Terms and Conditions of Equity Award – IBM

IBM

TERMS AND CONDITIONS OF YOUR EQUITY
AWARD: EFFECTIVE JUNE 8, 2011

Terms and Conditions of Your Equity Award

Table of Contents

				Page

1.	Introduction			2

2.	How to Use This Document			2

3.	Definition of Terms			3

4.	Provisions that apply to all Award types and all countries

5.	Provisions that apply to all Award types but not all countries			4

6.	Provisions that apply to specific Award types for all countries
	a.	Restricted Stock Units (“RSUs”) including Cash-Settled RSUs and Retention RSUs (“RRSUs”)		6
		i.	All RSUs
		ii.	RSUs Other Than Cash-Settled RSUs and Cash-Settled RRSUs
		iii.	Cash-Settled RSUs including Cash-Settled RRSUs
	b.	Restricted Stock		7
	c.	Stock Options (“Options”) and Stock Appreciation Rights (“SARs”)		9
		i.	All Option and SAR Awards
		ii.	All SAR Awards
	d.	Performance Share Units (“PSUs”)		11

7.	Provisions that apply to specific countries			12
	a.	Denmark

Terms and Conditions of Your Equity Award

Introduction

This document provides you with the terms and conditions of your Award that
are in addition to the terms and conditions contained in your Equity Award
Agreement for your specific Award. Also, your Award is subject to the terms and
conditions in the governing plan document; the applicable document is indicated
in your Equity Award Agreement and can be found at
http://w3.ibm.com/hr/exec/comp/eq_prospectus.shtml.

As an Award recipient, you can see a personalized summary of all your
outstanding equity grants in the “Personal statement” section of the IBM
executive compensation web site (http://w3.ibm.com/hr/exec/comp). This site also
contains other information about long-term incentive awards, including copies of
the prospectus (the governing plan document). If you have additional questions
and you are based in the U.S., you can call the Employee Service Center at
800-796-9876 (or 919-784-8646) weekdays, from 8: 00 a.m. to 8: 00 p.m. Eastern
time (TTY available at 800-426-6537). If you are based in another country you
can call your local IBM Employee Service Center.

Morgan Stanley Smith Barney currently administers these Awards on IBM153s
behalf. You can access your equity awards, view your account and transaction
history and model transactions on the Morgan Stanley Smith Barney web site at
https://www.benefitaccess.com (for security reasons, you will need to register
for a password first). You can also contact Morgan Stanley Smith Barney by
calling 1-210-677-3662 (or from within the U.S. at 1-800-IBM-4292) and speak
with a Morgan Stanley Smith Barney representative. If you have difficulties with
the Web site, you can contact the Morgan Stanley Smith Barney Web Site Help Desk
at 1-210-677-3712 (or from within the U.S. at 1-888-873-1194)

How to Use This Document

Terms and conditions that apply to all awards in all countries can be found
on page 4. Review these in addition to any award- or country-specific terms and
conditions that may be listed. Once you have reviewed these general terms, check
in your Equity Award Agreement for any award-specific and/or country-specific
terms that apply to your Award.

Terms and Conditions of Your Equity Award:

Definition of Terms

The following are defined terms in the Long-Term Performance Plan and/or your
Equity Award Agreement. These are provided for your information. See the Plan
prospectus and your Equity Award Agreement for more details.

“Awards” : The grant of any form of stock option, stock appreciation right,
stock or cash award, whether granted singly, in combination or in tandem, to a
Participant pursuant to such terms, conditions, performance requirements,
limitations and restrictions as the Committee may establish in order to fulfill
the objectives of the Plan.

“Board” : The Board of Directors of International Business Machines
Corporation (“IBM”).

“Capital Stock” : Authorized and issued or unissued Capital Stock of IBM, at
such par value as may be established from time to time.

“Committee” : The committee designated by the Board to administer the Plan.

“Company” : IBM and its affiliates and subsidiaries including subsidiaries of
subsidiaries and partnerships and other business ventures in which IBM has an
equity interest.

“Equity Award Agreement” : The document provided to the Participant which
provides the grant details.

“Fair Market Value” : The average of the high and low prices of Capital Stock
on the New York Stock Exchange for the date in question, provided that, if no
sales of Capital Stock were made on said exchange on that date, the average of
the high and low prices of Capital Stock as reported for the most recent
preceding day on which sales of Capital Stock were made on said exchange.

“Participant” : An individual to whom an Award has been made under the Plan.
Awards may be made to any employee of, or any other individual providing
services to, the Company. However, incentive stock options may be granted only
to individuals who are employed by IBM or by a subsidiary corporation (within
the meaning of section 424(f) of the Code) of IBM, including a subsidiary that
becomes such after the adoption of the Plan.

