock, par value $0.01 per share, in one or more
series. Our Board of Directors will determine the dividend, voting, conversion
and other rights of the series being offered and the terms and conditions
relating to its offering and sale at the time of the offer and sale. We may also
issue fractional shares of preferred stock that will be represented by
depositary shares and depositary receipts.
CAPITAL STOCK
We may issue our capital stock, par value $0.20 per share. Holders of
capital stock are entitled to receive dividends if and when those dividends are
declared by our Board of Directors, subject to rights of preferred stockholders.
Each holder of capital stock is entitled to one vote per share. The holders of
capital stock have no preemptive rights or cumulative voting rights.
WARRANTS
We may issue warrants for the purchase of debt securities, preferred stock
or capital stock. We may issue warrants independently or together with other
securities.
RATIO OF EARNINGS FROM CONTINUING OPERATIONS TO FIXED CHARGES AND EARNINGS FROM
CONTINUING OPERATIONS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
We compute the ratio of earnings from continuing operations to fixed charges
by dividing earnings from continuing operations before income taxes (which
excludes (a) amortization of capitalized interest and (b) IBM's share in the
income and losses of less than 50% owned affiliates) and fixed charges
(excluding capitalized interest) by fixed charges. Fixed charges consist of
interest expense, capitalized interest and that portion of rental expense deemed
to be representative of interest.
3
The ratio of earnings from continuing operations to combined fixed charges
and preferred stock dividends includes in the ratio computation preferred stock
dividends representing the pre-tax earnings that would be required to cover
those dividend requirements based on IBM's effective income tax rates for the
respective periods.
NINE MONTHS YEAR ENDED DECEMBER 31,
ENDED ----------------------------------------------------
SEPTEMBER 30, 2002 2001 2000 1999 1998 1997
------------------ -------- -------- -------- -------- --------
Ratio of earnings from continuing operations to
fixed charges.................................... 5.9 7.9 7.0 7.0 4.9 5.1
Ratio of earnings from continuing operations to
combined fixed charges and preferred stock
dividends........................................ 5.9 7.8 6.9 6.9 4.8 5.0
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference room in Washington, D.C. Please call the SEC at
1-800-SEC-0330 for further information on their public reference room. Our SEC
filings are also available to the public at the SEC's web site at
(http://www.sec.gov).
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with it. This means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and later
information that we file with the SEC will automatically update and supersede
this information. We incorporate by reference the documents listed below and any
future filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until our offering is completed:
i. Annual Report on Form 10-K for the year ended December 31, 2001;
ii. Quarterly report on Form 10-Q for the quarters ended March 31,
2002, June 30, 2002 and September 30, 2002; and
iii. Current Reports on Form 8-K, filed on January 17, 2002,
January 29, 2002, April 8, 2002, April 17, 2002, May 9, 2002, June 4, 2002,
July 1, 2002, July 9, 2002, July 17, 2002, July 30, 2002, August 13, 2002,
August 28, 2002, September 9, 2002, October 16, 2002, October 29, 2002,
November 4, 2002, November 14, 2002, November 26, 2002, December 4, 2002,
December 31, 2002, January 2, 2003 and January 17, 2003.
We encourage you to read our periodic and current reports. Not only do we
think these items are interesting reading, we think these reports provide
additional information about our company which prudent investors find important.
You may request a copy of these filings at no cost, by writing to or telephoning
our transfer agent at the following address:
Equiserve Trust Company, N.A.
P.O. Box 43072
Providence, Rhode Island 02940
(781) 575-2727
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of the
document.
4
DESCRIPTION OF THE COMPANY
We were originally incorporated in the State of New York on June 16, 1911,
as the Computing-Tabulating-Recording Co. (C-T-R). C-T-R was a consolidation of
the Computing Scale Co. of America, the Tabulating Machine Co., and The
International Time Recording Co. of New York. In 1924, C-T-R adopted the name
International Business Machines Corporation, also known more simply as IBM.
We use advanced information technology to provide customer solutions. We
operate primarily in a single industry using several segments that create value
by offering a variety of solutions that include, either singularly or in some
combination, technologies, systems, products, services, software and financing.
Organizationally, our major operations comprise a Global Services segment;
three hardware product segments--Enterprise Systems, Personal and Printing
Systems and Technology; a Software segment; a Global Financing segment and an
Enterprise Investments segment. The segments are determined based on several
factors, including customer base, homogeneity of products, technology and
delivery channels.
We offer our products through our global sales and distribution
organizations. The sales and distribution organizations have both a geographic
focus (in the Americas, Europe/Middle East/Africa, and Asia Pacific) and a
specialized and global industry focus. In addition, these organizations include
a global sales and distribution effort devoted exclusively to small and medium
businesses. We also offer our products through a variety of third party
distributors and resellers, as well as through our on-line channels.
USE OF PROCEEDS
Unless we otherwise specify in the applicable prospectus supplement, the net
proceeds we receive from the sale of the securities offered by this prospectus
and the accompanying prospectus supplement will be used for general corporate
purposes. General corporate purposes may include the repayment of debt,
investments in or extensions of credit to our subsidiaries, redemption of any
preferred stock we may issue, or the financing of possible acquisitions or
business expansion. The net proceeds may be invested temporarily or applied to
repay short-term debt until they are used for their stated purpose.
5
DESCRIPTION OF THE DEBT SECURITIES
The following description of the terms of the debt securities sets forth
general terms that may apply to the debt securities. The particular terms of any
debt securities will be described in the prospectus supplement relating to those
debt securities.
The debt securities will be either our senior debt securities or our
subordinated debt securities. The senior debt securities will be issued under an
indenture dated as of October 1, 1993, as supplemented on December 15, 1995,
between us and JPMorgan Chase Bank, as trustee. This indenture is referred to as
the "senior indenture". The subordinated debt securities will be issued under an
indenture to be entered into between us and the trustee named in a prospectus
supplement. This indenture is referred to as the "subordinated indenture". The
senior indenture and the subordinated indenture are together called the
"indentures".
The following is a summary of the most important provisions of the
indentures. Copies of the entire indentures are exhibits to the registration
statement of which this prospectus is a part. Section references below are to
the section in the applicable indenture. The referenced sections of the
indentures are incorporated by reference. We encourage you to read our
indentures.
GENERAL
Neither indenture limits the amount of debt securities that we may issue.
Each indenture provides that debt securities may be issued up to the principal
amount authorized by us from time to time. The senior debt securities will be
unsecured and will have the same rank as all of our other unsecured and
unsubordinated debt. The subordinated debt securities will be unsecured and will
be subordinated and junior to all senior indebtedness.
The debt securities may be issued in one or more separate series of senior
debt securities and/or subordinated debt securities. The prospectus supplement
relating to the particular series of debt securities being offered will specify
the particular amounts, prices and terms of those debt securities. These terms
may include:
- the title of the debt securities;
- any limit upon the aggregate principal amount of the debt securities;
- the maturity date or dates, or the method of determining the maturity
dates;
- the interest rate or rates, or the method of determining those rates;
- the interest payment dates and, for debt securities in registered form,
the regular record dates;
- the places where payments may be made;
- any mandatory or optional redemption provisions;
- any sinking fund or analogous provisions;
- any conversion or exchange provisions;
- any terms for the attachment to the debt securities of warrants, options
or other rights to purchase or sell our securities;
- the portion of principal amount of the debt security payable upon
acceleration of maturity if other than the full principal amount;
- any deletions of, or changes or additions to, the events of default or
covenants;
6
- if other than U.S. dollars, the currency or currencies, composite
currencies, in which payments on the debt securities will be payable and
whether the holder may elect payment to be made in a different currency;
- the method of determining the amount of any payments on the debt
securities which are linked to an index;
- whether the debt securities will be issued in fully registered form
without coupons or in bearer form, with or without coupons, or any
combination of these, and whether they will be issued in the form of one
or more global securities in temporary or definitive form;
- any terms relating to the delivery of the debt securities if they are to
be issued upon the exercise of warrants;
- whether and on what terms we will pay additional amounts to holders of the
debt securities that are not U.S. persons for any tax, assessment or
governmental charge withheld or deducted and, if so, whether and on what
terms we will have the option to redeem the debt securities rather than
pay the additional amounts; and
- any other specific terms of the debt securities.
