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Prospectus brochure de l'obligation IBM US459200JN26 en USD 1.9%, échue

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IBM est une entreprise multinationale de technologie spécialisée dans les solutions informatiques, le cloud, l'IA et les services de conseil.

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TABLE OF CONTENTS
Table of Contents
CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities
Amount to be
Maximum Offering
Maximum Aggregate
Amount of
to be Registered

Registered(1)

Price Per Unit(1)

Offering Price

Registration Fee(1)

Floating Rate Notes due 2020
$500,000,000

100.00%

$500,000,000

$57,950.00

1.900% Notes due 2020

$750,000,000

99.904%

$749,280,000

$86,841.55

2.500% Notes due 2022

$1,000,000,000
99.869%

$998,690,000

$115,748.17

3.300% Notes due 2027

$500,000,000

99.469%

$497,345,000

$57,642.29

(1)
Calculated in accordance with Rule 457(r) under the Securities Act of 1933. Payment of the aggregate registration fee for the above-referenced
Notes ($318,182.01) is being made by the registrant on a "pay-as-you-go" basis, and has been duly calculated utilizing the current SEC filing
fee rate of $115.90 per million.
Table of Contents
Filed Pursuant to Rule 424(b)(5)
Registration Statement No. 333-212685
PROSPECTUS SUPPLEMENT
(To Prospectus dated July 26, 2016)
$2,750,000,000
International Business Machines Corporation
$500,000,000 Floating Rate Notes due 2020
$750,000,000 1.900% Notes due 2020
$1,000,000,000 2.500% Notes due 2022
$500,000,000 3.300% Notes due 2027
Interest on the Floating Rate Notes due 2020 payable quarterly on January 27, April 27, July 27 and October 27 at a floating rate of three
month LIBOR plus 0.230%.
Interest on the 1.900% Notes due 2020, the 2.500% Notes due 2022 and the 3.300% Notes due 2027 payable semi-annually on January 27 and
July 27.
The Floating Rate Notes due 2020 may not be redeemed prior to maturity. The 1.900% Notes due 2020, the 2.500% Notes due 2022 and the
3.300% Notes due 2027 are redeemable in whole or in part at the option of IBM, as set forth in this prospectus supplement.
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Per
Floating
Per
Per
Per
Rate
2020
2022
2027

Note

Total

Note

Total

Note

Total

Note

Total

Price to Public(1)

100.000%
$ 500,000,000 99.904% $ 749,280,000 99.869% $
998,690,000 99.469% $ 497,345,000
Underwriting Discounts
and Commissions

0.150% $
750,000 0.150% $
1,125,000 0.250% $
2,500,000 0.400% $
2,000,000
Proceeds to Company(1) 99.850% $ 499,250,000 99.754% $ 748,155,000 99.619% $
996,190,000 99.069% $ 495,345,000
(1) Plus accrued interest from January 27, 2017.
The Securities and Exchange Commission and state securities regulators have not approved or disapproved of these securities, or determined if
this prospectus supplement or the accompanying prospectus are truthful or complete. Any representation to the contrary is a criminal offense.
The Underwriters expect to deliver the Notes to purchasers in book-entry form only through The Depository Trust Company, for the benefit of
its participants, including Clearstream Banking and the Euroclear System, on January 27, 2017.
Joint Bookrunning Managers
BNP PARIBAS

Credit Suisse

HSBC
Mizuho Securities

RBC Capital Markets
Co-Managers
Santander

US Bancorp

Great Pacific Securities

Multi-Bank Securities, Inc.
January 24, 2017
Table of Contents
We have not, and the underwriters have not, authorized anyone to provide any information other than that contained in or incorporated
by reference in this prospectus supplement and the accompanying prospectus. We take no responsibility for, and can provide no assurance as to
the reliability of, any other information. We are not, and the underwriters are not, making an offer of these securities in any jurisdiction where
the offer is not permitted. You should not assume that the information contained in this prospectus supplement or the accompanying
prospectus is accurate as of any date other than the date on the front of this prospectus supplement.
The Notes are offered globally for sale in those jurisdictions in the United States and elsewhere where it is lawful to make such offers. See
"Offering Restrictions."
TABLE OF CONTENTS

