Exhibit 10.1

 

EXECUTION VERSION

 

$10,000,000,000

 

5-YEAR CREDIT AGREEMENT

 

among

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

 

The Subsidiary Borrowers Parties Hereto

 

The Several Lenders
from Time to Time Parties Hereto

 

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent

 

BARCLAYS CAPITAL, BNP PARIBAS AND CITIBANK, N.A.,
as Syndication Agents

 

and

 

DEUTSCHE BANK SECURITIES INC.,

HSBC BANK USA, NATIONAL ASSOCIATION,

MITSUBISHI UFJ FINANCIAL GROUP, INC., MIZUHO CORPORATE BANK, LTD.,
ROYAL BANK OF CANADA AND

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Documentation Agents

 

Dated as of November 10, 2011

 

J.P. MORGAN SECURITIES LLC, BARCLAYS CAPITAL, BNP PARIBAS
SECURITIES CORP. and CITIGROUP GLOBAL MARKETS INC.,
as Joint Lead Arrangers and Joint Bookrunners

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

SECTION 1.

DEFINITIONS

 

1

 

 

 

 

1.1

Defined Terms

 

1

1.2

Other Definitional Provisions

 

20

 

 

 

 

SECTION 2.

AMOUNT AND TERMS OF US$ FACILITIES

 

21

 

 

 

 

2.1

Revolving Credit Commitments

 

21

2.2

Procedure for Revolving Credit Borrowing

 

21

2.3

Conversion and Continuation Options for Revolving Credit Loans

 

22

2.4

Minimum Amounts and Maximum Number of Eurodollar Tranches

 

22

2.5

Swing Line Loans

 

23

2.6

Optional Prepayments of Revolving Credit Loans and Swing Line Loans

 

24

2.7

The Competitive Loans

 

24

2.8

Procedure for Competitive Loan Borrowing

 

25

2.9

Repayment of US$ Loans; Evidence of Debt

 

27

2.10

Interest Rates and Payment Dates

 

28

2.11

Fees

 

29

2.12

Computation of Interest and Fees

 

29

2.13

Termination or Reduction of Revolving Credit Commitments

 

29

2.14

Inability to Determine Interest Rate

 

30

2.15

Pro Rata Treatment and Payments

 

30

2.16

Illegality

 

31

2.17

Requirements of Law

 

31

2.18

Taxes

 

34

2.19

Indemnity

 

37

2.20

Change of Lending Office

 

37

2.21

Extension of Termination Date

 

37

2.22

Defaulting Lenders

 

39

 

 

 

 

SECTION 3.

LOCAL CURRENCY FACILITIES

 

40

 

 

 

 

3.1

Terms of Local Currency Facilities

 

40

3.2

Currency Fluctuations, etc.

 

42

3.3

Refunding of Local Currency Loans

 

43

3.4

Existing Local Currency Facilities, etc.

 

45

 

 

 

 

SECTION 4.

REPRESENTATIONS AND WARRANTIES

 

45

 

 

 

 

4.1

Organization; Powers

 

45

4.2

Authorization

 

46

4.3

Enforceability

 

46

4.4

Governmental Approvals

 

46

4.5

Financial Statements

 

46

 

i

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Page

 

 

 

 

4.6

No Material Adverse Change

 

46

4.7

No Material Litigation, etc.

 

46

4.8

Federal Reserve Regulations

 

47

4.9

Investment Company Act, etc.

 

47

4.10

Tax Returns

 

47

4.11

No Material Misstatements

 

47

4.12

ERISA

 

47

4.13

Use of Proceeds

 

47

 

 

 

 

SECTION 5.

CONDITIONS PRECEDENT

 

48

 

 

 

 

5.1

Conditions to Initial US$ Loans

 

48

5.2

Conditions to Each US$ Loan

 

48

 

 

 

 

SECTION 6.

AFFIRMATIVE COVENANTS

 

50

 

 

 

 

6.1

Existence; Business and Properties

 

50

6.2

Financial Statements, Reports, etc.

 

50

6.3

Notices

 

51

 

 

 

 

SECTION 7.