(Sections 202 and 301)
Unless we otherwise specify in the prospectus supplement:
- the debt securities will be registered debt securities;
- registered debt securities denominated in U.S. dollars will be issued in
denominations of $1,000 or an integral multiple of $1,000; and
- bearer debt securities denominated in U.S. dollars will be issued in
denominations of $5,000.
Debt securities may bear legends required by United States Federal tax law
and regulations. (Section 401)
If any of the debt securities are sold for any foreign currency or currency
unit, or if any payments on the debt securities are payable in any foreign
currency or currency unit, the prospectus supplement will contain any
restrictions, elections, tax consequences, specific terms and other information
relating to the debt securities and the foreign currency or currency unit.
Some of the debt securities may be issued as original issue discount debt
securities. Original issue discount securities bear no interest or bear interest
at below-market rates. These are sold at a discount below their stated principal
amount. If we issue these securities, the prospectus supplement will describe
any special tax, accounting or other information which we think is important. We
encourage you to consult with your own competent tax and financial advisors on
these important matters.
EXCHANGE, REGISTRATION AND TRANSFER
Debt securities may be transferred or exchanged at the corporate trust
office of the security registrar or at any other office or agency which is
maintained for these purposes. No service charge will be payable upon the
transfer or exchange, except for any applicable tax or governmental charge.
The designated security registrar in the United States for the senior debt
securities is JPMorgan Chase Bank, located at 4 New York Plaza, 15th Floor, New
York, New York 10004. The security registrar for the subordinated debt
securities will be designated in a prospectus supplement.
If debt securities are issuable in both registered and bearer form, the
bearer securities will be exchangeable for registered securities. If a bearer
security with related coupons is surrendered in exchange for a registered
security between a record date and the date set for the payment of interest,
7
the bearer security will be surrendered without the coupon relating to that
interest payment. That interest payment will be made only to the holder of the
coupon when due.
In the event of any redemption in part of any series of debt securities, we
will not be required to:
- issue, register the transfer of, or exchange, debt securities of any
series between the opening of business 15 business days before any
selection of debt securities of that series to be redeemed and the close
of business on:
- the day of mailing of the relevant notice of redemption (if debt
securities of the series are issuable only in registered form), and
- the day of the first publication of the relevant notice of redemption
(if the debt securities of the series are issuable in bearer form) or,
- the day of mailing of the relevant notice of redemption (if the debt
securities of the series are issuable in bearer and registered form)
and there is no publication;
- register the transfer of, or exchange, any registered security selected
for redemption, in whole or in part, except the unredeemed portion of any
registered security being redeemed in part; or
- exchange any bearer security selected for redemption, except to exchange
it for a registered security which is simultaneously surrendered for
redemption.
(Section 404)
PAYMENT AND PAYING AGENT
We will pay principal, interest and any premium on fully registered
securities in the designated currency or currency unit at the office of the
paying agent. Payment of interest on fully registered securities may be made by
check mailed to the persons in whose names the debt securities are registered on
days specified in the indentures or any prospectus supplement. (Sections 406 and
410)
We will pay principal, interest and any premium on bearer securities in the
designated currency or currency unit at the office of the paying agent or agents
outside of the United States. Payments will be made at the offices of the paying
agent in the United States only if the designated currency is U.S. dollars and
payment outside of the United States is illegal or effectively precluded.
(Sections 410 and 1102)
If any amount payable on any debt security or coupon remains unclaimed at
the end of two years after the amount became due and payable, the paying agent
will release any unclaimed amounts to us. (Section 1103)
Our paying agent in the United States for the senior debt securities is
JPMorgan Chase Bank, located at 4 New York Plaza, 15th Floor, New York, New York
10004. If and when we issue subordinated debt securities, we'll designate the
paying agent for those subordinated debt securities in the applicable prospectus
supplement.
GLOBAL SECURITIES
The debt securities of a series may be issued in whole or in part in the
form of one or more global certificates. Those certificates will be deposited
with a depositary that we will identify in a prospectus supplement. Global debt
securities may be issued in either registered or bearer form and can be in
either temporary or definitive form. All global securities in bearer form will
be deposited with a depositary outside of the United States. We will describe
the specific terms of the depositary arrangement relating to a series of debt
securities in the prospectus supplement.
8
Other than for payments, we can treat a person having a beneficial interest
in a definitive global security as the holder of the principal amount of
outstanding debt securities represented by the global security. For these
purposes, we can rely upon a written statement delivered to the trustee by the
holder of the definitive global security, or, in the case of a definitive global
security in bearer form, by Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System, and Clearstream Banking, societe
anonyme (Clearstream, Luxembourg). (Section 411)
Neither we, the trustee nor any of our respective agents will be responsible
for any aspect of the records relating to or payments made on account of
beneficial ownership interests in a global security or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests. (Section 411)
Unless we otherwise specify in a prospectus supplement, we anticipate that
the following provisions will apply to our depositary arrangements:
TEMPORARY GLOBAL SECURITIES
All or any portion of the debt securities of a series that are issuable in
bearer form initially may be represented by one or more temporary global
securities, without interest coupons. The temporary global securities will be
deposited with a depositary in London for Euroclear and Clearstream for credit
to the accounts of the beneficial owners of the debt securities or to such other
accounts as they may direct.
On and after an exchange date provided in the applicable prospectus
supplement, each temporary global security will be exchangeable for definitive
debt securities in bearer form, registered form, definitive global bearer form
or a combination of these, as will be specified in the prospectus supplement.
No bearer security delivered in exchange for a portion of a temporary global
security will be mailed or delivered to any location in the United States.
(Sections 402 and 403)
Interest on a temporary global security will be paid to Euroclear and/or
Clearstream for the portion held for its account only after a certificate is
delivered to the trustee stating that the portion:
- is not beneficially owned by a United States person;
- has not been acquired by or on behalf of a United States person or for
offer to resell or for resale to a United States person or any person
inside the United States; or
- if a beneficial interest has been acquired by a United States person,
that:
- such person is a financial institution (as defined in the Internal
Revenue Code), purchasing for its own account or has acquired the debt
security through a financial institution; and
- that the debt securities are held by a financial institution that has
agreed in writing to comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the Internal Revenue Code and the
regulations thereunder, and that it did not purchase for resale inside
the United States.
The certificate must be based on statements provided by the beneficial
owners of interests in the temporary global security. Each of Euroclear and
Clearstream will credit the interest received by it to the accounts of the
beneficial owners of the debt security, or to other accounts as they may direct.
(Section 403)
9
DEFINITIVE GLOBAL SECURITIES
BEARER SECURITIES. The applicable prospectus supplement will describe the
exchange provisions, if any, of debt securities issuable in definitive global
bearer form. We will not deliver any bearer securities in exchange for a portion
of a definitive global security to any location in the United States. (Section
404)
U.S. BOOK-ENTRY SECURITIES. Debt securities of a series represented by a
definitive global registered security and deposited with or on behalf of a
depositary in the United States will be registered in the name of the depositary
or its nominee. These securities are referred to as "book-entry securities".
When a global security is issued and deposited with the depositary, the
depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts represented by that global security to the accounts
of institutions that have accounts with the depositary or its nominee.
Institutions that have accounts with the depositary or its nominee are referred
to as "participants".
The accounts to be credited shall be designated by the underwriters or
agents for the sale of such book-entry securities or by us, if we offer and sell
those securities directly.
Ownership of book-entry securities are limited to participants or persons
that may hold interests through participants. In addition, ownership of these
securities will be evidenced only by, and the transfer of that ownership will be
effected only through, records maintained by the depositary or its nominee or by
participants or persons that hold through other participants.
So long as the depositary, or its nominee, is the registered owner of a
global security, that depositary or nominee will be considered the sole owner or
holder of the book-entry securities represented by the global security for all
purposes under the indenture. Payments of principal, interest and premium on
those securities will be made to the depositary or its nominee as the registered
owner or the holder of the global security.
Owners of book-entry securities:
- will not be entitled to have the debt securities registered in their
names;
- will not be entitled to receive physical delivery of the debt securities
in definitive form; and
- will not be considered the owners or holders of those debt securities
under the indenture.
