{"id":40733,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/terms-and-conditions-of-equity-award-ibm.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"terms-and-conditions-of-equity-award-ibm","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/compensation\/terms-and-conditions-of-equity-award-ibm.html","title":{"rendered":"Terms and Conditions of Equity Award – IBM"},"content":{"rendered":"

IBM<\/strong><\/p>\n

\n

\n

TERMS AND CONDITIONS OF YOUR EQUITY
\nAWARD: EFFECTIVE JUNE 8, 2011<\/strong><\/p>\n

\n

\n

<\/p>\n

\n

Terms and Conditions of Your Equity Award<\/strong>\n<\/p>\n

\n

Table of Contents<\/strong><\/p>\n

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n<\/td>\n\n

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Page<\/strong><\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

\n<\/td>\n

\n

\n<\/td>\n<\/tr>\n

\n

1.<\/strong><\/p>\n<\/td>\n

\n

Introduction<\/strong><\/p>\n<\/td>\n

\n

\n<\/td>\n

\n

2<\/strong><\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

\n<\/td>\n

\n

\n<\/td>\n<\/tr>\n

\n

2.<\/strong><\/p>\n<\/td>\n

\n

How to Use This Document<\/strong><\/p>\n<\/td>\n

\n

\n<\/td>\n

\n

2<\/strong><\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

\n<\/td>\n

\n

\n<\/td>\n<\/tr>\n

\n

3.<\/strong><\/p>\n<\/td>\n

\n

Definition of Terms<\/strong><\/p>\n<\/td>\n

\n

\n<\/td>\n

\n

3<\/strong><\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

\n<\/td>\n

\n

\n<\/td>\n<\/tr>\n

\n

4.<\/strong><\/p>\n<\/td>\n

\n

Provisions that apply to all Award types and all countries<\/strong>\n<\/p>\n<\/td>\n

\n

\n<\/td>\n

\n

\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

\n<\/td>\n

\n

\n<\/td>\n<\/tr>\n

\n

5.<\/strong><\/p>\n<\/td>\n

\n

Provisions that apply to all Award types but not all
\ncountries<\/strong><\/p>\n<\/td>\n

\n

\n<\/td>\n

\n

4<\/strong><\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

\n<\/td>\n

\n

\n<\/td>\n<\/tr>\n

\n

6.<\/strong><\/p>\n<\/td>\n

\n

Provisions that apply to specific Award types for all
\ncountries<\/strong><\/p>\n<\/td>\n

\n

\n<\/td>\n

\n

\n<\/td>\n<\/tr>\n

\n<\/td>\n\n

a.<\/em><\/p>\n<\/td>\n

\n

Restricted Stock Units (“RSUs”) including Cash-Settled RSUs and Retention
\nRSUs (“RRSUs”)<\/em><\/p>\n<\/td>\n

\n

\n<\/td>\n

\n

6<\/em><\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

i.<\/em><\/p>\n<\/td>\n

\n

All RSUs<\/em><\/p>\n<\/td>\n

\n

\n<\/td>\n

\n

\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

ii.<\/em><\/p>\n<\/td>\n

\n

RSUs Other Than Cash-Settled RSUs and Cash-Settled RRSUs<\/em><\/p>\n<\/td>\n

\n

\n<\/td>\n

\n

\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

iii.<\/em><\/p>\n<\/td>\n

\n

Cash-Settled RSUs including Cash-Settled RRSUs<\/em><\/p>\n<\/td>\n

\n

\n<\/td>\n

\n

\n<\/td>\n<\/tr>\n

\n<\/td>\n\n

b.<\/em><\/p>\n<\/td>\n

\n

Restricted Stock<\/em><\/p>\n<\/td>\n

\n

\n<\/td>\n

\n

7<\/em><\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n

c.<\/em><\/p>\n<\/td>\n

\n

Stock Options (“Options”) and Stock Appreciation Rights (“SARs”)<\/em>\n<\/p>\n<\/td>\n