Page

Prospectus Supplement

International Business Machines Corporation
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Where You Can Find More Information
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Use of Proceeds
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Description of Notes
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United States Taxation
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Underwriting
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Offering Restrictions
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Legal Opinions
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Experts
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Prospectus
Summary

1
Use of Proceeds

5
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Description of the Debt Securities

5
Description of the Preferred Stock

17
Description of the Capital Stock

22
Description of the Warrants

23
Debt Warrants

23
Stock Warrants

23
Plan of Distribution

24
Legal Opinions

26
Experts

26
The distribution of this prospectus supplement and accompanying prospectus and the offering of the Notes in certain jurisdictions may be restricted
by law. Persons into whose possession this prospectus supplement and the accompanying prospectus come should inform themselves about and observe
any such restrictions. This prospectus supplement and the accompanying prospectus do not constitute, and may not be used in connection with an offer
or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation
is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. See "Offering Restrictions."
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INTERNATIONAL BUSINESS MACHINES CORPORATION
International Business Machines Corporation (IBM or the company) was incorporated in the State of New York on June 16, 1911, as the
Computing-Tabulating-Recording Co. (C-T-R), a consolidation of the Computing Scale Co. of America, the Tabulating Machine Co. and The
International Time Recording Co. of New York. Since that time, IBM has focused on the intersection of business insight and technological innovation,
and its operations and aims have been international in nature. This was signaled over 90 years ago, in 1924, when C-T-R changed its name to
International Business Machines Corporation. And it continues today: The company creates value for clients through integrated solutions and products
that leverage: data, information technology, deep expertise in industries and business processes, and a broad ecosystem of partners and alliances. IBM
solutions typically create value by enabling new capabilities for clients that transform their businesses and help them engage with their customers and
employees in new ways. These solutions draw from an industry-leading portfolio of consulting and IT implementation services, cloud and cognitive
offerings, and enterprise systems and software; all bolstered by one of the world's leading research organizations.
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 at 100 F Street, N.E., Washington, D.C. 20549. 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 supplement and the accompanying 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 supplement and the accompanying 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, 2015;
ii.
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2016, June 30, 2016 and September 30, 2016; and
iii.
Current Reports on Form 8-K or filed portions of those reports, filed (but not portions of those reports which were furnished) January 4,
2016, January 19, 2016, January 20, 2016 (two filings), January 26, 2016, January 28, 2016, February 18, 2016, February 25, 2016,
March 4, 2016, March 31, 2016, April 18, 2016, April 19, 2016, April 29, 2016, June 13, 2016, July 18, 2016, October 17, 2016,
November 1, 2016, December 13, 2016, December 16, 2016, January 19, 2017 and January 20, 2017.
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:
Computershare Trust Company, N.A.
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P.O. Box 43078
Providence, Rhode Island 02940-3078
(781) 575-2727
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USE OF PROCEEDS
The net proceeds from the sale of the Notes after deducting underwriting discounts and commissions and expenses to be paid by IBM are estimated
to be approximately $2,738 million and will be used for general corporate purposes.
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DESCRIPTION OF NOTES
The following description of the particular terms of the Notes supplements, and to the extent inconsistent replaces, the description of the general
terms and provisions of the debt securities set forth in the accompanying prospectus.
General
The Floating Rate Notes due 2020 (the "Floating Rate Notes"), the 1.900% Notes due 2020 (the "2020 Notes"), the 2.500% Notes due 2022 (the
"2022 Notes") and the 3.300% Notes due 2027 (the "2027 Notes", and together with the Floating Rate Notes, the 2020 Notes and the 2022 Notes, the
"Notes") will be issued under an Indenture (the "Senior Indenture") dated as of October 1, 1993, between IBM and The Bank of New York Mellon, as
Trustee, as supplemented by the First Supplemental Indenture dated as of December 15, 1995, filed as an exhibit to the Registration Statement of which