NEGATIVE COVENANTS

 

52

 

 

 

 

7.1

Limitation on Secured Debt and Sale and Leaseback Transactions

 

52

7.2

Mergers, Consolidations and Sales of Assets

 

52

7.3

Margin Regulations

 

53

7.4

Consolidated Net Interest Expense Ratio

 

53

 

 

 

 

SECTION 8.

EVENTS OF DEFAULT

 

53

 

 

 

 

SECTION 9.

THE ADMINISTRATIVE AGENT

 

55

 

 

 

 

9.1

Appointment

 

55

9.2

Delegation of Duties

 

55

9.3

Exculpatory Provisions

 

55

9.4

Reliance by Administrative Agent

 

55

9.5

Notice of Default

 

56

9.6

Non-Reliance on Administrative Agent and Other Lenders

 

56

9.7

Indemnification

 

56

9.8

Administrative Agent in Its Individual Capacity

 

57

9.9

Successor Administrative Agent

 

57

9.10

Syndication and Documentation Agents

 

57

 

 

 

 

SECTION 10.

GUARANTEE

 

58

 

 

 

 

10.1

Guarantee

 

58

10.2

No Subrogation

 

58

10.3

Amendments, etc. with respect to the Subsidiary Borrower Obligations

 

58

10.4

Guarantee Absolute and Unconditional

 

59

 

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Page

 

 

 

 

10.5

Reinstatement

 

60

10.6

Payments

 

60

10.7

Judgments Relating to Guarantee

 

60

10.8

Independent Obligations

 

60

 

 

 

 

SECTION 11.

MISCELLANEOUS

 

61

 

 

 

 

11.1

Amendments and Waivers

 

61

11.2

Notices

 

61

11.3

No Waiver; Cumulative Remedies

 

62

11.4

Survival of Representations and Warranties

 

62

11.5

Payment of Expenses

 

62

11.6

Participations

 

63

11.7

Transfers of Competitive Loans

 

64

11.8

Assignments

 

65

11.9

The Register; Disclosure; Pledges to Federal Reserve Banks

 

66

11.10

Changing Designations of Swing Line Lenders and Competitive Loan Lenders

 

66

11.11

Replacement of Lenders under Certain Circumstances

 

67

11.12

Adjustments; Set-off

 

67

11.13

Counterparts

 

68

11.14

Severability

 

68

11.15

Integration

 

68

11.16

GOVERNING LAW

 

68

11.17

Submission To Jurisdiction; Waivers

 

68

11.18

Judgments Relating to Subsidiary Borrowers

 

69

11.19

Acknowledgements

 

69

11.20

WAIVERS OF JURY TRIAL

 

70

11.21

Confidentiality

 

70

11.22

Binding Effect; Successors and Assigns

 

70

11.23

Incremental Revolving Credit Commitments

 

71

11.24

USA PATRIOT Act

 

72

11.25

No Fiduciary Duty, etc

 

72

 

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Page

 

 

 

 

SCHEDULES

 

 

 

 

 

 

 

SCHEDULE 1.1

Revolving Credit Commitments and Swing Line Commitments of Lenders

 

 

SCHEDULE 3.4

Certain Existing Local Currency Facilities

 

 

SCHEDULE 6.2(c)

Compliance Certificate

 

 

 

 

 

 

EXHIBITS

 

 

 

 

 

 

 

EXHIBIT A-1

Form of Competitive Loan Confirmation

 

 

EXHIBIT A-2

Form of Competitive Loan Offer

 

 

EXHIBIT A-3

Form of Competitive Loan Request

 

 

EXHIBIT B-1

Form of Subsidiary Borrower Notice and Designation

 

 

EXHIBIT B-2

Form of Subsidiary Borrower Request

 

 

EXHIBIT C

Form of Closing Certificate

 

 

EXHIBIT D-1

Form of Opinion of Simpson Thacher & Bartlett LLP

 

 

EXHIBIT D-2

Form of Opinion of Assistant General Counsel of IBM

 

 

EXHIBIT E

Form of Assignment and Assumption

 

 