“Plan” : Any IBM Long-Term Performance Plan.

Terms and Conditions of Your Equity Award:

Provisions that apply to all Award types but not all
countries

The following terms apply to all countries and for all Award types
(Restricted Stock Units, Cash-Settled Restricted Stock Units, Restricted Stock,
Stock Options, Stock Appreciation Rights and Performance Share Units).

Cancellation and Rescission

All determinations regarding enforcement, waiver or modification of the
cancellation and rescission and other provisions of the Plan and your Equity
Award Agreement (including the provisions relating to termination of employment,
death and disability) shall be made in IBM153s sole discretion. Determinations
made under your Equity Award Agreement and the Plan need not be uniform and may
be made selectively among individuals, whether or not such individuals are
similarly situated.

You agree that the cancellation and rescission provisions of the Plan and
your Equity Award Agreement are reasonable and agree not to challenge the
reasonableness of such provisions, even where forfeiture of your Award is the
penalty for violation.

Jurisdiction, Governing Law, Expenses and Taxes

Your 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. You
submit to the exclusive jurisdiction and venue of the federal or state courts of
New York, County of Westchester, to resolve all issues that may arise out of or
relate to your Equity Award Agreement.

If any court of competent jurisdiction finds any provision of your Equity
Award Agreement, or portion thereof, to be unenforceable, that provision shall
be enforced to the maximum extent permissible so as to effect the intent of the
parties, and the remainder of your Equity Award Agreement shall continue in full
force and effect.

If you or the Company brings an action to enforce your Equity Award Agreement
and the Company prevails, you will pay all costs and expenses incurred by the
Company in connection with that action and in connection with collection,
including reasonable attorneys153 fees.

If the Company, in its sole discretion, determines that it has incurred or
will incur any obligation to withhold taxes as a result of your Award, without
limiting the Company153s rights under Section 9 of the Plan, the Company may
withhold the number of shares that it determines is required to satisfy such
liability and/or the Company may withhold amounts from other compensation to the
extent required to satisfy such liability under federal, state, provincial,
local, foreign or other tax laws. To the extent that such amounts are not
withheld, the Company may require you to pay to the Company any amount demanded
by the Company for the purpose of satisfying such liability.

The following provision applies to all Award types (Restricted Stock Units,
Cash-Settled Restricted Stock Units, Restricted Stock, Stock Options, Stock
Appreciation Rights and Performance Share Units) granted to all individuals in
all countries except those with a home country of Latin America, specifically:
Argentina, Bolivia, Brazil, Chile, Columbia, Costa Rica, Ecuador, Mexico,
Paraguay, Peru, Uruguay, and Venezuela.

Non-Solicitation

In consideration of your Award, you agree that during your employment with
the Company and for two years following the termination of your employment for
any reason, you will not directly or indirectly hire, solicit or make an offer
to any employee of the Company to be employed or perform services outside of the
Company. Also, you agree that during your employment with the Company and for
one year following the termination of your employment for any reason, you will
not directly or indirectly, solicit, for competitive business purposes, any
customer of the Company with which you were involved as part of your job
responsibilities during the last year of your employment with the Company. By
accepting your Award, you acknowledge that the Company would suffer irreparable
harm if you fail to comply with the foregoing, and that the Company would be
entitled to any appropriate relief, including money damages, equitable relief
and attorneys153 fees.

Terms and Conditions of Your Equity Award:

Provisions that apply to specific Award types for all
countries

a. Restricted Stock Units (“RSUs”) including
Cash-Settled RSUs and Retention RSUs (“RRSUs”)

All references in this document to RSUs include RRSUs, unless explicitly
stated otherwise

i. All RSUs

Termination of Employment including Death, Disability and Leave of
Absence

Termination of Employment

In the event you cease to be an employee (other than on account of death or
are disabled as described in Section 12 of the Plan) prior to the Vesting
Date(s) set in your Equity Award Agreement, all then unvested RSUs, including
RRSUs, under your Award shall be canceled.

However, your unvested and/or outstanding RSUs, but not RRSUs, will continue
to vest upon the termination of employment if all of the following criteria are
met:

– You are on the performance team, or any successor team thereto, at the time
of termination of employment;

– You have completed at least one year of active service since the award date
of grant;

– You have reached age 55 with 15 years of service at the time of termination
of employment (age 60 with 15 years of service for the Chairman and CEO); and

– Appropriate senior management, the Committee or the Board, as appropriate,
do not exercise their discretion to cancel or otherwise limit the vesting of the
RSUs.

