Obligation IBN 1.7% ( US459200KH39 ) en USD

IBN

100 % ▲

Etas-Unis

US459200KH39 ( en USD )

1.7% par an ( paiement semestriel )

15/05/2027

Prospectus brochure de l'obligation IBM US459200KH39 en USD 1.7%, échéance 15/05/2027

100 000 USD

1 250 000 000 USD

459200KH3

A ( Qualité moyenne supérieure )

A2 ( Qualité moyenne supérieure )

15/11/2025 ( Dans 17 jours )

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

L'Obligation émise par IBN ( Etas-Unis ) , en USD, avec le code ISIN US459200KH39, paye un coupon de 1.7% par an.
Le paiement des coupons est semestriel et la maturité de l'Obligation est le 15/05/2027

L'Obligation émise par IBN ( Etas-Unis ) , en USD, avec le code ISIN US459200KH39, a été notée A2 ( Qualité moyenne supérieure ) par l'agence de notation Moody's.

L'Obligation émise par IBN ( Etas-Unis ) , en USD, avec le code ISIN US459200KH39, a été notée A ( Qualité moyenne supérieure ) par l'agence de notation Standard & Poor's ( S&P ).

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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)

1.700% Notes Due 2027

$1,250,000,000
99.815%

$1,247,687,500
$161,949.84

1.950% Notes Due 2030

$1,350,000,000
99.629%

$1,344,991,500
$174,579.90

2.850% Notes Due 2040

$650,000,000

99.365%

$645,872,500

$83,834.25

2.950% Notes Due 2050

$750,000,000

99.171%

$743,782,500

$96,542.97

(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 ($516,906.96) 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 $129.80 per million.
Table of Contents
As filed pursuant to Rule 424(b)(5)
Registration No. 333-230099
PROSPECTUS SUPPLEMENT
(To Prospectus dated March 6, 2019)
$4,000,000,000
International Business Machines Corporation
$1,250,000,000 1.700% Notes due 2027
$1,350,000,000 1.950% Notes due 2030
$650,000,000 2.850% Notes due 2040
$750,000,000 2.950% Notes due 2050
Interest on the 1.700% Notes due 2027, the 1.950% Notes due 2030, the 2.850% Notes due 2040 and the 2.950% Notes due 2050 payable semi-
annually on May 15 and November 15.
The 1.700% Notes due 2027, the 1.950% Notes due 2030, the 2.850% Notes due 2040 and the 2.950% Notes due 2050 are redeemable in
whole or in part at the option of IBM, as set forth in this prospectus supplement.
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Per 2027
Per 2030
Per 2040
Per 2050

Note

Total

Note

Total

Note

Total

Note

Total

Price to
Public(1)

99.815% $
1,247,687,500

99.629% $
1,344,991,500

99.365% $
645,872,500

99.171% $
743,782,500
Underwriting
Discounts
and
Commissions

0.300% $
3,750,000

0.400% $
5,400,000

0.600% $
3,900,000

0.750% $
5,625,000
Proceeds to
Company(1)

99.515% $
1,243,937,500

99.229% $
1,339,591,500

98.765% $
641,972,500

98.421% $
738,157,500
(1)
Plus accrued interest from May 7, 2020.
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 May 7, 2020.
Joint Bookrunning Managers
BofA Securities

Citigroup

Credit Suisse

Deutsche Bank Securities

Goldman Sachs & Co. LLC

Santander
SOCIETE GENERALE
Wells Fargo Securities
Co-Managers
ING

Lloyds Securities

PNC Capital Markets LLC

TD Securities
US Bancorp

Academy Securities

Blaylock Van, LLC

Drexel Hamilton
April 30, 2020
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
S-2
Use of Proceeds
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Description of Notes
S-4
United States Taxation
S-10
Underwriting
S-15
Offering Restrictions
S-18
Legal Opinions
S-19
Experts
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Page