EXHIBIT F

Form of Local Currency Facility Addendum

 

 

EXHIBIT G-1

Form of Revolving Credit Loan Promissory Note

 

 

EXHIBIT G-2

Form of Competitive Loan Promissory Note

 

 

EXHIBIT H-1

Form of Lender Addendum

 

 

EXHIBIT H-2

Form of Subsidiary Borrower Addendum

 

 

EXHIBIT I-1

Form of New Lender Supplement

 

 

EXHIBIT I-2

Form of Incremental Commitment Supplement

 

 

EXHIBIT J

Form of Extension Request

 

 

EXHIBITS K-1 through K-4

Forms of U.S. Tax Compliance Certificate

 

 

 

iv

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CREDIT AGREEMENT, dated as of November 10, 2011, among INTERNATIONAL BUSINESS
MACHINES CORPORATION, a New York corporation (“IBM”), each Subsidiary Borrower
(as hereinafter defined), the several banks and other financial institutions
from time to time parties to this Agreement (the “Lenders”), JPMORGAN CHASE
BANK, N.A., as administrative agent for the Lenders hereunder (in such capacity,
the “Administrative Agent”), BARCLAYS CAPITAL, BNP PARIBAS AND CITIBANK, N.A.,
as syndication agents (in such capacity, the “Syndication Agents”) and DEUTSCHE
BANK SECURITIES INC., HSBC BANK USA, NATIONAL ASSOCIATION, MITSUBISHI UFJ
FINANCIAL GROUP, INC., MIZUHO CORPORATE BANK, LTD., ROYAL BANK OF CANADA AND
WELLS FARGO BANK, NATIONAL ASSOCIATION, as documentation agents (in such
capacity, the “Documentation Agents”).

 

The parties hereto hereby agree as follows:

 

SECTION 1.           DEFINITIONS

 

1.1           Defined Terms.  As used in this Agreement, the following terms
shall have the following meanings:

 

“ABR”:  for any day, a rate per annum (rounded upwards, if necessary, to the
next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on such
day, (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%
and (c) the Eurodollar Rate that would be calculated as of such day (or, if such
day is not a Business Day, as of the next preceding Business Day) in respect of
a proposed Eurodollar Loan with a one-month Interest Period plus 1.0%.  For
purposes hereof:  “Prime Rate” shall mean the rate of interest per annum
publicly announced from time to time by JPMorgan Chase Bank as its prime rate in
effect at its principal office in New York City (each change in the Prime Rate
to be effective on the date such change is publicly announced). If for any
reason the Administrative Agent shall have determined (which determination shall
be conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations in accordance with the
terms thereof, the ABR shall be determined without regard to clause (b) of the
first sentence of this definition until the circumstances giving rise to such
inability no longer exist.  Any change in the ABR due to a change in the Prime
Rate, the Federal Funds Effective Rate or such Eurodollar Rate shall be
effective on the effective day of such change in the Prime Rate, the Federal
Funds Effective Rate or such Eurodollar Rate, respectively.

 

“ABR Loans”:  Loans the rate of interest applicable to which is based upon the
ABR.

 

“Act”:  as defined in Section 11.24.

 

“Affiliate”:  as to any Person, any other Person that, directly or indirectly,
is in control of, is controlled by, or is under common control with, such
Person.  For purposes of this definition, “control” of a Person means the power,
directly or indirectly, either to (a) vote 25% or more of the securities having
ordinary voting power for the election of directors (or persons performing
similar functions) of such Person or (b) direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.

 

--------------------------------------------------------------------------------

 

“Aggregate Outstanding Revolving Extensions of Credit”:  as to any Lender at any
time, the aggregate principal amount of all Revolving Credit Loans, Swing Line
Loans, Local Currency Loans (US$ Equivalent) and Funded Participations made by
such Lender then outstanding.

 

“Aggregate Outstanding US$ Revolving Extensions of Credit”:  as to any Lender at
any time, the aggregate principal amount of all Revolving Credit Loans, Swing
Line Loans and Funded Participations in respect of Swing Line Loans made by such
Lender then outstanding.

