PSU Equity Award Agreement – IBM

International Business Machines Corporation (“IBM”)

Equity Award Agreement

Plan

[IBM 1999 Long-Term Performance Plan (the “Plan”)]

Award Type

Performance Share Units (PSUs)

Purpose

The purpose of this Award is to retain selected executives. You recognize
that this Award represents a potentially significant benefit to you and is
awarded for the purpose stated here.

Awarded to Home Country Global ID

Sample

United States (USA) [Employee ID]

[Global ID]

Award Agreement

This Equity Award Agreement, together with the “Terms and Conditions of Your
Equity Award: Effective June 8, 2011” (“Terms and Conditions”) document and the
Plan http://w3.ibm.com/hr/exec/comp/eq_prospectus.shtml, both of which
are incorporated herein by reference, together constitute the entire agreement
between you and IBM with respect to your Award. This Equity Award Agreement
shall be governed by the laws of the State of New York, without regard to
conflicts or choice of law rules or principles.

Grant

Date of Grant

# PSUs Awarded

Performance Period

Date of Payout

[month day year]

[amount]

[dates]

[date]

[month day year]

[amount]

[dates]

[date]

[ ” ]

[ ” ]

[ ” ]

[ ” ]

Vesting

You can earn the PSUs awarded above based on IBM153s performance in achieving
cumulative business targets of earnings-per-share and cash flow, weighted 80/20
respectively, over the 3-year Performance Period applicable to the award.
Performance against each of the targets will be subject to separate payout
calculations according to the following table (which will be applied
separately for each award of PSUs listed above):

% of Target

<70

%

70

%

80

%

90

%

100

%

110

%

>120

%

% of PSUs earned

0

%

25

%

50

%

75

%

100

%

125

%

150

%

Payout of Awards

On the Date of Payout, the Company shall either (a) deliver to you a number
of shares of Capital Stock equal to the number of your earned PSUs, or (b) make
a cash payment to you equal to the value of your earned PSUs at the end of the
Performance Period, in either case, net of any applicable tax withholding, and
the respective PSUs shall thereafter be canceled. If paid in cash, the value of
each PSU at the end of the Performance Period shall be equal to the average
closing price, as reported on the New York Stock Exchange (“NYSE”), of one share
of Capital Stock for the month of January following the end of the Performance
Period.

All payouts under this Award are subject to the provisions of the Plan, this
Agreement and the Terms and Conditions document, including those relating to the
cancellation and rescission of awards.

Terms and Conditions of Your Equity Award

Refer to the Terms and Conditions document
http://w3.ibm.com/hr/exec/comp/eq_prospectus.shtml for an explanation
of the terms and conditions applicable to your Award, including those relating
to:

– Cancellation and rescission of awards (also see below)

– Jurisdiction, governing law, expenses and taxes

– Non-solicitation of Company employees and clients, if applicable

– Treatment of your Award in the event of death or disability or leave of
absence

– Treatment of your Award upon termination of employment, including
retirement or for cause, (i) if you are on the performance team, or any
successor team thereto, and (ii) under all other circumstances.

It is strongly recommended that you print the Terms and Conditions document
for later reference.

Cancellation and Rescission

You understand that IBM may cancel, modify, rescind, suspend, withhold or
otherwise limit or restrict this Award in accordance with the terms of the Plan,
including, without limitation, canceling or rescinding this Award if you render
services for a competitor prior to, or during the Rescission Period. You
understand that the Rescission Period that has been established is 12 months.
Refer to the Terms and Conditions document and the Plan for further details.

Data Privacy, Electronic Delivery

By accepting this Award, you agree that data, including your personal data,
necessary to administer this Award may be exchanged among IBM and its
subsidiaries and affiliates as necessary, and with any vendor engaged by IBM to
administer this Award, subject to the Terms and Conditions document; you also
consent to receiving information and materials in connection with this Award or
any subsequent awards under IBM153s long-term performance plans, including without
limitation any prospectuses and plan documents, by any means of electronic
delivery available now and/or in the future (including without limitation by
e-mail, by Web site access and/or by facsimile), such consent to remain in
effect unless and until revoked in writing by you.

Extraordinary Compensation

Your participation in the Plan is voluntary. The value of this Award is an
extraordinary item of income, is not part of your normal or expected
compensation and shall not be considered in calculating any severance,
redundancy, end of service payments, bonus, long-service awards, pension,
retirement or other benefits or similar payments. The Plan is discretionary in
nature. This Award is a one-time benefit that does not create any contractual or
other right to receive additional awards or other benefits in the future. Future
grants, if any, are at the sole grace and discretion of IBM, including but not
limited to, the timing of the grant, the number of units and vesting provisions.
This Equity Award Agreement is not part of your employment agreement, if any.

Accept Your Award

This Award is considered valid when you accept it. By pressing the Accept
button below to accept your Award, you acknowledge having received and read this
Equity Award Agreement, the Terms and Conditions document and the Plan under
which this Award was granted and you agree (i) not to hedge the economic risk of
this Award or any previously-granted outstanding awards, which includes entering
into any derivative transaction on IBM securities (e.g., any short sale, put,
swap, forward, option, collar, etc.), (ii) to comply with the terms of the Plan,
this Equity Award Agreement and the Terms and Conditions document, including
those provisions relating to cancellation and rescission of awards and
jurisdiction and governing law, and (iii) that by your acceptance of this Award,
all awards previously granted to you under the Plan or other IBM Long-Term
Performance Plans are subject to (A) the “Cancellation and Rescission” section
of this Agreement (unless your previous award agreement(s) specified a longer
Rescission Period, in which case such longer period will apply) and the
“Cancellation and Rescission” section of the Terms and Conditions document and
(B) any other cancellation, rescission or recovery required by applicable laws,
rules, regulations or standards, including without limitation any requirements
or standards of the U.S. Securities and Exchange Commission or the New York
Stock Exchange.