The laws of some jurisdictions require that purchasers of securities take
physical delivery of the securities in definitive form. These laws may impair
the ability to purchase or transfer book-entry securities.
We expect that the depositary for book-entry securities of a series will
immediately credit participants' accounts with payments received by the
depositary or nominee in amounts proportionate to the participants' beneficial
interests as shown on the records of such depositary.
We also expect that payments by participants to owners of beneficial
interests in a global security held through the participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name". The payments by participants to the owners of beneficial
interests will be the responsibility of those participants.
PRACTICAL IMPLICATIONS OF HOLDING DEBT SECURITIES IN STREET NAME
Investors who hold debt securities in accounts at banks or brokers will not
generally be recognized by us as the legal holders of debt securities. Since we
recognize as the holder the bank or broker, or the financial institution the
bank or broker uses to hold its debt securities, it is the responsibility of
these intermediary banks, brokers and other financial institutions to pass along
principal, interest and
10
other payments on the debt securities, either because they agree to do so in
their agreements with their customers, or because they are legally required to
do so. If you hold debt securities in street name, you really ought to check
with your own institution to find out:
- How it handles securities payments and notices;
- Whether it imposes additional fees or charges;
- How it would handle voting and related issues if ever required;
- How it would pursue or enforce rights under the debt securities if there
were a default or other event triggering the need for direct holders to
act to protect their interests; and
- Whether and how it would react on other matters which are important to
persons who hold debt securities in "street name".
COVENANTS
LIMITATION ON MERGER, CONSOLIDATION AND CERTAIN SALES OF ASSETS. We may,
without the consent of the holders of the debt securities, merge into or
consolidate with any other corporation, or convey or transfer all or
substantially all of our properties and assets to another person provided that:
- the successor is a U.S. corporation;
- the successor assumes on the same terms and conditions all the obligations
under the debt securities and the indentures; and
- immediately after giving effect to the transaction, there is no default
under the applicable indenture. (Section 901)
The remaining or acquiring corporation will take over all of our rights and
obligations under the indentures. (Section 902)
SATISFACTION AND DISCHARGE; DEFEASANCE
We may be discharged from our obligations on the debt securities of any
series that have matured or will mature or be redeemed within one year if we
deposit with the trustee enough cash to pay all the principal, interest and any
premium due to the stated maturity date or redemption date of the debt
securities. (Section 501)
Each indenture contains a provision that permits us to elect:
1. to be discharged after 90 days from all of our obligations (subject to
limited exceptions) with respect to any series of debt securities then
outstanding; and/or
2. to be released from our obligations under the following covenants and
from the consequences of an event of default or cross-default resulting
from a breach of these covenants:
a. the limitations on mergers, consolidations and sale of assets,
b. the limitations on sale and leaseback transactions under the senior
indenture, and
c. the limitations on secured indebtedness under the senior indenture.
To make either of the above elections, we must deposit in trust with the
trustee enough money to pay in full the principal, interest and premium on the
debt securities. This amount may be made in cash and/or U.S. government
obligations, if the debt securities are denominated in U.S. dollars. This amount
may be made in cash, and/or foreign government securities if the debt securities
are denominated in a foreign currency. As a condition to either of the above
elections, we must deliver to
11
the trustee an opinion of counsel that the holders of the debt securities will
not recognize income, gain or loss for Federal income tax purposes as a result
of the action. (Section 503)
If either of the above events occur, the holders of the debt securities of
the series will not be entitled to the benefits of the indenture, except for
registration of transfer and exchange of debt securities and replacement of
lost, stolen or mutilated debt securities. (Sections 501 and 503)
EVENTS OF DEFAULT, NOTICE AND WAIVER
If an event of default for any series of debt securities occurs and
continues, the trustee or the holders of at least 25% in principal amount of the
debt securities of the series may declare the entire principal amount of all the
debt securities of that series to be due and payable immediately.
The declaration may be annulled and past defaults may be waived by the
holders of a majority of the principal amount of the debt securities of that
series. However, payment defaults that are not cured may only be waived by all
holders of the debt securities. (Sections 602 and 613)
Each indenture defines an event of default in connection with any series of
debt securities as one or more of the following events:
- we fail to pay interest on any debt security of the series for 30 days
when due;
- we fail to pay the principal or any premium on any debt securities of the
series when due;
- we fail to make any sinking fund payment for 30 days when due;
- we fail to perform any other covenant in the debt securities of the series
or in the applicable indenture relating to debt securities of that series
for 90 days after being given notice; and
- we enter into bankruptcy or become insolvent.
An event of default for one series of debt securities is not necessarily an
event of default for any other series of debt securities. (Section 601)
Each indenture requires the trustee to give the holders of a series of debt
securities notice of a default for that series within 90 days unless the default
is cured or waived. However, the trustee may withhold this notice if it
determines in good faith that it is in the interest of those holders. The
trustee may not, however, withhold this notice in the case of a payment default.
(Section 702)
Other than the duty to act with the required standard of care during an
event of default, a trustee is not obligated to exercise any of its rights or
powers under the indenture at the request or direction of any of the holders of
debt securities, unless the holders have offered to the trustee reasonable
indemnification. (Section 703)
Generally, the holders of a majority in principal amount of outstanding debt
securities of any series may direct the time, method and place of conducting any
proceeding for any remedy available to the trustee, or exercising any trust or
other power conferred on the trustee. (Section 612)
Each indenture includes a covenant that we will file annually with the
trustee a certificate of no default, or specifying any default that exists.
(Section 1106)
Street name and other indirect holders should consult their banks and
brokers for information on their requirements for giving notice or taking other
actions upon a default.
MODIFICATION OF THE INDENTURES
Together with the trustee, we may modify the indentures without the consent
of the holders for limited purposes, including adding to our covenants or events
of default, establishing forms or terms of
12
debt securities, curing ambiguities and other purposes which do not adversely
affect the holders in any material respect. (Section 1001)
Together with the trustee, we may also make modifications and amendments to
each indenture with the consent of the holders of a majority in principal amount
of the outstanding debt securities of all affected series. However, without the
consent of each affected holder, no modification may:
- change the stated maturity of any debt security;
- reduce the principal, premium (if any) or rate of interest on any debt
security;
- change any place of payment or the currency in which any debt security is
payable;
- impair the right to enforce any payment after the stated maturity or
redemption date;
- adversely affect the terms of any conversion right;
- reduce the percentage of holders of outstanding debt securities of any
series required to consent to any modification, amendment or waiver under
the indenture;
- change any of our obligations for any outstanding series of debt
securities to maintain an office or agency in the places and for the
purposes specified in the indenture for that series; or
- change the provisions in the indenture that relate to its modification or
amendment.
(Section 1002)
MEETINGS
The indentures contain provisions for convening meetings of the holders of
debt securities of a series. (Section 1401)
A meeting may be called at any time by the trustee, upon request by us or
upon request by the holders of at least 10% in principal amount of the
outstanding debt securities of the series. In each case, notice will be given to
the holders of debt securities of the series. (Section 1402)
Persons holding a majority in principal amount of the outstanding debt
securities of a series will constitute a quorum at a meeting. A meeting called
by us or the trustee that did not have a quorum may be adjourned for not less
than 10 days, and if there is not a quorum at the adjourned meeting, the meeting
may be further adjourned for not less than 10 days.
Generally, any resolution presented at a meeting at which a quorum is
present may be adopted by the affirmative vote of the holders of a majority in
principal amount of the outstanding debt securities of that series. However, to
change the amount or timing of payments under the debt securities, every holder
in the series must consent.
In addition, if the indenture provides that an action may be taken by the
holders of a specified percentage in principal amount of outstanding debt
securities of a series, that action may be taken at a meeting at which a quorum
is present by the affirmative vote of the holders of such specified percentage
in principal amount of the outstanding debt securities of that series. Any
resolution passed or decision taken at any meeting of holders of debt securities
of any series duly held in accordance with an indenture will be binding on all
holders of debt securities of that series and the related coupons.