 

“Agreement”:  this Credit Agreement, as amended, supplemented or otherwise
modified from time to time.

 

“Applicable Index Rate” in respect of any Index Rate Competitive Loan of a
specified maturity requested pursuant to an Index Rate Competitive Loan Request,
the rate of interest, determined on the basis of the rate for deposits in
Dollars with a maturity comparable to the maturity applicable to such Index Rate
Competitive Loan, appearing on the Reuters Screen LIBOR01 Page as of 11:00 A.M.,
London time, two Business Days prior to the Borrowing Date in respect of such
Index Rate Competitive Loan.  In the event that such rate does not appear on
such page (or otherwise on such screen), the “Applicable Index Rate” shall be
determined by reference to such other publicly available service for displaying
eurodollar rates as may be agreed upon by the Administrative Agent and IBM or,
in the absence of such agreement, the “Applicable Index Rate” shall instead be
the average (rounded upward, if necessary, to the nearest 1/16th of 1%) of the
respective rates notified to the Administrative Agent by each of the Reference
Lenders as the rate at which such Reference Lender is offered Dollar deposits at
or about 10:00 A.M., New York City time, two Business Days prior to the
Borrowing Date in respect of such Index Rate Competitive Loan, in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations in respect of its Eurodollar Loans are then being conducted for
delivery on such Borrowing Date with a maturity comparable to the maturity
applicable to such Index Rate Competitive Loan and in an amount comparable to
the amount of such Index Rate Competitive Loan.

 

                “Applicable Margin”:  on any date, with respect to (a) any
Eurodollar Loan, a rate per annum equal to the Credit Default Swap Spread in
effect for Eurodollar Loans on such date or (b) any ABR Loan, a rate per annum
equal to the Credit Default Swap Spread in effect for ABR Loans on such date
less 1% per annum (but not less than 0%).  Notwithstanding the foregoing, (x)
the non-default Applicable Margin for Eurodollar Loans in effect at any time
shall not be less than the minimum applicable margin (the “Minimum Eurodollar
Applicable Margin”), and shall not exceed the maximum applicable margin (the
“Maximum Eurodollar Applicable Margin”) corresponding to the Status then in
effect on such date of determination as set forth below and (y) the non-default
Applicable Margin for ABR Loans in effect at any time shall not be less than the
minimum applicable margin (the “Minimum ABR Applicable Margin”), and shall not
exceed the maximum applicable margin (the “Maximum ABR Applicable Margin”)
corresponding to the Status then in effect on such date of determination as set
forth below.

 

 

 

Level I
Status

 

Level II
Status

 

Level III
Status

 

Level IV
Status

 

Level V
Status

 

Minimum Eurodollar Applicable Margin

 

0.10

%

0.10

%

0.20

%

0.25

%

0.30

%

Maximum Eurodollar Applicable Margin

 

0.75

%

0.75

%

0.875

%

1.00

%

1.125

%

Minimum ABR Applicable Margin

 

0.00

%

0.00

%

0.00

%

0.00

%

0.00

%

Maximum ABR Applicable Margin

 

0.00

%

0.00

%

0.00

%

0.00

%

0.125

%

 

2

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If at any time the Credit Default Swap Spread is unavailable, IBM and the
Lenders shall negotiate in good faith (for a period of up to thirty days after
the Credit Default Swap Spread becomes unavailable (such thirty-day period, the
“Negotiation Period”)) to agree on an alternative method for establishing the
Applicable Margin.  The Applicable Margin at any date of determination thereof
which falls during the Negotiation Period shall be based upon the then most
recently available quote of the Credit Default Swap Spread.  If no such
alternative method is agreed upon during the Negotiation Period, the Applicable
Margin at any date of determination subsequent to the end of the Negotiation
Period shall be the greater of (i) a rate per annum based upon the then most
recently available quote of the Credit Default Swap Spread (but in no event (A)
greater than the Maximum Eurodollar Applicable Margin or the Maximum ABR
Applicable Margin, as the case may be or (B) less than the Minimum Eurodollar
Applicable Margin or the Minimum ABR Applicable Margin, as the case may be) and
(ii) a rate per annum equal to 75% of the Maximum Eurodollar Applicable Margin
or the Maximum ABR Applicable Margin, as the case may be.