Death or Disability

Upon your death all RSUs covered by this Agreement shall vest immediately and
your Vesting Date shall be your date of death. If you are disabled as described
in Section 12 of the Plan, your RSUs shall continue to vest according to the
terms of your Award.

Leave of Absence

In the event of a management approved leave of absence, any unvested RSUs
shall continue to vest as if you were an active employee of the Company, subject
to the terms in this document and your Equity Award Agreement. If you return to

active status, your unvested RSUs will continue to vest in accordance with
the terms in this document and your Equity Award Agreement.

Dividend Equivalents

IBM shall not pay dividend equivalents on cash-settled or stock-settled
unvested RSU awards.

ii. RSUs Other Than Cash-Settled RSUs
and Cash-Settled RRSUs

Settlement of Award

Subject to Sections 12 and 13 of the Plan and the section “Termination of
Employment including Death, Disability and Leave of Absence” above, upon the
Vesting Date(s), or as soon thereafter as may be practicable but in no event
later than March 15 of the following calendar year, IBM shall make a payment to
Participant in shares of Capital Stock equal to the number of vested RSUs,
subject to any applicable tax withholding requirements as described in Section 9
of the Plan, and the respective RSUs shall thereupon be canceled. RSUs are not
shares of Capital Stock and do not convey any stockholder rights.

iii. Cash-Settled RSUs including
Cash-Settled RRSUs

Settlement of Award

Subject to Sections 12 and 13 of the Plan and the section entitled
“Termination of Employment including Death, Disability and Leave of Absence”
above, upon the Vesting Date(s), or as soon thereafter as may be practicable but
in no event later than March 15 of the following calendar year, the Company
shall make a payment to Participant in cash equal to the Fair Market Value of
the vested RSUs, subject to any applicable tax withholding requirements as
described in Section 9 of the Plan, and the respective RSUs shall thereupon be
canceled. Fair Market Value will be calculated in your home country currency at
the exchange rate on the applicable Vesting Date using a commercially reasonable
measure of exchange rate. RSUs are not shares of Capital Stock and do not convey
any stockholder rights.

b. Restricted Stock

Settlement of Award

Subject to Sections 12 and 13 of the Plan and the paragraph entitled
“Termination of Employment including Death, Disability or Leave of Absence”
below, upon the Vesting Date(s), or as soon thereafter as may be practicable but
in no event later than March 15 of the following calendar year, the shares of
Restricted Stock awarded under your Equity Award Agreement will be deliverable
to you, subject to any applicable tax withholding requirements as described in
Section 9 of the Plan.

Termination of Employment including Death, Disability and Leave of
Absence

Termination of Employment

In the event you cease to be an employee (other than on account of death or
are disabled as described in Section 12 of the Plan) prior to the Vesting
Date(s) in your Equity Award Agreement, all then unvested shares of Restricted
Stock under your Award shall be canceled (unless your Equity Award Agreement
provides otherwise).

Death or Disability

Upon your death all unvested shares of Restricted Stock covered by your
Equity Award Agreement shall vest immediately and your Vesting Date shall be
your date of death. If you are disabled as described in Section 12 of the Plan,
your unvested shares of Restricted Stock shall continue to vest according to the
terms of your Equity Award Agreement.

Leave of Absence

In the event of a management approved leave of absence, any unvested shares
of Restricted Stock shall continue to vest as if you were an active employee of
the Company, subject to the terms in this document and your Equity Award
Agreement. If you return to active status, your unvested shares of Restricted
Stock will continue to vest in accordance with the terms in this document and
your Equity Award Agreement.

Dividends and Other Rights

During the period that the Restricted Stock is held by IBM hereunder, such
stock will remain on the books of IBM in your name, may be voted by you, and any
applicable dividends shall be paid to you. Shares issued in stock splits or
similar events which relate to Restricted Stock then held by IBM in your name
shall be issued in your name but shall be held by IBM under the terms hereof.

Transferability

Shares of Restricted Stock awarded under your Equity Award Agreement cannot
be sold, assigned, transferred, pledged or otherwise encumbered prior to the
vesting of your Award as set forth in your Equity Award Agreement and any such
sale, assignment, transfer, pledge or encumbrance, or any attempt thereof, shall
be void.

c. Stock Options (“Options”) and Stock Appreciation
Rights (“SARs”)

i. All Option and SAR
Awards

Termination of Employment including Death, Disability and Leave of
Absence

Termination of Employment

In the event you cease to be an employee (other than on account of death or
are disabled as described in Section 12 of the Plan):

– Any Options or SARs that are not exercisable as of the date your employment
terminates shall be canceled immediately (unless your Equity Award Agreement
provides otherwise), and

– Any Options or SARs that are exercisable as of the date your employment
terminates (other than for cause) will remain exercisable for 90 days (not three
months) after the date of termination, after which any unexercised Options or
SARs are canceled; provided, however, if you are a banded executive when your
employment with the Company terminates (other than for cause) after you have
attained age 55 and completed at least 15 years of service with the Company at
the time of termination, any Options or SARs that are exercisable as of the date
your employment terminates shall remain exercisable for the full term as in your
Equity Award Agreement (unless your Equity Award Agreement provides otherwise).