(Section 1404)
NOTICES TO HOLDERS
In most instances, notices to holders of bearer securities will be given by
publication at least once in a daily newspaper in The City of New York and in
London. Notices may also be published in another city or cities as may be
specified in the securities. In addition, notices to holders of bearer
13
securities will be mailed to those persons whose names and addresses were
previously filed with the applicable trustee. Notice to holders of registered
securities will be given by mail to the addresses of the holders as they appear
in the security register. (Section 106)
TITLE
Title to any bearer securities and any related coupons will pass by
delivery. We, the trustee and any agent of ours or the trustee may treat the
holder of any bearer security or related coupon as the absolute owner of that
security for all purposes. We may also treat the registered owner of any
registered security as the absolute owner of that security for all purposes.
(Section 407)
REPLACEMENT OF SECURITIES AND COUPONS
We think it's very important for you to keep your securities safe. If you
don't, you'll have to follow these procedures. We'll replace debt securities or
coupons that have been mutilated, but you'll have to pay for the replacement,
and you'll have to surrender the mutilated debt security or coupon to the
security registrar first. Debt securities or coupons that become destroyed,
stolen or lost will only be replaced by us, again at your expense, upon your
providing evidence of destruction, loss or theft which we and the security
registrar are willing to accept. In the case of a destroyed, lost or stolen debt
security or coupon, we may also require you, as the holder of the debt security
or coupon, to indemnify the security registrar and us before we'll go about
issuing any replacement debt security or coupon. (Section 405)
GOVERNING LAW
The indentures, the debt securities and the coupons will be governed by, and
construed under, the laws of the State of New York.
OUR RELATIONSHIP WITH THE TRUSTEE
We may from time to time maintain lines of credit, and have other customary
banking relationships, with the trustee under the senior indenture or the
trustee under the subordinated indenture.
SENIOR DEBT SECURITIES
The senior debt securities will be unsecured and will rank equally with all
of our other unsecured and non-subordinated debt.
COVENANTS IN THE SENIOR INDENTURE
LIMITATION ON SECURED INDEBTEDNESS. Neither we nor any Restricted
Subsidiary will create, assume, incur or guarantee any Secured Indebtedness
without securing the senior debt securities equally and ratably with, or prior
to, that Secured Indebtedness, UNLESS the sum of the following amounts would not
exceed 10% of Consolidated Net Tangible Assets:
- the total amount of all Secured Indebtedness that the senior debt
securities are not secured equally and ratably with, and
- the discounted present value of all net rentals payable under leases
entered into in connection with sale and leaseback transactions entered
into after July 15, 1985.
You should note that we don't include in this calculation any leases entered
into by a Restricted Subsidiary before the time it became a Restricted
Subsidiary. (Section 1104 of Senior Indenture)
14
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS. Neither we nor any
Restricted Subsidiary will enter into any lease longer than three years covering
any of our Principal Property or any Restricted Subsidiary that is sold to any
other person in connection with that lease unless either:
1. the sum of the following amounts does not exceed 10% of Consolidated Net
Tangible Assets:
- the discounted present value of all net rentals payable under all these
leases entered into after July 15, 1985; and
- the total amount of all Secured Indebtedness that the senior debt
securities are not secured equally and ratably with.
We don't include in this calculation any leases entered into by a
Restricted Subsidiary before the time it became a Restricted Subsidiary.
or
2. an amount equal to the greater of the following amounts is applied
within 180 days to the retirement of our long-term debt or the debt of a
Restricted Subsidiary:
- the net proceeds to us or a Restricted Subsidiary from the sale; and
- the discounted present value of all net rentals payable under the
lease.
Amounts applied to debt which is subordinated to the senior debt
securities or which is owing to us or a Restricted Subsidiary will not be
included in this calculation. (Section 1105 of Senior Indenture)
We think it's important for you to be aware that this limitation on sale and
leaseback transactions won't apply to any leases that we may enter into relating
to newly acquired, improved or constructed property.
We think it's also important for you to note that the holders of a majority
in principal amount of all affected series of outstanding debt securities may
waive compliance with each of the above covenants. (Section 1107 of Senior
Indenture)
DEFINITIONS
"Secured Indebtedness" means our indebtedness or indebtedness of a
Restricted Subsidiary for borrowed money secured by any lien on, or any
conditional sale or other title retention agreement covering, any Principal
Property or any stock or indebtedness of a Restricted Subsidiary. Excluded from
this definition is all indebtedness:
- outstanding on July 15, 1985, secured by liens, or arising from
conditional sale or other title retention agreements, existing on that
date;
- incurred after July 15, 1985 to finance the acquisition, improvement or
construction of property, and either secured by purchase money mortgages
or liens placed on the property within 180 days of acquisition,
improvement or construction or arising from conditional sale or other
title retention agreements;
- secured by liens on Principal Property or on the stock or indebtedness of
Restricted Subsidiaries, and, in either case, existing at the time of its
acquisition;
- owing to us or any Restricted Subsidiary;
- secured by liens, or conditional sale or other title retention devices,
existing at the time a corporation became or becomes a Restricted
Subsidiary after July 15, 1985;
15
- constituting our guarantees of Secured Indebtedness and Attributable Debt
of any Restricted Subsidiaries and guarantees by a Restricted Subsidiary
of Secured Indebtedness and Attributable Debt of ours and any other
Restricted Subsidiaries;
- arising from any sale and leaseback transaction;
- incurred to finance the acquisition or construction of property secured by
liens in favor of any country or any political subdivision; and
- constituting any replacement, extension or renewal of any indebtedness to
the extent the amount of indebtedness is not increased.
"Principal Property" means land, land improvements, buildings and associated
factory, laboratory and office equipment constituting a manufacturing,
development, warehouse, service or office facility owned by or leased to us or a
Restricted Subsidiary which is located within the United States and which has an
acquisition cost plus capitalized improvements in excess of 0.15% of
Consolidated Net Tangible Assets as of the date of such determination. Principal
Property does not include:
- products marketed by us or our subsidiaries;
- any property financed through the issuance of tax-exempt governmental
obligations;
- any property which our Board of Directors determines is not of material
importance to us and our Restricted Subsidiaries taken as a whole; or
- any property in which the interest of us and all of our subsidiaries does
not exceed 50%.
"Consolidated Net Tangible Assets" means the total assets of us and our
subsidiaries, less current liabilities and intangible assets. We include in
intangible assets the balance sheet value of:
- all trade names, trademarks, licenses, patents, copyrights and goodwill;
- organizational and development costs;
- deferred charges other than prepaid items such as insurance, taxes,
interest, commissions, rents and similar items and tangible items we are
amortizing; and
- unamortized debt discount and expense minus unamortized premium.
We don't include in intangible assets any program products.
"Attributable Debt" means the discounted present value of a lessee's
obligation for rental payments under a sale and leaseback transaction of
Principal Property, reduced by amounts owed by any sublessee for rental
obligations during the remaining term of that transaction. The discount rate we
use for the Attributable Debt is called the "Attributable Interest Rate." We
compute the Attributable Interest Rate as the weighted average of the interest
rates of all securities then issued and outstanding under the Senior Indenture.
"Restricted Subsidiary" means:
1. any of our subsidiaries:
a. which has substantially all its property in the United States;
b. which owns or is a lessee of any Principal Property; and,
c. in which our investment and the investment of our subsidiaries
exceeds 0.15% of Consolidated Net Tangible Assets as of the date of
such determination; and
2. any other subsidiary the Board of Directors may designate as a
Restricted Subsidiary.
16
"Restricted Subsidiary" doesn't include financing subsidiaries and
subsidiaries formed or acquired after July 15, 1985 for the purpose of acquiring
the stock, business or assets of another person and that have not and do not
acquire all or any substantial part of our business or assets or the business or
assets of any Restricted Subsidiary. (Section 101 of Senior Indenture)
SUBORDINATED DEBT SECURITIES
The subordinated debt securities will be unsecured. The subordinated debt
securities will be subordinate in right of payment to all senior indebtedness.
(Section 1501 of Subordinated Indenture)
In addition, claims of our subsidiaries' creditors generally will have
priority with respect to the assets and earnings of the subsidiaries over the
claims of our creditors, including holders of the subordinated debt securities,
even though those obligations may not constitute senior indebtedness. The
subordinated debt securities, therefore, will be effectively subordinated to
creditors, including trade creditors of our subsidiaries.