the accompanying prospectus is a part. The Floating Rate Notes, the 2020 Notes, the 2022 Notes and the 2027 Notes will each be a separate series (each
a "series") of debt securities under the Indenture for purposes of, among other things, payments of principal and interest, events of default and consents
to amendments to the Indenture. The Notes will be unsecured and will have the same rank as all of IBM's other unsecured and unsubordinated debt. The
Floating Rate Notes will mature on January 27, 2020. The 2020 Notes will mature on January 27, 2020. The 2022 Notes will mature on January 27,
2022. The 2027 Notes will mature on January 27, 2027.
The 2020 Notes, the 2022 Notes and the 2027 Notes will be subject to defeasance and covenant defeasance as provided in "Description of the Debt
Securities--Satisfaction and Discharge; Defeasance" in the accompanying prospectus. The Notes will be issued in denominations of $100,000 and
multiples of $1,000 in excess thereof.
IBM may, without the consent of the holders of Notes of any series, issue additional notes having the same ranking and the same interest rate,
maturity and other terms as the Notes of that series, provided however, that no such additional notes may be issued unless such additional notes are
fungible with the Notes of such series for U.S. federal income tax purposes. Any additional notes having such similar terms, together with the Notes of
such series, will constitute a single series of notes under the Senior Indenture. No additional notes may be issued if an event of default has occurred with
respect to the Notes of such series.
Interest
The 2020 Notes, the 2022 Notes and the 2027 Notes will bear interest from January 27, 2017, at the rates of interest stated on the cover page of this
prospectus supplement. Interest on the 2020 Notes, the 2022 Notes and the 2027 Notes will be payable semi-annually on January 27 and July 27 of each
year, commencing July 27, 2017 to the persons in whose names such Notes are registered at the close of business on the fifteenth calendar day
preceding each January 27 or July 27. Interest on the 2020 Notes, the 2022 Notes and the 2027 Notes will be computed on the basis of a 360-day year
consisting of twelve 30-day months.
The Floating Rate Notes will bear interest from January 27, 2017 at the floating rate of interest described below. Interest on the Floating Rate Notes
will be payable quarterly on January 27, April 27, July 27 and October 27 of each year, commencing April 27, 2017, to the persons in whose names the
Floating Rate Notes are registered at the close of business on the fifteenth calendar day preceding each January 27, April 27, July 27 or October 27.
Interest on the Floating Rate Notes will accrue from and including January 27, 2017, to but excluding the first interest payment date, and then from
and including the most recent interest payment date to which interest has been paid or duly provided for, to but excluding the next interest payment date
or maturity date, as the case may be. We refer to each of these periods as an "interest period."
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The amount of accrued interest that we will pay for any interest period can be calculated by multiplying the face amount of the Floating Rate Notes by
an accrued interest factor. This accrued interest factor is computed by adding the interest factor calculated for each day from January 27, 2017, or from
the last date we paid interest to you, to the date for which accrued interest is being calculated. The interest factor for each day is computed by dividing
the interest rate applicable to that day by 360.
When we use the term "London business day," we mean any day on which dealings in United States dollars are transacted in the London interbank
market. A "business day" means any day except a Saturday, a Sunday or a legal holiday in The City of New York or a day on which banking institutions
in The City of New York are authorized or obligated by law, regulation or executive order to close. In the event that any interest payment date (other
than the maturity date) and interest reset date for the Floating Rate Notes would otherwise fall on a day that is not a business day, that interest payment
date and interest reset date will be postponed to the next day that is a business day. If the postponement would cause the day to fall in the next calendar
month, the interest payment date and interest reset date will be the immediately preceding business day.
The interest rate on the Floating Rate Notes will be calculated by the calculation agent appointed by us, initially The Bank of New York Mellon,
and will be equal to LIBOR plus 0.230%. The calculation agent will reset the interest rates on each interest payment date and on January 27, 2017, each
of which we refer to as an "interest reset date." The second London business day preceding an interest reset date will be the "interest determination
date" for that interest reset date. The interest rate in effect on each day that is not an interest reset date will be the interest rate determined as of the
interest determination date pertaining to the immediately preceding interest reset date. The interest rate in effect on any day that is an interest reset date