\n

\n<\/td>\n

\n

9<\/em><\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

i.<\/em><\/p>\n<\/td>\n

\n

All Option and SAR Awards<\/em><\/p>\n<\/td>\n

\n

\n<\/td>\n

\n

\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

ii.<\/em><\/p>\n<\/td>\n

\n

All SAR Awards<\/em><\/p>\n<\/td>\n

\n

\n<\/td>\n

\n

\n<\/td>\n<\/tr>\n

\n<\/td>\n\n

d.<\/em><\/p>\n<\/td>\n

\n

Performance Share Units (“PSUs”)<\/em><\/p>\n<\/td>\n

\n

\n<\/td>\n

\n

11<\/em><\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n<\/td>\n\n

\n<\/td>\n

\n

\n<\/td>\n<\/tr>\n

\n

7.<\/strong><\/p>\n<\/td>\n

\n

Provisions that apply to specific countries<\/strong><\/p>\n<\/td>\n

\n

\n<\/td>\n

\n

12<\/strong><\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n

a.<\/em><\/p>\n<\/td>\n

\n

Denmark<\/em><\/p>\n<\/td>\n

\n

\n<\/td>\n

\n

\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\n

1<\/p>\n

\n

<\/p>\n

\n

Terms and Conditions of Your Equity Award<\/strong>\n<\/p>\n

\n

Introduction<\/strong><\/p>\n<\/p>\n

This document provides you with the terms and conditions of your Award that
\nare in addition to the terms and conditions contained in your Equity Award
\nAgreement for your specific Award. Also, your Award is subject to the terms and
\nconditions in the governing plan document; the applicable document is indicated
\nin your Equity Award Agreement and can be found at
\nhttp:\/\/w3.ibm.com\/hr\/exec\/comp\/eq_prospectus.shtml.<\/p>\n<\/p>\n

As an Award recipient, you can see a personalized summary of all your
\noutstanding equity grants in the “Personal statement” section of the IBM
\nexecutive compensation web site (http:\/\/w3.ibm.com\/hr\/exec\/comp). This site also
\ncontains other information about long-term incentive awards, including copies of
\nthe prospectus (the governing plan document). If you have additional questions
\nand you are based in the U.S., you can call the Employee Service Center at
\n800-796-9876 (or 919-784-8646) weekdays, from 8: 00 a.m. to 8: 00 p.m. Eastern
\ntime (TTY available at 800-426-6537). If you are based in another country you
\ncan call your local IBM Employee Service Center.<\/p>\n<\/p>\n

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

How to Use This Document<\/strong><\/p>\n<\/p>\n

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

\n

2<\/p>\n

\n

<\/p>\n

\n

Terms and Conditions of Your Equity Award:<\/strong>\n<\/p>\n

Definition of Terms<\/strong><\/p>\n

\n

The following are defined terms in the Long-Term Performance Plan and\/or your
\nEquity Award Agreement. These are provided for your information. See the Plan
\nprospectus and your Equity Award Agreement for more details.<\/p>\n<\/p>\n

“Awards” : The grant of any form of stock option, stock appreciation right,
\nstock or cash award, whether granted singly, in combination or in tandem, to a
\nParticipant pursuant to such terms, conditions, performance requirements,
\nlimitations and restrictions as the Committee may establish in order to fulfill
\nthe objectives of the Plan.<\/p>\n<\/p>\n

“Board” : The Board of Directors of International Business Machines
\nCorporation (“IBM”).<\/p>\n<\/p>\n

“Capital Stock” : Authorized and issued or unissued Capital Stock of IBM, at
\nsuch par value as may be established from time to time.<\/p>\n<\/p>\n

“Committee” : The committee designated by the Board to administer the Plan.\n<\/p>\n<\/p>\n

“Company” : IBM and its affiliates and subsidiaries including subsidiaries of
\nsubsidiaries and partnerships and other business ventures in which IBM has an
\nequity interest.<\/p>\n<\/p>\n

“Equity Award Agreement” : The document provided to the Participant which
\nprovides the grant details.<\/p>\n<\/p>\n

“Fair Market Value” : The average of the high and low prices of Capital Stock
\non the New York Stock Exchange for the date in question, provided that, if no
\nsales of Capital Stock were made on said exchange on that date, the average of
\nthe high and low prices of Capital Stock as reported for the most recent
\npreceding day on which sales of Capital Stock were made on said exchange.<\/p>\n<\/p>\n

“Participant” : An individual to whom an Award has been made under the Plan.
\nAwards may be made to any employee of, or any other individual providing
\nservices to, the Company. However, incentive stock options may be granted only
\nto individuals who are employed by IBM or by a subsidiary corporation (within
\nthe meaning of section 424(f) of the Code) of IBM, including a subsidiary that
\nbecomes such after the adoption of the Plan.<\/p>\n<\/p>\n

“Plan” : Any IBM Long-Term Performance Plan.<\/p>\n

\n

3<\/p>\n

\n

<\/p>\n

\n

Terms and Conditions of Your Equity Award:<\/strong>\n<\/p>\n

Provisions that apply to all Award types but not all
\ncountries<\/strong><\/p>\n