The subordinated indenture defines "senior indebtedness" to mean the
principal of, premium, if any, and interest on:
- all indebtedness for money borrowed or guaranteed by us other than the
subordinated debt securities, unless the indebtedness expressly states to
have the same rank as, or to rank junior to, the subordinated debt
securities; and
- any deferrals, renewals or extensions of any senior indebtedness.
However, the term "senior indebtedness" will not include:
- any of our obligations to our subsidiaries;
- any liability for Federal, state, local or other taxes owed or owing by
us;
- any accounts payable or other liability to trade creditors arising in the
ordinary course of business, including guarantees of instruments
evidencing those liabilities;
- any indebtedness, guarantee or obligation of ours which is expressly
subordinate or junior in right of payment in any respect to any other
indebtedness, guarantee or obligation of ours, including any senior
subordinated indebtedness and any subordinated obligations;
- any obligations with respect to any capital stock; or
- any indebtedness incurred in violation of the Subordinated Indenture.
There is no limitation on our ability to issue additional senior
indebtedness. The senior debt securities constitute senior indebtedness under
the subordinated indenture. The subordinated debt securities will rank equally
with our other subordinated indebtedness.
Under the subordinated indenture, no payment may be made on the subordinated
debt securities and no purchase, redemption or retirement of any subordinated
debt securities may be made in the event:
- any senior indebtedness is not paid when due, or
- the maturity of any senior indebtedness is accelerated as a result of a
default, unless the default has been cured or waived and the acceleration
has been rescinded or that senior indebtedness has been paid in full.
We may, however, pay the subordinated debt securities without regard to the
above restriction if the representatives of the holders of the applicable senior
indebtedness approve the payment in writing to us and the trustee.
17
The representatives of the holders of senior indebtedness may notify us and
the trustee in writing of a default which can result in the acceleration of that
senior indebtedness' maturity without further notice or the expiration of any
grace periods. In this event, we may not pay the subordinated debt securities
for 179 days after receipt of that notice. If the holders of senior indebtedness
or their representatives have not accelerated the maturity of the senior
indebtedness at the end of the 179 day period, we may resume payments on the
subordinated debt securities. Not more than one such notice may be given in any
consecutive 360-day period, irrespective of the number of defaults with respect
to senior indebtedness during that period. (Section 1503 of Subordinated
Indenture)
In the event we pay or distribute our assets to creditors upon a total or
partial liquidation, dissolution or reorganization of us or our property, the
holders of senior indebtedness will be entitled to receive payment in full of
the senior indebtedness before the holders of subordinated debt securities are
entitled to receive any payment. Until the senior indebtedness is paid in full,
any payment or distribution to which holders of subordinated debt securities
would be entitled but for the subordination provisions of the subordinated
indenture will be made to holders of the senior indebtedness. (Section 1502 of
Subordinated Indenture)
If a distribution is made to holders of subordinated debt securities that,
due to the subordination provisions, should not have been made to them, those
holders of subordinated debt securities are required to hold it in trust for the
holders of senior indebtedness, and pay it over to them as their interests may
appear. (Section 1505 of Subordinated Indenture)
If payment of the subordinated debt securities is accelerated because of an
event of default, either we or the trustee will promptly notify the holders of
senior indebtedness or their representatives of the acceleration. We may not pay
the subordinated debt securities until five business days after the holders of
senior indebtedness or their representatives receive notice of the acceleration.
Thereafter, we may pay the subordinated debt securities only if the
subordination provisions of the subordinated indenture otherwise permit payment
at that time. (Section 1505 of Subordinated Indenture)
As a result of the subordination provisions contained in the subordinated
indenture, in the event of insolvency, our creditors who are holders of senior
indebtedness may recover more, ratably, than the holders of subordinated debt
securities. In addition, our creditors who are not holders of senior
indebtedness may recover less, ratably, than holders of senior indebtedness and
may recover more, ratably, than the holders of subordinated indebtedness. It's
important to keep this in mind if you decide to hold our subordinated debt
securities.
18
DESCRIPTION OF THE PREFERRED STOCK
The following is a description of general terms and provisions of the
preferred stock. The particular terms of any series of preferred stock will be
described in the applicable prospectus supplement.
All of the terms of the preferred stock are, or will be, contained in our
Certificate of Incorporation and the certificate of amendment relating to each
series of the preferred stock, which will be filed with the Securities and
Exchange Commission at or before the time we issue a series of the preferred
stock.
We are authorized to issue up to 150,000,000 shares of preferred stock, par
value $.01 per share. As of the date of this Prospectus, we have no shares of
preferred stock outstanding. Subject to limitations prescribed by law, the Board
of Directors is authorized at any time to:
- issue one or more series of preferred stock;
- determine the designation for any series by number, letter or title that
shall distinguish the series from any other series of preferred stock; and
- determine the number of shares in any series.
The Board of Directors is authorized to determine, for each series of
preferred stock, and the prospectus supplement will set forth with respect to
the series the following information:
- whether dividends on that series of preferred stock will be cumulative,
noncumulative or partially cumulative;
- the dividend rate (or method for determining the rate);
- the liquidation preference per share of that series of preferred stock, if
any;
- any conversion provisions applicable to that series of preferred stock;
- any redemption or sinking fund provisions applicable to that series of
preferred stock;
- the voting rights of that series of preferred stock, if any; and
- the terms of any other preferences or rights, if any, applicable to that
series of preferred stock.
The preferred stock, when issued, will be fully paid and nonassessable.
DIVIDENDS
Holders of preferred stock will be entitled to receive, when, as and if
declared by our Board of Directors, cash dividends at the rates and on the dates
as set forth in the prospectus supplement. Generally, no dividends will be
declared or paid on any series of preferred stock unless full dividends for all
series of preferred stock, including any cumulative dividends still owing, have
been or contemporaneously are declared and paid. When those dividends are not
paid in full, dividends will be declared pro-rata so that the amount of
dividends declared per share on each series of preferred stock will bear to each
other series the same ratio that accrued dividends per share for each respective
series of preferred stock bear to aggregate accrued dividends for all
outstanding shares of preferred stock. In addition, generally, unless all
dividends on the preferred stock have been paid, no dividends will be declared
or paid on the capital stock and we may not redeem or purchase any capital
stock.
Payment of dividends on any series of preferred stock may be restricted by
loan agreements, indentures and other transactions we may enter into.
19
CONVERTIBILITY
No series of preferred stock will be convertible into, or exchangeable for,
other securities or property except as set forth in the applicable prospectus
supplement.
REDEMPTION AND SINKING FUND
No series of preferred stock will be redeemable or receive the benefit of a
sinking fund except as set forth in the applicable prospectus supplement.
Shares of preferred stock that we redeem or otherwise reacquire will resume
the status of authorized and unissued shares of preferred stock undesignated as
to series, and will be available for subsequent issuance. There are no
restrictions on repurchase or redemption of the preferred stock while there is
any arrearage on sinking fund installments except as may be set forth in a
prospectus supplement.
LIQUIDATION
In the event we voluntarily or involuntarily liquidate, dissolve or wind up
our affairs, the holders of each series of preferred stock will be entitled to
receive the liquidation preference per share specified in the prospectus
supplement, plus any accrued and unpaid dividends. Holders of preferred stock
will be entitled to receive these amounts before any distribution is made to the
holders of capital stock.
If the amounts payable to preferred stockholders are not paid in full, the
holders of preferred stock will share ratably in any distribution of assets
based upon the aggregate liquidation preference for all outstanding shares for
each series. After the holders of shares of preferred stock are paid in full,
they will have no right or claim to any of our remaining assets.
Neither the par value nor the liquidation preference is indicative of the
price at which the preferred stock will actually trade on or after the date of
issuance.
VOTING
Generally, the holders of preferred stock will not be entitled to vote.
However, if the equivalent of six quarterly dividends payable on any series of
preferred stock is in default, the number of directors constituting our Board of
Directors will be increased by two and the holders of such series of preferred
stock, voting together as a class with all other series of preferred stock
entitled to vote on such election of directors, will be entitled to elect those
additional directors. In the event of this type of default, the Board of
Directors will call a special meeting for the holders of all affected series
within 10 business days of the default for the purpose of electing the
additional directors. Alternatively, the holders of record of a majority of the
outstanding shares of all affected series who are entitled to participate in the
election of directors may elect those additional directors by written consent.