Prospectus

Summary

1
Use of Proceeds

4
Description of the Debt Securities

4
Description of the Preferred Stock

16
Description of the Capital Stock

21
Description of the Warrants

22
Debt Warrants

22
Stock Warrants

22
Plan of Distribution

23
Legal Opinions

25
Experts

25
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--we create value for clients by providing integrated solutions and products that
leverage: data, information technology, deep expertise in industries and business processes, with trust and security 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, digital and cognitive offerings, and enterprise systems and software which are 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. Our SEC filings are available to the public at
the SEC's web site at (http://www.sec.gov). Our reports on Forms 10-K, 10-Q and 8-K, and amendments to those reports, are also available for
download, free of charge, as soon as reasonably practicable after these reports are filed with the SEC, at our web site at http://www.ibm.com. Except as
stated herein, no information contained in, or that can be accessed through, our website is incorporated by reference into this prospectus supplement or
the accompanying prospectus, and no such information should be considered a part of this prospectus supplement or the accompanying prospectus.
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 (the "Exchange Act") until our offering is completed:
i.
Annual Report on Form 10-K for the year ended December 31, 2019;
ii.
Quarterly Report on Form 10-Q for the quarter ended March 31, 2020; and
iii.
Current Reports on Form 8-K or filed portions of those reports (but not portions of those reports which were furnished) filed on
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January 21, 2020, January 22, 2020, January 29, 2020, January 31, 2020, February 3, 2020, February 10, 2020, April 7, 2020, April 20,
2020, April 21, 2020 and April 29, 2020 and Form 8-K/A filed on September 20, 2019.
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. For example, for a discussion of the recent COVID-19 pandemic and
its impact on our business, see the Management's Discussion and Analysis section of our Form 10-Q for the first quarter of 2020. 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.
P.O. Box 505005
Louisville, KY 40233-5005
(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 $3,963 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 1.700% Notes due 2027 (the "2027 Notes"), the 1.950% Notes due 2030 (the "2030 Notes"), the 2.850% Notes due 2040 (the "2040 Notes")
and the 2.950% Notes due 2050 (the "2050 Notes", and together with the 2027 Notes, the 2030 Notes and the 2040 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 2027 Notes, the 2030 Notes, the 2040 Notes and the 2050 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 2027 Notes will
mature on May 15, 2027. The 2030 Notes will mature on May 15, 2030. The 2040 Notes will mature on May 15, 2040. The 2050 Notes will mature on
May 15, 2050.
The 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 2027 Notes, the 2030 Notes, the 2040 Notes and the 2050 Notes will bear interest from May 7, 2020, at the rates of interest stated on the cover
page of this prospectus supplement. Interest on the Notes will be payable semi-annually on May 15 and November 15 of each year, commencing
November 15, 2020 to the persons in whose names such Notes are registered at the close of business on the fifteenth calendar day preceding each
May 15 or November 15. Interest on the Notes will be computed on the basis of a 360-day year consisting of twelve 30-day months.
Optional Redemption
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The Notes of each series 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. Prior to the applicable Par Call Date, the redemption price for a series of Notes will be 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
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·
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 20 basis points in the case of the 2027
Notes, 20 basis points in the case of the 2030 Notes, 25 basis points in the case of the 2040 Notes and 25 basis points in the case of the
2050 Notes, plus, in each case, accrued interest to the date of redemption which has not been paid.
On and after the applicable Par Call Date, the redemption price for a series of Notes will be equal to 100% of the principal amount of the Notes to
be redeemed, plus accrued interest, if any, to the redemption date.
"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" 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 (assuming, for this purpose, that the relevant series
of Notes matured on the applicable Par Call Date), 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 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 (assuming, for this purpose,
that the relevant series of Notes matured on the applicable Par Call Date) 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.
"Par Call Date" means, with respect to the 2027 Notes, March 15, 2027 (two months prior to the maturity date of the 2027 Notes); with respect to
the 2030 Notes, February 15, 2030 (three months prior to the maturity date of the 2030 Notes); with respect to the 2040 Notes, November 15, 2039 (six
months prior to the maturity date of the 2040 Notes); and with respect to the 2050 Notes, November 15, 2049 (six months prior to the maturity date of
the 2050 Notes).
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"Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as
