Item 1.01. Entry into a Material Definitive Agreement.
On July 19, 2018, International Business Machines Corporation (IBM) amended and restated (as amended and restated, the Amended and Restated Five-Year Credit Agreement) the existing $10.25 billion Five-Year Credit Agreement, dated as of November 10, 2011, among IBM, the several banks and other financial institutions from time to time parties thereto (the Five-Year Lenders), JPMorgan Chase Bank, N.A., as Administrative Agent, BNP Paribas, Citibank N.A., Royal Bank of Canada, and Mizuho Bank Ltd., as Syndication Agents and the Documentation Agents named therein (as amended by the First Amendment thereto, dated October 16, 2014, the Second Amendment thereto, dated October 21, 2016, and the Third Amendment thereto, dated July 20, 2017, the Existing Five-Year Credit Agreement). On July 19, 2018, IBM and IBM Credit LLC (IBM Credit) (IBM and IBM Credit together, the Borrowers) (i) entered into a new $2.5 billion 364-Day Credit Agreement (the New 364-Day Credit Agreement) with the several banks and other financial institutions from time to time parties thereto (the 364-Day Lenders), and (ii) amended and restated (as amended and restated, the Amended and Restated Three-Year Credit Agreement) the existing $2.5 billion Three-Year Credit Agreement, dated as of July 20, 2017, among the Borrowers, the several banks and other financial institutions from time to time parties thereto (the Three-Year Lenders, together with the Five-Year Lenders and the 364-Day Lenders, the Lenders), JPMorgan Chase Bank, N.A., as Administrative Agent, BNP Paribas, Citibank N.A., Royal Bank of Canada and Mizuho Bank Ltd., as Syndication Agents and the Documentation Agents named therein (the Existing Three-Year Credit Agreement).
The New 364-Day Credit Agreement permits the Borrowers to borrow up to an aggregate of $2.5 billion on a revolving basis at any time during the term of the New 364-Day Credit Agreement, subject to the terms therein. Neither Borrower is a guarantor or co-obligor of the other Borrower under the New 364-Day Credit Agreement. Funds borrowed may be used for the general corporate purposes of the Borrowers. Interest rates on borrowings under the New 364-Day Credit Agreement will be based on prevailing market interest rates plus a margin, as further described therein. The New 364-Day Credit Agreement contains customary representations and warranties, covenants, events of default and indemnification provisions.
Each of the Amended and Restated Three-Year Credit Agreement and the Amended and Restated Five-Year Credit Agreement, among other things, modify section 2.14 of the Existing Three-Year Credit Agreement and the Existing Five-Year Credit Agreement, respectively, to account for the potential discontinuation of LIBOR and extend the maturity of the Existing Three-Year Credit Agreement and the Existing Five-Year Credit Agreement to July 20, 2021 and July 20, 2023, respectively. The facility sizes of $2.5 billion and $10.25 billion, respectively, remain unchanged.
The foregoing descriptions of the New 364-Day Credit Agreement, the Amended and Restated Three-Year Credit Agreement and the Amended and Restated Five-Year Credit Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the New 364-Day Credit Agreement, the Amended and Restated Three-Year Credit Agreement and the Amended and Restated Five-Year Credit Agreement, respectively, which are filed as Exhibits 10.1, 10.2 and 10.3 to this report, and are incorporated by reference herein.
In the ordinary course of their respective businesses, the Lenders and their affiliates have engaged, and may in the future engage, in commercial banking, investment banking, financial advisory or other services with the Borrowers for which they have in the past and/or may in the future receive customary compensation and expense reimbursement.