If all accumulated dividends on any series of preferred stock have been paid in
full, the holders of shares of that series will no longer have the right to vote
on directors, the term of office of each director so elected will terminate, and
the number of our directors will, without further action, be reduced by two.
Unless we otherwise specify in a prospectus supplement, the vote of the
holders of a majority of the outstanding shares of each series of preferred
stock voting together as a class, is required to authorize any amendment,
alteration or repeal of our Certificate of Incorporation or any certificate of
amendment which would adversely affect the powers, preferences, or special
rights of the preferred stock including authorizing any class of stock with
superior dividend and liquidation preferences.
20
NO OTHER RIGHTS
The shares of a series of preferred stock will not have any preemptive
rights, preferences, voting powers or relative, participating, optional or other
special rights except as set forth above or in the prospectus supplement, the
Certificate of Incorporation or certificate of amendment or as otherwise
required by law.
TRANSFER AGENT AND REGISTRAR
We'll designate the transfer agent for each series of preferred stock in the
prospectus supplement.
DESCRIPTION OF THE DEPOSITARY SHARES
We may, at our option, elect to offer fractional shares of preferred stock,
rather than full shares of preferred stock. If we do, we will issue to the
public receipts for depositary shares, and each of these depositary shares will
represent a fraction of a share of a particular series of preferred stock. Each
owner of a depositary share will be entitled, in proportion to the applicable
fractional interest in shares of preferred stock underlying that depositary
share, to all rights and preferences of the preferred stock underlying that
depositary share. Those rights include dividend, voting, redemption and
liquidation rights.
The shares of preferred stock underlying the depositary shares will be
deposited with a depositary under a deposit agreement between us, the depositary
and the holders of the depositary receipts evidencing the depositary shares. The
depositary will be a bank or trust company selected by us. The depositary will
also act as the transfer agent, registrar and dividend disbursing agent for the
depositary shares.
Holders of depositary receipts agree to be bound by the deposit agreement,
which requires holders to take certain actions such as filing proof of residence
and paying certain charges.
The following is a summary of the most important terms of the depositary
shares. The deposit agreement, our Certificate of Incorporation and the
certificate of amendment for the applicable series of preferred stock that are,
or will be, filed with the SEC will set forth all of the terms relating to the
depositary shares.
DIVIDENDS
The depositary will distribute all cash dividends or other cash
distributions received relating to the series of preferred stock underlying the
depositary shares, to the record holders of depositary receipts in proportion to
the number of depositary shares owned by those holders on the relevant record
date. The record date for the depositary shares will be the same date as the
record date for the preferred stock.
In the event of a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary receipts
that are entitled to receive the distribution. However, if the depositary
determines that it is not feasible to make the distribution, the depositary may,
with our approval, adopt another method for the distribution. The method may
include selling the property and distributing the net proceeds to the holders.
LIQUIDATION PREFERENCE
In the event of our voluntary or involuntary liquidation, dissolution or
winding up, the holders of each depositary share will be entitled to receive the
fraction of the liquidation preference accorded each share of the applicable
series of preferred stock, as set forth in the applicable prospectus supplement.
21
REDEMPTION
If a series of preferred stock underlying the depositary shares is subject
to redemption, the depositary shares will be redeemed from the proceeds received
by the depositary resulting from the redemption, in whole or in part, of
preferred stock held by the depositary. Whenever we redeem any preferred stock
held by the depositary, the depositary will redeem, as of the same redemption
date, the number of depositary shares representing the preferred stock so
redeemed. The depositary will mail the notice of redemption to the record
holders of the depositary receipts promptly upon receiving the notice from us
and not less than 35 nor more than 60 days prior to the date fixed for
redemption of the preferred stock and the depositary shares.
VOTING
Upon receipt of notice of any meeting at which the holders of preferred
stock are entitled to vote, the depositary will mail the information contained
in the notice of meeting to the record holders of the depositary receipts
underlying the preferred stock. Each record holder of those depositary receipts
on the record date will be entitled to instruct the depositary as to the
exercise of the voting rights pertaining to the amount of preferred stock
underlying that holder's depositary shares. The record date for the depositary
shares will be the same date as the record date for the preferred stock. The
depositary will try, as far as practicable, to vote the preferred stock
underlying the depositary shares in a manner consistent with the instructions of
the holders of the depositary receipts. We will agree to take all action which
may be deemed necessary by the depositary in order to enable the depositary to
do so. The depositary will not vote the preferred stock to the extent that it
does not receive specific instructions from the holders of depositary receipts.
WITHDRAWAL OF PREFERRED STOCK
Owners of depositary shares are entitled, upon surrender of depositary
receipts at the principal office of the depositary and payment of any unpaid
amount due the depositary, to receive the number of whole shares of preferred
stock underlying the depositary shares. Partial shares of preferred stock will
not be issued. These holders of preferred stock will not be entitled to deposit
the shares under the deposit agreement or to receive depositary receipts
evidencing depositary shares for the preferred stock.
AMENDMENT AND TERMINATION OF DEPOSIT AGREEMENT
The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may be amended at any time and from time to
time by agreement between us and the depositary. However, any amendment which
materially and adversely alters the rights of the holders of depositary shares,
other than any change in fees, will not be effective unless the amendment has
been approved by at least a majority of the depositary shares then outstanding.
The deposit agreement may be terminated by us or the depositary only if:
- all outstanding depositary shares have been redeemed; or
- there has been a final distribution relating to the preferred stock in
connection with our dissolution, and that distribution has been made to
all the holders of depositary shares.
CHARGES OF DEPOSITARY
We'll pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We'll also pay charges
of the depositary in connection with the initial deposit of the preferred stock
and the initial issuance of the depositary shares, any redemption of the
preferred stock and all withdrawals of preferred stock by owners of depositary
shares. Holders of
22
depositary receipts will pay transfer, income and other taxes and governmental
charges and certain other charges as provided in the deposit agreement. In
certain circumstances, the depositary may refuse to transfer depositary shares,
withhold dividends and distributions, and sell the depositary shares evidenced
by the depositary receipt, if the charges are not paid.
REPORTS TO HOLDERS
The depositary will forward to the holders of depositary receipts all
reports and communications we deliver to the depositary that we are required to
furnish to the holders of the preferred stock. In addition, the depositary will
make available for inspection by holders of depositary receipts at the principal
office of the depositary--and at other places as it thinks is advisable--any
reports and communications we deliver to the depositary as the holder of
preferred stock.
LIABILITY AND LEGAL PROCEEDINGS
Neither we nor the depositary will be liable if either of us are prevented
or delayed by law or any circumstance beyond our control in performing our
obligations under the deposit agreement. Our obligations and those of the
depositary will be limited to performance in good faith of our duties under the
deposit agreement. Neither we nor the depositary will be obligated to prosecute
or defend any legal proceeding in respect of any depositary shares or preferred
stock unless satisfactory indemnity is furnished. We and the depositary may rely
on written advice of counsel or accountants, on information provided by holders
of depositary receipts or other persons believed in good faith to be competent
to give such information and on documents believed to be genuine and to have
been signed or presented by the proper persons.
RESIGNATION AND REMOVAL OF DEPOSITARY
The depositary may resign at any time by delivering a notice to us of its
election to do so. We may also remove the depositary at any time. Any such
resignation or removal will take effect upon the appointment of a successor
depositary and its acceptance of such appointment. The successor depositary must
be appointed within 60 days after delivery of the notice for resignation or
removal. In addition, the successor depositary must be a bank or trust company
having its principal office in the United States of America and must have a
combined capital and surplus of at least $150,000,000.
FEDERAL INCOME TAX CONSEQUENCES
Owners of the depositary shares will be treated for Federal income tax
purposes as if they were owners of the preferred stock underlying the depositary
shares. Accordingly, the owners will be entitled to take into account for
Federal income tax purposes income and deductions to which they would be
entitled if they were holders of the preferred stock. In addition:
- no gain or loss will be recognized for Federal income tax purposes upon
the withdrawal of preferred stock in exchange for depositary shares;
- the tax basis of each share of preferred stock to an exchanging owner of
depositary shares will, upon the exchange, be the same as the aggregate
tax basis of the depositary shares exchanged; and
- the holding period for preferred stock in the hands of an exchanging owner
of depositary shares will include the period during which the person owned
the depositary shares.