Death or Disability

In the event of your death, all Options or SARs shall become fully
exercisable and remain exercisable for their full term.

In the event you are disabled (as described in Section 12 of the Plan), any
unvested Options or SARs shall continue to vest and be exercisable.

Leave of Absence

In the event of a management approved leave of absence, any unvested Options
or SARs shall continue to vest and be exercisable as if you were an active
employee of the Company, subject to the terms in this document and your Equity
Award Agreement. If you return to active status, your Options or SARs will
continue to vest and be exercisable in accordance with their terms. If you do
not return to active status,

– Your unvested Options or SARs will be canceled immediately; and

– Your vested Options or SARs will be canceled on the later of the 91st day
following your last day of active employment or the date of the termination of
your leave of absence; provided, however, if you are a banded executive when
your employment terminates (other than for cause) after you have attained age 55
and completed at least 15 years of service with the Company at the time of
termination, any Options or SARs that are exercisable as of the date your
employment terminates shall remain exercisable for the full term as in your
Equity Award Agreement.

Termination of Employment for Cause

If your employment terminates for cause, all exercisable and not exercisable
Options or SARs are canceled immediately.

ii. All SAR Awards

Settlement of Award

Upon exercise, the Company shall deliver an aggregate amount, in cash, equal
to the excess of the Fair Market Value of a share of Capital Stock on the date
of exercise over the Exercise Price set forth in your Equity Award Agreement
multiplied by the number of SARs exercised, subject to any applicable tax
withholding requirements as described in Section 9 of the Plan. The value of the
Award will be calculated in your home country currency at the exchange rate on
the date the Award becomes fully vested using a commercially reasonable measure
of exchange rate.

d. Performance Share Units (“PSUs”)

Termination of Employment, including Death and Disability, and Leave
of Absence

Termination of Employment and Leave of Absence

If you cease to be an active, full-time employee for any reason (other than
on account of death or are disabled as described in Section 12 of the Plan)
before the Date of Payout, all PSUs are canceled immediately provided, however,
if you are a banded executive when your employment terminates (other than for
cause) after you have attained age 55, completed at least 15 years of service
with the Company at the time of termination, and completed at least one year of
active service during the PSU Performance Period (as set forth in your Equity
Award Agreement), the PSUs granted hereunder shall be paid out on the Date of
Payout (as set forth in your Equity Award Agreement) based on IBM performance
over the entire applicable Performance Period(s), in an amount that will be
prorated for the number of months completed as an active executive during the
PSU Performance Period, adjusted for the performance score.

However, your unvested PSUs will continue to vest upon termination of
employment or the time you cease to be an active, full-time employee if all of
the following criteria are met:

– You are on the performance team, or any successor team thereto, at the time
of termination of employment or the time you cease to be an active, full-time
employee;

– You have completed at least one year of active service during the PSU
Performance Period (as set forth in your Equity Award Agreement);

– You have reached age 55 with 15 years of service at the time of termination
of employment or the time you cease to be an active, full-time employee (age 60
with 15 years of service for the Chairman and CEO);

– The Committee has certified that all performance conditions have been met;
and

– Appropriate senior management, the Committee or the Board, as appropriate,
do not exercise their discretion to cancel or otherwise limit the payout.

Death or Disability

Prior to the Date of Payout, (i) in the event of your death or (ii) if you
are disabled (as described in Section 12 of the Plan), all PSUs shall continue
to vest according to the terms of your Equity Award Agreement and the PSUs will
be paid out at the end of the Performance Period based on IBM performance over
the entire applicable Performance Period(s).

Terms and Conditions of Your Equity Award:

Provisions that apply to specific countries

a. Denmark

i. All Awards

Non-Solicitation

The following part of the above non-solicitation provision does not apply to
those individuals with the home country of Denmark: “In consideration of your
Award, you agree that during your employment with the Company and for two years
following the termination of your employment for any reason, you will not
directly or indirectly hire, solicit or make an offer to any employee of the
Company to be employed or perform services outside of the Company.”

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