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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 BofA Securities, Inc., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche
Bank Securities Inc., Goldman Sachs & Co. LLC, Santander Investment Securities Inc., SG Americas Securities, LLC and Wells Fargo Securities, 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.
"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 (assuming, for this purpose, that the Notes matured on the
applicable Par Call Date); 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.
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
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, societe anonyme ("Clearstream") or
Euroclear Bank SA/NV, 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
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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.
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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 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
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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 Exchange Act, 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, 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 accompanying 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
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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;
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·
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.
·
The discussion does not cover you if you are an accrual method taxpayer required to recognize income no later than when such income
is taken into account for financial accounting purposes.
·
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.
·
The discussion does not apply to you if you are a Non-U.S. Holder (as defined below) of Notes and if you (a) own, actually or
constructively, 10% or more of the voting stock of the company, (b) are a "controlled foreign corporation" related, directly or indirectly,
to the company through stock ownership or (c) are a bank making a loan in the ordinary course of business.
·
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
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·
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.
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
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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
IRS requirements concerning information reporting.
·
If you are subject to these requirements but do not comply, the intermediary must withhold at a rate of 24% of all amounts payable to
you on the Notes (including principal payments and sale proceeds). This is called "backup withholding." If the intermediary withholds
payments, you may use the withheld amount as a credit against your federal income tax liability.
·
All individuals are subject to these requirements. Some holders, including all corporations, tax-exempt organizations and individual
retirement accounts, are exempt from these requirements.
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Table of Contents
Tax Consequences to Non-U.S. Holders
This section applies to you if you are a "Non-U.S. Holder." A "Non-U.S. Holder" is a beneficial owner of a Note (other than a partnership) that is
not a U.S. Holder.
Withholding Taxes
Generally, payments of principal and interest on the Notes will not be subject to U.S. withholding taxes.
However, in the case of interest, for the exemption from withholding taxes to apply to you, you must meet one of the following requirements:
·
You provide a completed Form W-8BEN or W-8BEN-E (or substitute form), as applicable, to the bank, broker or other intermediary
through which you hold your Notes. The Form W-8BEN or W-8BEN-E, as applicable, contains your name, address and a statement that
you are the beneficial owner of the Notes and that you are not a U.S. person.
·
You hold your Notes directly through a "qualified intermediary," and the qualified intermediary has sufficient information in its files
indicating that you are not a U.S. person. A qualified intermediary is a bank, broker or other intermediary that (1) is either a U.S. or non-
U.S. entity, (2) is acting out of a non-U.S. branch or office and (3) has signed an agreement with the IRS providing that it will
administer all or part of the U.S. tax withholding rules under specified procedures.
·
You are entitled to an exemption from withholding tax on interest under a tax treaty between the United States and your country of
residence. To claim this exemption, you generally must complete Form W-8BEN or W-8BEN-E, as applicable, and claim this
exemption on the form. In some cases, you may instead be permitted to provide documentary evidence of your claim to the intermediary,
or a qualified intermediary may already have some or all of the necessary evidence in its files.
·
The interest income on the Notes is effectively connected with the conduct of your trade or business in the United States, and is not
exempt from U.S. tax under a tax treaty. To claim this exemption, you must complete Form W-8ECI.
Even if you meet one of the above requirements, interest paid to you will be subject to withholding tax under any of the following circumstances:
·
The withholding agent or an intermediary knows or has reason to know that you are not entitled to an exemption from withholding tax.
Specific rules apply for this test.
·
The IRS notifies the withholding agent that information that you or an intermediary provided concerning your status is false.
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