will be the interest rate determined as of the interest determination date pertaining to that interest reset date.
"LIBOR" will be determined by the calculation agent in accordance with the following provisions:
(a)
With respect to any interest determination date, LIBOR will be the rate for deposits in United States dollars having a maturity of the
Index Maturity commencing on the first day of the applicable interest period that appears on Reuters Screen LIBOR01 Page as of
11:00 a.m., London time, on that interest determination date. If no rate appears, LIBOR for that interest determination date will be
determined in accordance with the provisions described in (b) below.
(b)
With respect to an interest determination date on which no rate appears on Reuters Screen LIBOR01 Page, as specified in (a) above, the
calculation agent will request the principal London offices of each of four major reference banks in the London interbank market, as
selected by the calculation agent (after consultation with IBM), to provide the calculation agent with its offered quotation for deposits in
United States dollars for the Index Maturity, commencing on the first day of the applicable interest period, to prime banks in the London
interbank market at approximately 11:00 a.m., London time, on that interest determination date and in a principal amount that is
representative for a single transaction in United States dollars in that market at that time. If at least two quotations are provided, then
LIBOR on that interest determination date will be the arithmetic mean of those quotations. If fewer than two quotations are provided,
then LIBOR on the interest determination date will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in The City
of New York, on the interest determination date by three major banks in The City of New York selected by the calculation agent (after
consultation with IBM) for loans in United States dollars to leading European banks, having an Index Maturity and in a principal
amount that is representative for a single transaction in United States dollars in that market at that time. If, however, the banks selected
by the calculation agent are not providing quotations in the manner described by the previous sentence, LIBOR determined as of that
interest determination date will be LIBOR in effect on that interest determination date.
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"Reuters Screen LIBOR01 Page" means the display designated as the Reuters Screen LIBOR01 Page, or such other screen as may replace the
Reuters Screen LIBOR01 Page on the service or any successor service as may be nominated for the purpose of displaying London interbank offered
rates for United States dollar deposits by ICE Benchmark Administration Limited ("IBA") or its successor or such other entity assuming the
responsibility of IBA or its successor in calculating the London interbank offered rate in the event that IBA or its successor no longer does so.
The Index Maturity will be three months.
All percentages resulting from any calculation of the interest rate on the Floating Rate Notes will be rounded to the nearest one hundred-thousandth
of a percentage point with five one millionths of a percentage point rounded upwards (e.g., 9.876545% (or .09876545) would be rounded to 9.87655%
(or .0987655)), and all dollar amounts used in or resulting from such calculation on the Floating Rate Notes will be rounded to the nearest cent (with
one-half cent being rounded upward). Each calculation of the interest rate on the Floating Rate Notes by the calculation agent will (in the absence of
manifest error) be final and binding on the noteholders and IBM.
So long as any of the Floating Rate Notes remain outstanding, there will at all times be a calculation agent. If that bank is unable or unwilling to
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continue to act as the calculation agent or if it fails to calculate properly the interest rate on the Floating Rate Notes for any interest period, we will
appoint another leading commercial or investment bank to act as calculation agent in its place. The calculation agent may not resign its duties without a
successor having been appointed.
Optional Redemption
The 2020 Notes, the 2022 Notes and the 2027 Notes will be redeemable, as a whole or in part, at IBM's option, at any time or from time to time, on
at least 30 days, but not more than 60 days, prior notice to holders of the Notes to be redeemed given in accordance with "Description of the Debt
Securities--Notices to Holders" in the accompanying prospectus, at a redemption price equal to the greater of:
·
100% of the principal amount of the Notes to be redeemed, plus accrued interest, if any, to the redemption date; or
·
the sum of the present values of the Remaining Scheduled Payments, as defined below, discounted, on a semiannual basis, assuming a
360-day year consisting of twelve 30-day months, at the Treasury Rate, as defined below, plus 10 basis points in the case of the 2020
Notes and the 2022 Notes and 15 basis points in the case of the 2027 Notes, plus, in each case, accrued interest to the date of redemption
which has not been paid.
"Treasury Rate" means, with respect to any redemption date for a series of Notes:
·
the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor publication which is published weekly by the Board of Governors of the
Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity
under the caption "Treasury Constant Maturities," for the maturity corresponding to the Comparable Treasury Issue; provided that if no
maturity is within three months before or after the maturity date for the relevant series of Notes, yields for the two published maturities
most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Rate will be interpolated or
extrapolated from those yields on a straight line basis rounding to the nearest month; or
·
if that release, or any successor release, is not published during the week preceding the calculation date or does not contain such yields,
the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for
the
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Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for that
redemption date.
The Treasury Rate will be calculated on the third business day preceding the redemption date.
"Comparable Treasury Issue" with respect to the relevant series of Notes means the United States Treasury security selected by an Independent
Investment Banker as having a maturity comparable to the remaining term of the relevant series of Notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such series of Notes.
"Independent Investment Banker" means one of the Reference Treasury Dealers, to be appointed by IBM.
"Comparable Treasury Price" means, with respect to any redemption date:
·
the average of the Reference Treasury Dealer Quotations for that redemption date, after excluding the highest and lowest of such
Reference Treasury Dealer Quotations; or
·
if IBM obtains fewer than four Reference Treasury Dealer Quotations, the average of all quotations obtained by IBM.
"Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as
determined by IBM, of the bid and asked prices for the Comparable Treasury Issue, expressed in each case as a percentage of its principal amount,
quoted in writing to IBM by such Reference Treasury Dealer at 3:30 p.m., New York City time on the third business day preceding such redemption
date.
"Reference Treasury Dealer" means each of BNP Paribas Securities Corp., Credit Suisse Securities (USA) LLC, HSBC Securities (USA) Inc.,
Mizuho Securities USA Inc. and RBC Capital Markets, LLC, or a Primary Treasury Dealer selected by any of them, and their respective successors;
provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer, which we refer to as a "Primary Treasury
Dealer," IBM will substitute therefor another nationally recognized investment banking firm that is a Primary Treasury Dealer.
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"Remaining Scheduled Payments" means, with respect to each Note to be redeemed, the remaining scheduled payments of the principal thereof and
interest thereon that would be due after the related redemption date but for such redemption; provided, however, that, if such redemption date is not an
interest payment date with respect to such Note, the amount of the next succeeding scheduled interest payment thereon will be deemed to be reduced by
the amount of interest accrued thereon to such redemption date.
On and after the redemption date of a series of the Notes, interest will cease to accrue on such Notes or any portion thereof called for redemption,
unless IBM defaults in the payment of the redemption price and accrued interest. On or before the redemption date, IBM will deposit with a paying
agent, or the trustee, money sufficient to pay the redemption price of and accrued interest on the Notes to be redeemed on such date. If less than all of
the Notes of a series are to be redeemed, the Notes to be redeemed shall be selected by the trustee by such method as the trustee shall deem fair and
appropriate.
The Floating Rate Notes may not be redeemed prior to maturity.
Book-Entry, Delivery and Form
The Notes of each series will be issued in the form of one or more fully registered Global Notes (the "Global Notes") which will be deposited with,
or on behalf of, The Depository Trust Company, New York, New York (the "Depositary" or "DTC") and registered in the name of Cede & Co., the
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Depositary's nominee. Beneficial interests in the Global Notes will be represented through book-entry accounts of financial institutions acting on behalf
of beneficial owners as direct and indirect participants in the Depositary.
Investors may elect to hold interests in the Global Notes through the Depositary, Clearstream Banking Luxembourg S.A. ("Clearstream") or
Euroclear Bank S.A., as operator of the Euroclear System ("Euroclear") if they are participants in such systems, or indirectly through organizations
which are participants in such systems. Clearstream and Euroclear will hold interests on behalf of their participants through customers' securities
accounts in Clearstream's and Euroclear's names on the books of their respective depositaries, which in turn will hold such interests in customers'
securities accounts in the depositaries' names on the books of the Depositary. Citibank, N.A. will act as depositary for Clearstream and JPMorgan Chase