\n

The following terms apply to all countries and for all Award types
\n(Restricted Stock Units, Cash-Settled Restricted Stock Units, Restricted Stock,
\nStock Options, Stock Appreciation Rights and Performance Share Units).<\/p>\n<\/p>\n

Cancellation and Rescission<\/strong><\/p>\n<\/p>\n

All determinations regarding enforcement, waiver or modification of the
\ncancellation and rescission and other provisions of the Plan and your Equity
\nAward Agreement (including the provisions relating to termination of employment,
\ndeath and disability) shall be made in IBM153s sole discretion. Determinations
\nmade under your Equity Award Agreement and the Plan need not be uniform and may
\nbe made selectively among individuals, whether or not such individuals are
\nsimilarly situated.<\/p>\n<\/p>\n

You agree that the cancellation and rescission provisions of the Plan and
\nyour Equity Award Agreement are reasonable and agree not to challenge the
\nreasonableness of such provisions, even where forfeiture of your Award is the
\npenalty for violation.<\/p>\n<\/p>\n

Jurisdiction, Governing Law, Expenses and Taxes<\/strong><\/p>\n<\/p>\n

Your Equity Award Agreement shall be governed by the laws of the State of New
\nYork, without regard to conflicts or choice of law rules or principles. You
\nsubmit to the exclusive jurisdiction and venue of the federal or state courts of
\nNew York, County of Westchester, to resolve all issues that may arise out of or
\nrelate to your Equity Award Agreement.<\/p>\n<\/p>\n

If any court of competent jurisdiction finds any provision of your Equity
\nAward Agreement, or portion thereof, to be unenforceable, that provision shall
\nbe enforced to the maximum extent permissible so as to effect the intent of the
\nparties, and the remainder of your Equity Award Agreement shall continue in full
\nforce and effect.<\/p>\n<\/p>\n

If you or the Company brings an action to enforce your Equity Award Agreement
\nand the Company prevails, you will pay all costs and expenses incurred by the
\nCompany in connection with that action and in connection with collection,
\nincluding reasonable attorneys153 fees.<\/p>\n<\/p>\n

If the Company, in its sole discretion, determines that it has incurred or
\nwill incur any obligation to withhold taxes as a result of your Award, without
\nlimiting the Company153s rights under Section 9 of the Plan, the Company may
\nwithhold the number of shares that it determines is required to satisfy such
\nliability and\/or the Company may withhold amounts from other compensation to the
\nextent required to satisfy such liability under federal, state, provincial,
\nlocal, foreign or other tax laws. To the extent that such amounts are not
\nwithheld, the Company may require you to pay to the Company any amount demanded
\nby the Company for the purpose of satisfying such liability.<\/p>\n

\n

4<\/p>\n

\n

<\/p>\n

\n

The following provision applies to all Award types (Restricted Stock Units,
\nCash-Settled Restricted Stock Units, Restricted Stock, Stock Options, Stock
\nAppreciation Rights and Performance Share Units) granted to all individuals in
\nall countries except those with a home country of Latin America, specifically:
\nArgentina, Bolivia, Brazil, Chile, Columbia, Costa Rica, Ecuador, Mexico,
\nParaguay, Peru, Uruguay, and Venezuela.<\/p>\n<\/p>\n

Non-Solicitation<\/strong><\/p>\n<\/p>\n

In consideration of your Award, you agree that during your employment with
\nthe Company and for two years following the termination of your employment for
\nany reason, you will not directly or indirectly hire, solicit or make an offer
\nto any employee of the Company to be employed or perform services outside of the
\nCompany. Also, you agree that during your employment with the Company and for
\none year following the termination of your employment for any reason, you will
\nnot directly or indirectly, solicit, for competitive business purposes, any
\ncustomer of the Company with which you were involved as part of your job
\nresponsibilities during the last year of your employment with the Company. By
\naccepting your Award, you acknowledge that the Company would suffer irreparable
\nharm if you fail to comply with the foregoing, and that the Company would be
\nentitled to any appropriate relief, including money damages, equitable relief
\nand attorneys153 fees.<\/p>\n

\n

5<\/p>\n

\n

<\/p>\n

\n

Terms and Conditions of Your Equity Award:<\/strong>\n<\/p>\n

Provisions that apply to specific Award types for all
\ncountries<\/strong><\/p>\n

\n

a.<\/strong> Restricted Stock Units (“RSUs”) including
\nCash-Settled RSUs and Retention RSUs (“RRSUs”)<\/strong><\/p>\n<\/p>\n