23
DESCRIPTION OF THE CAPITAL STOCK
As of the date of this prospectus, we are authorized to issue up to
4,687,500,000 shares of capital stock, $0.20 par value per share. As of
December 31, 2002, 1,920,957,772 shares of capital stock were issued and
1,722,366,896 were outstanding.
DIVIDENDS. Holders of capital stock are entitled to receive dividends, in
cash, securities, or property, as may from time to time be declared by our Board
of Directors, subject to the rights of the holders of the preferred stock.
VOTING. Each holder of capital stock is entitled to one vote per share on
all matters requiring a vote of the stockholders.
RIGHTS UPON LIQUIDATION. In the event of our voluntary or involuntary
liquidation, dissolution, or winding up, the holders of capital stock will be
entitled to share equally in our assets available for distribution after payment
in full of all debts and after the holders of preferred stock have received
their liquidation preferences in full.
MISCELLANEOUS. Shares of capital stock are not redeemable and have no
subscription, conversion or preemptive rights.
DESCRIPTION OF THE WARRANTS
We may issue warrants for the purchase of debt securities, preferred stock
or capital stock. Warrants may be issued independently or together with our debt
securities, preferred stock or capital stock and may be attached to or separate
from any offered securities. Each series of warrants will be issued under a
separate warrant agreement to be entered into between us and a bank or trust
company, as warrant agent. The warrant agent will act solely as our agent in
connection with the warrants and will not have any obligation or relationship of
agency or trust for or with any holders or beneficial owners of warrants. A copy
of the warrant agreement will be filed with the SEC in connection with the
offering of warrants.
DEBT WARRANTS
The prospectus supplement relating to a particular issue of warrants to
issue debt securities will describe the terms of those warrants, including the
following:
- the title of the warrants;
- the offering price for the warrants, if any;
- the aggregate number of the warrants;
- the designation and terms of the debt securities purchasable upon exercise
of the warrants;
- if applicable, the designation and terms of the debt securities that the
warrants are issued with and the number of warrants issued with each debt
security;
- if applicable, the date from and after which the warrants and any debt
securities issued with them will be separately transferable;
- the principal amount of debt securities that may be purchased upon
exercise of a warrant and the price at which the debt securities may be
purchased upon exercise;
- the dates on which the right to exercise the warrants will commence and
expire;
- if applicable, the minimum or maximum amount of the warrants that may be
exercised at any one time;
24
- whether the warrants represented by the warrant certificates or debt
securities that may be issued upon exercise of the warrants will be issued
in registered or bearer form;
- information relating to book-entry procedures, if any;
- the currency or currency units in which the offering price, if any, and
the exercise price are payable;
- if applicable, a discussion of material United States federal income tax
considerations;
- anti-dilution provisions of the warrants, if any;
- redemption or call provisions, if any, applicable to the warrants; and
- any additional terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants.
STOCK WARRANTS
The prospectus supplement relating to a particular issue of warrants to
issue capital stock or preferred stock will describe the terms of the warrants,
including the following:
- the title of the warrants;
- the offering price for the warrants, if any;
- the aggregate number of the warrants;
- the designation and terms of the capital stock or preferred stock that may
be purchased upon exercise of the warrants;
- if applicable, the designation and terms of the securities that the
warrants are issued with and the number of warrants issued with each
security;
- if applicable, the date from and after which the warrants and any
securities issued with the warrants will be separately transferable;
- the number of shares of capital stock or preferred stock that may be
purchased upon exercise of a warrant and the price at which the shares may
be purchased upon exercise;
- the dates on which the right to exercise the warrants commence and expire;
- if applicable, the minimum or maximum amount of the warrants that may be
exercised at any one time;
- the currency or currency units in which the offering price, if any, and
the exercise price are payable;
- if applicable, a discussion of material United States federal income tax
considerations;
- antidilution provisions of the warrants, if any;
- redemption or call provisions, if any, applicable to the warrants;
- any additional terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants; and
- any other information we think is important about the warrants.
25
PLAN OF DISTRIBUTION
We may sell the securities:
- through underwriters;
- through agents; or
- directly to purchasers.
In this connection, we may also make sales through the Internet or through
other electronic means. Since we may from time to time elect to offer securities
directly to the public, with or without the involvement of agents, underwriters
or dealers, utilizing the Internet (sometimes referred to as the "world wide
web") or other forms of electronic bidding or ordering systems for the pricing
and allocation of such securities, you'll want to pay particular attention to
the description of that system we'll provide in a prospectus supplement.
Such a system may allow bidders to directly participate, through electronic
access to an auction site, by submitting conditional offers to buy that are
subject to acceptance by us, and which may directly affect the price or other
terms and conditions at which such securities are sold. Such a bidding or
ordering system may present to each bidder, on a so-called "real-time" basis,
relevant information to assist in making a bid, such as the clearing spread at
which the offering would be sold, based on the bids submitted, and whether a
bidder's individual bids would be accepted, prorated or rejected. For example,
in the case of a note, the clearing spread could be indicated as a number of
"basis points" above an index treasury note. Of course, many pricing methods can
and may also be used.
Upon completion of such an auction process, securities will be allocated
based on prices bid, terms of bid or other factors. The final offering price at
which securities would be sold and the allocation of securities among bidders
would be based in whole or in part on the results of the Internet or other
electronic bidding process or auction.
Many variations of Internet or other electronic auction or pricing and
allocation systems are likely to be developed in the future as new technology
evolves, and we may utilize such systems in connection with the sale of
securities. The specific rules of such an auction would be described to
potential bidders in a prospectus supplement. You should review carefully the
auction and other rules we will describe in a prospectus supplement in order to
understand and participate intelligently in the applicable offering.
We'll describe in a prospectus supplement, the particular terms of the
offering of the securities, including the following:
- the names of any underwriters;
- the purchase price and the proceeds we will receive from the sale;
- any underwriting discounts and other items constituting underwriters'
compensation;
- any initial public offering price and any discounts or concessions allowed
or reallowed or paid to dealers;
- any securities exchanges on which the securities of the series may be
listed; and
- any other information we think is important.
If we use underwriters in the sale, the securities will be acquired by the
underwriters for their own account and may be resold from time to time in one or
more transactions, including negotiated transactions, either at a fixed public
offering price, or at varying prices determined at the time of sale.
The securities may be either offered to the public through underwriting
syndicates represented by managing underwriters or by underwriters without a
syndicate. The obligations of the underwriters to
26
purchase securities will be subject to conditions precedent, and the
underwriters will be obligated to purchase all the securities of a series if any
are purchased. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time to
time.
Securities may be sold directly by us or through agents designated by us
from time to time. Any agent involved in the offer or sale of the securities for
which this prospectus is delivered will be named, and any commissions payable by
us to that agent will be set forth, in the prospectus supplement. Unless
otherwise indicated in the prospectus supplement, any agent will be acting on a
best efforts basis for the period of its appointment.
We may authorize agents or underwriters to solicit offers by certain types
of institutions to purchase securities from us at the public offering price set
forth in the prospectus supplement pursuant to delayed delivery contracts. These
contracts will provide for payment and delivery on a specified date in the
future. The conditions to these contracts and the commissions payable for
solicitation of such contracts will be set forth in the applicable prospectus
supplement.
Agents and underwriters may be entitled to indemnification by us against
civil liabilities arising out of this prospectus, including liabilities under
the Securities Act of 1933, or to contribution for payments which the agents or
underwriters may be required to make relating to those liabilities. Agents and
underwriters may be customers of, engage in transactions with, or perform
services for, us in the ordinary course of business.
Each series of securities will be a new issue of securities with no
established trading market. Any underwriter may make a market in the securities,
but won't be obligated to do so, and may discontinue any market making at any
time without notice. We can't and won't give any assurances as to the liquidity
of the trading market for any of our securities.
LEGAL OPINIONS
The legality of the securities will be passed upon by Mr. Daniel E.
O'Donnell, our Vice President, Assistant General Counsel and Secretary.