Bank will act as depositary for Euroclear (in such capacities, the "U.S. Depositaries"). Except as described below, the Global Notes may be transferred,
in whole and not in part, only to another nominee of the Depositary or to a successor of the Depositary or its nominee.
The Depositary has advised IBM as follows: the Depositary is a limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within
the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934. The Depositary holds securities deposited with it by its participants and facilitates the settlement of transactions among its
participants in such securities through electronic computerized book-entry changes in accounts of the participants, thereby eliminating the need for
physical movement of securities certificates. The Depositary's participants include securities brokers and dealers (including the Underwriters), banks,
trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own the Depositary. Access to the
Depositary book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
Clearstream advises that it is incorporated under the laws of Luxembourg as a bank. Clearstream holds securities for its customers ("Clearstream
Customers") and facilitates the clearance and settlement of securities transactions between Clearstream Customers through electronic book-entry
transfers between their accounts. Clearstream provides to Clearstream Customers, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream interfaces with domestic securities
markets in over 30 countries through established depository and custodial relationships. As a bank, Clearstream is subject to regulation by the
Luxembourg Commission for the Supervision of the Financial Sector (Commission de Surveillance du Secteur Financier). Clearstream Customers are
recognized financial institutions around the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. Clearstream's U.S. customers are limited to securities brokers and dealers and banks. Indirect access to Clearstream is
also available to other institutions such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a
Clearstream Customer.
Distributions with respect to the Notes held through Clearstream will be credited to cash accounts of Clearstream Customers in accordance with its
rules and procedures, to the extent received by the U.S. Depositary for Clearstream.
Euroclear advises that it was created in 1968 to hold securities for its participants ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of securities and cash. Euroclear provides various other services, including
securities lending and borrowing and interfaces with domestic markets
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in several countries. Euroclear is operated by Euroclear Bank S.A. (the "Euroclear Operator"), under contract with Euroclear Clearance Systems, S.C., a
Belgian cooperative corporation (the "Cooperative"). All operations are conducted by the Euroclear Operator, and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear Operator, not the Cooperative. The Cooperative establishes policy for Euroclear
on behalf of Euroclear Participants. Euroclear Participants include banks (including central banks), securities brokers and dealers and other professional
financial intermediaries and may include the Underwriters. Indirect access to Euroclear is also available to other firms that clear through or maintain a
custodial relationship with a Euroclear Participant, either directly or indirectly.
Securities clearance accounts and cash accounts with the Euroclear Operator are governed by the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures of the Euroclear System, and applicable Belgian law (collectively, the "Terms and Conditions"). The
Terms and Conditions govern transfers of securities and cash within Euroclear, withdrawals of securities and cash from Euroclear, and receipts of
payments with respect to securities in Euroclear. All securities in Euroclear are held on a fungible basis without attribution of specific certificates to
specific securities clearance accounts. The Euroclear Operator acts under the Terms and Conditions only on behalf of Euroclear Participants and has no
record of or relationship with persons holding through Euroclear Participants.
Distributions with respect to the Notes held beneficially through Euroclear will be credited to the cash accounts of Euroclear Participants in
accordance with the Terms and Conditions, to the extent received by the U.S. Depositary for Euroclear.
Euroclear further advises that investors that acquire, hold and transfer interests in the Notes by book-entry through accounts with the Euroclear
Operator or any other securities intermediary are subject to the laws and contractual provisions governing their relationship with their intermediary, as
well as the laws and contractual provisions governing the relationship between such an intermediary and each other intermediary, if any, standing
between themselves and the Global Notes.
The Euroclear Operator advises as follows: Under Belgian law, investors that are credited with securities on the records of the Euroclear Operator
have a co-property right in the fungible pool of interests in securities on deposit with the Euroclear Operator in an amount equal to the amount of