All references in this document to RSUs include RRSUs, unless explicitly
\nstated otherwise<\/p>\n<\/p>\n

i.<\/em><\/strong> All RSUs<\/em><\/strong><\/p>\n<\/p>\n

Termination of Employment including Death, Disability and Leave of
\nAbsence<\/strong><\/p>\n<\/p>\n

Termination of Employment<\/em><\/p>\n<\/p>\n

In the event you cease to be an employee (other than on account of death or
\nare disabled as described in Section 12 of the Plan) prior to the Vesting
\nDate(s) set in your Equity Award Agreement, all then unvested RSUs, including
\nRRSUs, under your Award shall be canceled.<\/p>\n<\/p>\n

However, your unvested and\/or outstanding RSUs, but not RRSUs, will continue
\nto vest upon the termination of employment if all of the following criteria are
\nmet:<\/p>\n<\/p>\n

– You are on the performance team, or any successor team thereto, at the time
\nof termination of employment;<\/p>\n

– You have completed at least one year of active service since the award date
\nof grant;<\/p>\n

– You have reached age 55 with 15 years of service at the time of termination
\nof employment (age 60 with 15 years of service for the Chairman and CEO); and\n<\/p>\n

– Appropriate senior management, the Committee or the Board, as appropriate,
\ndo not exercise their discretion to cancel or otherwise limit the vesting of the
\nRSUs.<\/p>\n<\/p>\n

Death or Disability<\/em><\/p>\n<\/p>\n

Upon your death all RSUs covered by this Agreement shall vest immediately and
\nyour Vesting Date shall be your date of death. If you are disabled as described
\nin Section 12 of the Plan, your RSUs shall continue to vest according to the
\nterms of your Award.<\/p>\n<\/p>\n

Leave of Absence<\/em><\/p>\n<\/p>\n

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

\n

6<\/p>\n

\n

<\/p>\n

\n

active status, your unvested RSUs will continue to vest in accordance with
\nthe terms in this document and your Equity Award Agreement.<\/p>\n<\/p>\n

Dividend Equivalents<\/strong><\/p>\n<\/p>\n

IBM shall not pay dividend equivalents on cash-settled or stock-settled
\nunvested RSU awards.<\/p>\n<\/p>\n

ii.<\/em><\/strong> RSUs Other Than Cash-Settled RSUs
\nand Cash-Settled RRSUs<\/em><\/strong><\/p>\n<\/p>\n

Settlement of Award<\/strong><\/p>\n<\/p>\n

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

iii.<\/em><\/strong> Cash-Settled RSUs including
\nCash-Settled RRSUs<\/em><\/strong><\/p>\n<\/p>\n

Settlement of Award<\/strong><\/p>\n<\/p>\n

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

b.<\/strong> Restricted Stock<\/strong><\/p>\n<\/p>\n

Settlement of Award<\/strong><\/p>\n<\/p>\n

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

\n

7<\/p>\n

\n

<\/p>\n

\n

Termination of Employment including Death, Disability and Leave of
\nAbsence<\/strong><\/p>\n<\/p>\n

Termination of Employment<\/em><\/p>\n<\/p>\n

In the event you cease to be an employee (other than on account of death or
\nare disabled as described in Section 12 of the Plan) prior to the Vesting
\nDate(s) in your Equity Award Agreement, all then unvested shares of Restricted
\nStock under your Award shall be canceled (unless your Equity Award Agreement
\nprovides otherwise).<\/p>\n<\/p>\n

Death or Disability<\/em><\/p>\n<\/p>\n

Upon your death all unvested shares of Restricted Stock covered by your
\nEquity Award Agreement shall vest immediately and your Vesting Date shall be
\nyour date of death. If you are disabled as described in Section 12 of the Plan,
\nyour unvested shares of Restricted Stock shall continue to vest according to the
\nterms of your Equity Award Agreement.<\/p>\n<\/p>\n

Leave of Absence<\/em><\/p>\n<\/p>\n

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

Dividends and Other Rights<\/strong><\/p>\n<\/p>\n

During the period that the Restricted Stock is held by IBM hereunder, such
\nstock will remain on the books of IBM in your name, may be voted by you, and any
\napplicable dividends shall be paid to you. Shares issued in stock splits or
\nsimilar events which relate to Restricted Stock then held by IBM in your name
\nshall be issued in your name but shall be held by IBM under the terms hereof.\n<\/p>\n<\/p>\n