Mr. O'Donnell, together with members of his family, owns, has options to
purchase and has other interests in shares of our common stock.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Current Report on Form 8-K dated November 4, 2002 have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
27
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following statement sets forth the estimated amounts of expenses, other
than underwriting discounts, to be borne by us in connection with the offerings
described in this Registration Statement:
Securities and Exchange Commission Registration Fee......... $ 1,840,000
Trustee's Fees.............................................. 200,000
Printing and Engraving Expenses............................. 300,000
Rating Agency Fees.......................................... 1,400,000
Accounting Fees and Expenses................................ 600,000
Legal Fees and Expenses..................................... 450,000
Listing Fees................................................ 150,000
Miscellaneous Expenses...................................... 450,000
-----------
Total Expenses.......................................... $ 5,390,000
===========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our By-Laws (Article VI, Section 6) provide the following:
"The Corporation shall, to the fullest extent permitted by applicable law as
in effect at any time, indemnify any person made, or threatened to be made, a
party to an action or proceeding whether civil or criminal (including an action
or proceeding by or in the right of the Corporation or any other corporation of
any type or kind, domestic or foreign, or any partnership, joint venture, trust,
employee benefit plan or other enterprise, for which any director or officer of
the Corporation served in any capacity at the request of the Corporation), by
reason of the fact that such person or such person's testator or intestate was a
director or officer of the Corporation, or served such other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise in
any capacity, against judgments, fines, amounts paid in settlement and
reasonable expenses, including attorneys' fees actually and necessarily incurred
as a result of such action or proceeding, or any appeal therein. Such
indemnification shall be a contract right and shall include the right to be paid
advances of any expenses incurred by such person in connection with such action,
suit or proceeding, consistent with the provisions of applicable law in effect
at any time. Indemnification shall be deemed to be "permitted' within the
meaning of the first sentence hereof if it is not expressly prohibited by
applicable law as in effect at the time."
Our Certificate of Incorporation (Article ELEVEN) provides the following:
"Pursuant to Section 402(b) of the Business Corporation Law of the State of
New York, the liability of the Corporation's directors to the Corporation or its
stockholders for damages for breach of duty as a director shall be eliminated to
the fullest extent permitted by the Business Corporation Law of the State of New
York, as it exists on the date hereof or as it may hereafter be amended. No
amendment to or repeal of this Article shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal."
II-1
With certain limitations, Sections 721 through 726 of the New York Business
Corporation Law permit a corporation to indemnify a director or officer made a
party to an action (i) by a corporation or in its right in order to procure a
judgment in its favor unless he shall have breached his duties, or (ii) other
than an action by or in the right of the corporation in order to procure a
judgment in its favor, if such director or officer acted in good faith and in a
manner he reasonably believed to be in or, in certain cases not opposed to such
corporation's interest and additionally, in criminal actions, had no reasonable
cause to believe his conduct was unlawful.
In addition, we maintain directors' and officers' liability insurance
policies.
ITEM 16. EXHIBITS.
(1) (a) Proposed Form of Underwriting Agreement.********
(1) (b) Proposed Form of Agency Agreement.********
(3) (a) By-laws*********
(4) (a) Certificate of Incorporation.***
(4) (b) Indenture dated as of October 1, 1993, between us and
JPMorgan Chase Bank, as successor to The Chase Manhattan
Bank (National Association) as Trustee.**
(4) (c) First Supplemental Indenture dated as of December 15, 1995,
to Indenture dated as of October 1, 1993, between us and
JPMorgan Chase Bank, as successor to The Chase Manhattan
Bank (National Association).******
(4) (d) Form of Subordinated Indenture.******
(4) (h) Form of Temporary Global Fixed Rate Bearer Medium-Term
Note.**
(4) (i) Form of Definitive Global Fixed Rate Bearer Medium-Term
Note.**
(4) (j) Form of Definitive Fixed Rate Bearer Medium-Term Note.**
(4) (k) Form of Fixed Rate Debt Security with Optional Redemption.**
(4) (l) Form of Fixed Rate Debt Security with Optional Redemption
and Sinking Fund.**
(4) (m) Form of Extendible Debt Security with Optional Redemption.**
(4) (n) Form of Zero Coupon Debt Security with Optional
Redemption.**
(4) (o) Form of Original Issue Discount Debt Security with Optional
Redemption.**
(4) (p) Form of Certificate of Amendment.****
(4) (q) Form of Preferred Stock Certificate.****
(4) (r) Form of Deposit Agreement.****
(4) (s) Form of Depositary Receipt (included as Exhibit A to the
Form of Deposit Agreement).****
(4) (t) Form of Warrant Agreement.*****
(4) (u) Form of Warrant Certificate.*****
(4) (aa) Form of Master Note for Medium-Term Note Program*
(5) Opinion of IBM Legal Counsel (Daniel E. O'Donnell, Esq.)*
(12) Computation of Ratios of Earnings to Fixed Charges and
Earnings to Combined Fixed Charges and Preferred Stock
Dividends.*******
(23) (a) Consent of Independent Accountants.*
(23) (b) Consent of Counsel (included in Exhibit 5).*
(24) (a) Powers of Attorney.*
II-2
(24) (b) Certified copy of a resolution adopted by our Board of
Directors authorizing execution of the registration
statement by power of attorney.*
(25) (a) Statement of Eligibility and Qualification on Form T-1 of
JPMorgan Chase Bank to act as Trustee under the Senior
Indenture dated October 1, 1993.*
(25) (b) Statement of Eligibility and Qualification on Form T-1 of
the Subordinated Trustee to act as Trustee under the
Subordinated Indenture.*****
------------------------
* Filed with this registration statement.
** Incorporated by reference to our Registration Statement on Form S-3
(Registration No. 33-50537).
*** Incorporated by reference to Exhibit 3(i) of our Form 8-K filed
April 28, 1999.
**** Incorporated by reference to our Registration Statement on
Form S-3 (Registration No. 33-49475).
***** To be filed as an Exhibit to a report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934.
****** Incorporated by reference to our Registration Statement on
Form S-3 (Registration No. 33-65119).
******* Incorporated by reference to Exhibit 99.2 of our Form 8-K filed
on November 4, 2002, and to exhibit 12 of our Form 10-Q for the fiscal
quarter ended September 30, 2002.
******** Incorporated by reference to our Registration Statement on
Form S-3 (Registration No. 333-37034).
********* Incorporated by reference to Attachment III of our Form 8-K
filed January 17, 2003.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement (other than as provided
in the proviso and instructions to Item 512(a) of Regulation S-K)(i) to include
any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii)
to reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement; and (iii) to include
any material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-3
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) To file an application for the purpose of determining the eligibility of
the trustee to act under subsection (a) of Section 310 of the Trust Indenture
Act in accordance with the rules and regulations prescribed by the Commission
under Section 305(b)(2) of the Trust Indenture Act.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 15 above, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person in the successful defense of any action, suit or proceeding) is asserted
by such officer, director or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether or not such indemnification
by it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 21st day of January, 2003.
INTERNATIONAL BUSINESS MACHINES CORPORATION
By: *
------------------------------------------------
Samuel J. Palmisano
PRESIDENT AND CHIEF EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
* Senior Vice President and Chief
------------------------------------ Financial Officer (Principal January 21, 2003
John R. Joyce Financial Officer)
*
------------------------------------ Vice President and Controller January 21, 2003
Robert F. Woods (Principal Accounting Officer)
*
------------------------------------ Director January 21, 2003
Cathleen Black
*
------------------------------------ Director January 21, 2003
Juergen Dormann
*
------------------------------------ Director January 21, 2003
Nannerl O. Keohane
*
------------------------------------ Director January 21, 2003
Charles F. Knight
*
------------------------------------ Director January 21, 2003
Minoru Makihara
*
------------------------------------ Director January 21, 2003
Lucio A. Noto
*
------------------------------------ Director January 21, 2003
John B. Slaughter
II-5
*
------------------------------------ Director January 21, 2003
Sidney J. Taurel
*
------------------------------------ Director January 21, 2003
Alex Trotman
*
------------------------------------ Director January 21, 2003
Charles M. Vest
*By: /s/ DANIEL E. O'DONNELL
-------------------------------
Daniel E. O'Donnell
ATTORNEY-IN-FACT
II-6