interests in securities credited to their accounts. In the event of the insolvency of the Euroclear Operator, Euroclear Participants would have a right
under Belgian law to the return of the amount and type of interests in securities credited to their accounts with the Euroclear Operator. If the Euroclear
Operator did not have a sufficient amount of interests in securities on deposit of a particular type to cover the claims of all Participants credited with
such interests in securities on the Euroclear Operator's records, all Participants having an amount of interests in securities of such type credited to their
accounts with the Euroclear Operator would have the right under Belgian law to the return of their pro rata share of the amount of interests in securities
actually on deposit.
Under Belgian law, the Euroclear Operator is required to pass on the benefits of ownership in any interests in securities on deposit with it (such as
dividends, voting rights and other entitlements) to any person credited with such interests in securities on its records.
Individual certificates in respect of the Notes will not be issued in exchange for the Global Notes, except in very limited circumstances. If DTC
notifies IBM that it is unwilling or unable to continue as a clearing system in connection with the Global Notes, or ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, and a successor clearing system is not appointed by IBM within 90 days after receiving such
notice from DTC or upon becoming aware that DTC is no longer so registered, IBM will issue or cause to be issued individual certificates in registered
form on registration of transfer of, or in exchange for, book-entry interests in the Notes represented by such Global Notes upon delivery of such Global
Notes for cancellation. In the event that individual certificates are issued,
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holders of the Notes will be able to receive payments (including principal and interest) on the Notes and effect transfer of the Notes at the offices of
IBM's paying agent and transfer agent.
Title to book-entry interests in the Notes will pass by book-entry registration of the transfer within the records of Clearstream, Euroclear or DTC,
as the case may be, in accordance with their respective procedures. Book-entry interests in the Notes may be transferred within Clearstream and within
Euroclear and between Clearstream and Euroclear in accordance with procedures established for these purposes by Clearstream and Euroclear. Book-
entry interests in the Notes may be transferred within DTC in accordance with procedures established for this purpose by DTC. Transfers of book-entry
interests in the Notes among Clearstream and Euroclear and DTC may be effected in accordance with procedures established for this purpose by
Clearstream, Euroclear and DTC.
A further description of the Depositary's procedures with respect to the Global Notes is set forth in the prospectus under "Description of the Debt
Securities--Global Securities." The Depositary has confirmed to IBM, the Underwriters and the trustee that it intends to follow such procedures.
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Global Clearance and Settlement Procedures
Initial settlement for the Notes will be made in immediately available funds. Secondary market trading between DTC participants will occur in the
ordinary way in accordance with the Depositary's rules and will be settled in immediately available funds using the Depositary's Same-Day Funds
Settlement System. Secondary market trading between Clearstream Customers and/or Euroclear Participants will occur in the ordinary way in
accordance with the applicable rules and operating procedures of Clearstream and Euroclear and will be settled using the procedures applicable to
conventional Eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly through the Depositary on the one hand, and directly or indirectly through
Clearstream Customers or Euroclear Participants, on the other, will be effected in the Depositary in accordance with the Depositary's rules on behalf of
the relevant European international clearing system by its U.S. Depositary; however, such cross-market transactions will require delivery of instructions
to the relevant European international clearing system by the counterparty in such system in accordance with its rules and procedures and within its
established deadlines (European time). The relevant European, international clearing system will, if the transaction meets its settlement requirements,
deliver instructions to its U.S. Depositary to take action to effect final settlement on its behalf by delivering interests in the Notes to or receiving
interests in the Notes from the Depositary, and making or receiving payment in accordance with normal procedures for same-day funds settlement
applicable to the Depositary. Clearstream Customers and Euroclear Participants may not deliver instructions directly to their respective U.S.
Depositaries.
Because of time-zone differences, credits of interests in the Notes received in Clearstream or Euroclear as a result of a transaction with a DTC
participant will be made during subsequent securities settlement processing and dated the business day following the Depositary settlement date. Such