Transferability<\/strong><\/p>\n<\/p>\n

Shares of Restricted Stock awarded under your Equity Award Agreement cannot
\nbe sold, assigned, transferred, pledged or otherwise encumbered prior to the
\nvesting of your Award as set forth in your Equity Award Agreement and any such
\nsale, assignment, transfer, pledge or encumbrance, or any attempt thereof, shall
\nbe void.<\/p>\n

\n

8<\/p>\n

\n

<\/p>\n

\n

c.<\/strong> Stock Options (“Options”) and Stock Appreciation
\nRights (“SARs”)<\/strong><\/p>\n<\/p>\n

i.<\/em><\/strong> All Option and SAR
\nAwards<\/em><\/strong><\/p>\n<\/p>\n

Termination of Employment including Death, Disability and Leave of
\nAbsence<\/strong><\/p>\n<\/p>\n

Termination of Employment<\/em><\/p>\n<\/p>\n

In the event you cease to be an employee (other than on account of death or
\nare disabled as described in Section 12 of the Plan):<\/p>\n<\/p>\n

– Any Options or SARs that are not exercisable as of the date your employment
\nterminates shall be canceled immediately (unless your Equity Award Agreement
\nprovides otherwise), and<\/p>\n<\/p>\n

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

Death or Disability<\/em><\/p>\n<\/p>\n

In the event of your death, all Options or SARs shall become fully
\nexercisable and remain exercisable for their full term.<\/p>\n<\/p>\n

In the event you are disabled (as described in Section 12 of the Plan), any
\nunvested Options or SARs shall continue to vest and be exercisable.<\/p>\n

\n

9<\/p>\n

\n

<\/p>\n

\n

Leave of Absence<\/em><\/p>\n<\/p>\n

In the event of a management approved leave of absence, any unvested Options
\nor SARs shall continue to vest and be exercisable as if you were an active
\nemployee of the Company, subject to the terms in this document and your Equity
\nAward Agreement. If you return to active status, your Options or SARs will
\ncontinue to vest and be exercisable in accordance with their terms. If you do
\nnot return to active status,<\/p>\n<\/p>\n

– Your unvested Options or SARs will be canceled immediately; and<\/p>\n<\/p>\n

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

Termination of Employment for Cause<\/strong><\/p>\n<\/p>\n

If your employment terminates for cause, all exercisable and not exercisable
\nOptions or SARs are canceled immediately.<\/p>\n<\/p>\n

ii.<\/em><\/strong> All SAR Awards<\/em><\/strong><\/p>\n<\/p>\n

Settlement of Award<\/strong><\/p>\n<\/p>\n

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

\n

10<\/p>\n

\n

<\/p>\n

\n

d.<\/strong> Performance Share Units (“PSUs”)<\/strong><\/p>\n<\/p>\n

Termination of Employment, including Death and Disability, and Leave
\nof Absence<\/strong><\/p>\n<\/p>\n

Termination of Employment and Leave of Absence<\/em><\/p>\n<\/p>\n

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

However, your unvested PSUs will continue to vest upon termination of
\nemployment or the time you cease to be an active, full-time employee if all of
\nthe following criteria are met:<\/p>\n<\/p>\n

– You are on the performance team, or any successor team thereto, at the time
\nof termination of employment or the time you cease to be an active, full-time
\nemployee;<\/p>\n

– You have completed at least one year of active service during the PSU
\nPerformance Period (as set forth in your Equity Award Agreement);<\/p>\n

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

– The Committee has certified that all performance conditions have been met;
\nand<\/p>\n

– Appropriate senior management, the Committee or the Board, as appropriate,
\ndo not exercise their discretion to cancel or otherwise limit the payout.<\/p>\n<\/p>\n

Death or Disability<\/em><\/p>\n<\/p>\n

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

\n

11<\/p>\n

\n

<\/p>\n

\n

Terms and Conditions of Your Equity Award:<\/strong>\n<\/p>\n

Provisions that apply to specific countries<\/strong>\n<\/p>\n

\n

a.<\/strong> Denmark<\/strong><\/p>\n<\/p>\n

i.<\/em><\/strong> All Awards<\/em><\/strong><\/p>\n<\/p>\n

Non-Solicitation<\/strong><\/p>\n<\/p>\n

The following part of the above non-solicitation provision does not apply to
\nthose individuals with the home country of Denmark: “In consideration of your
\nAward, you agree that during your employment with the Company and for two years
\nfollowing the termination of your employment for any reason, you will not
\ndirectly or indirectly hire, solicit or make an offer to any employee of the
\nCompany to be employed or perform services outside of the Company.”<\/p>\n

\n

12<\/p>\n

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