credits or any transactions involving interests in such Notes settled during such processing will be reported to the relevant Clearstream Customers or
Euroclear Participants on such business day. Cash received in Clearstream or Euroclear as a result of sales of interests in the Notes by or through a
Clearstream Customer or a Euroclear Participant to a DTC participant will be received with value on the Depositary settlement date but will be
available in the relevant Clearstream or Euroclear cash account only as of the business day following settlement in the Depositary.
Although the Depositary, Clearstream and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of interests in the Notes
among participants of the Depositary, Clearstream and Euroclear, they are under no obligation to perform or continue to perform such procedures and
such procedures may be changed or discontinued at any time.
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UNITED STATES TAXATION
General
This section summarizes the material U.S. federal tax consequences of ownership and disposition of the Notes. However, the discussion is limited
in the following ways:
·
The discussion only covers you if you buy your Notes in the initial offering at the price set forth on the cover page.
·
The discussion only covers you if you hold your Notes as capital assets (that is, for investment purposes), and if you do not have a
special tax status such as:
·
certain financial institutions;
·
insurance companies;
·
dealers in securities;
·
U.S. Holders whose functional currency is not the U.S. dollar;
·
partnerships or other entities classified as partnerships for U.S. federal income tax purposes; or
·
persons subject to the alternative minimum tax.
·
The discussion does not cover tax consequences that depend upon your particular tax situation in addition to your ownership of Notes.
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·
The discussion is based on current law. Changes in the law may change the tax treatment of the Notes possibly with a retroactive effect.
·
The discussion does not cover state, local or foreign law.
·
We have not requested a ruling from the Internal Revenue Service (the "IRS") on the tax consequences of owning and disposing of the
Notes. As a result, the IRS could disagree with portions of this discussion.
If you are considering buying Notes, we suggest that you consult your tax advisor about the tax consequences of holding the Notes in your
particular situation.
Tax Consequences to U.S. Holders
This section applies to you if you are a "U.S. Holder." A "U.S. Holder" is a beneficial owner of a Note that is for U.S. federal income tax purposes:
·
an individual U.S. citizen or resident alien;
·
a corporation--or entity taxable as a corporation for U.S. federal income tax purposes--that was created under U.S. law (federal or
state);
·
an estate whose world-wide income is subject to U.S. federal income tax; or
·
a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more
U.S. persons has the authority to control all substantial decisions of the trust or (ii) the trust has in effect a valid election to be treated as
a U.S. person under applicable Treasury regulations.
If a partnership holds Notes, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the
partnership. If you are a partner of a partnership holding Notes, we suggest that you consult your tax advisor.
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Interest
·
If you are a cash method taxpayer (including most individual holders), you must report interest on the Notes as ordinary income when
you receive it.
·
If you are an accrual method taxpayer, you must report interest on the Notes as ordinary income as it accrues.
Sale, Redemption or Retirement of Notes
On your sale, redemption or retirement of your Note:
·
You will have taxable gain or loss equal to the difference between the amount realized by you and your tax basis in the Note. Your tax
basis in the Note is your cost, subject to certain adjustments.
·
Your gain or loss will generally be capital gain or loss, and will be long term capital gain or loss if you held the Note for more than one
year.
·
If you sell the Note between interest payment dates, a portion of the amount you receive reflects interest that has accrued on the Note but
has not yet been paid by the sale date. That amount is treated as ordinary interest income as described above under "--Interest."
Information Reporting and Backup Withholding
Under the tax rules concerning information reporting to the IRS:
·
Assuming you hold your Notes through a broker or other securities intermediary, the intermediary must provide information to the IRS
and to you on IRS Form 1099 concerning interest and retirement proceeds on your Notes as well as on proceeds from sale or other
disposition of the Notes, unless an exemption applies.
·
Similarly, unless an exemption applies, you must provide the intermediary with your Taxpayer Identification Number for its use in
reporting information to the IRS. If you are an individual, this is your social security number. You are also required to comply with other
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Document Outline

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