 

“Attributable Debt”:  as of any date of determination, the present value
(discounted semiannually at the Attributable Interest Rate) of the obligation of
a lessee for rental payments pursuant to any Sale and Leaseback Transaction
(reduced by the amount of the rental obligations of any sublessee of all or part
of the same property) during the remaining term of such Sale and Leaseback
Transaction (including any period for which the lease relating thereto has been
extended), such rental payments not to include amounts payable by the lessee for
maintenance and repairs, insurance, taxes, assessments and similar charges and
for contingent rents (such as those based on sales).  In the case of any Sale
and Leaseback Transaction in which the lease is terminable by the lessee upon
the payment of a penalty, such rental payments shall be considered for purposes
of this definition to be the lesser of (a) the rental payments to be paid under
such Sale and Leaseback Transaction until the first date (after the date of such
determination) upon which it may be so terminated plus the then applicable
penalty upon such termination and (b) the rental payments required to be paid
during the remaining term of such Sale and Leaseback Transaction (assuming such
termination provision is not exercised).

 

“Attributable Interest Rate”:  as of the date of its determination, the weighted
average of the interest rates (or the effective rate in the case of original
issue discount securities or discount securities) of (a) all Outstanding
Securities (as such term is defined in the 1990 Indenture) of IBM under the 1990
Indenture and all securities of IBM issued and outstanding (as defined in the
1985 Indenture) under the 1985 Indenture to which Sections 6.05 and 6.06 of the
1985 Indenture apply (and whose application has not been waived), or (b) at any
time when no securities of IBM referred to in clause (a) of this sentence are
outstanding, all outstanding Loans and all other outstanding Funded Debt of IBM.

 

“Available Revolving Credit Commitment”:  as to any Lender, at any time of
determination, an amount equal to such Lender’s Revolving Credit Commitment at
such time minus such Lender’s Aggregate Outstanding Revolving Extensions of
Credit at such time.

 

3

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“Banking Day”:  in respect of any city, any day on which commercial banks are
open for business (including dealings in foreign exchange and foreign currency
deposits) in that city.

 

“Bankruptcy Event”:  with respect to any Person, such Person becomes the subject
of a bankruptcy or insolvency proceeding, other than via an Undisclosed
Administration, or has had a receiver, conservator, trustee, administrator,
custodian, assignee for the benefit of creditors or similar Person charged with
the reorganization or liquidation of its business appointed for it, or, in the
good faith determination of the Administrative Agent, has taken any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any such proceeding or appointment, provided that a Bankruptcy Event shall not
result solely by virtue of any ownership interest, or the acquisition of any
ownership interest, in such Person by a Governmental Authority or
instrumentality thereof, provided, further, that such ownership interest does
not result in or provide such Person with immunity from the jurisdiction of
courts within the United States or from the enforcement of judgments or writs of
attachment on its assets or permit such Person (or such Governmental Authority
or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or
agreements made by such Person.

 

“Board”:  the Board of Governors of the Federal Reserve System of the United
States (or any successor).

 

“Borrower”:  as applicable, IBM or the relevant Subsidiary Borrower.

 

“Borrower Obligations”:  any and all obligations of any Borrower for the payment
of money hereunder or in respect hereof, whether absolute or contingent
(including, in the case of IBM, its obligations pursuant to the guarantee
contained in Section 10).

 

“Borrowing Date”:  any Business Day specified in a notice pursuant to Section
2.2, 2.5 or 2.8 as a date on which the relevant Borrower requests US$ Loans to
be made hereunder and, for the purposes of Section 3, any other date on which
the relevant Borrower requests Local Currency Loans to be made under a Local
Currency Facility.

 

“Business Day”:  a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close,
except that, when used in connection with a Eurodollar Loan or an Index Rate
Competitive Loan with respect to which the Eurodollar Rate or the Applicable
Index Rate is determined based upon the Reuters screen in accordance with the
definition of Eurodollar Rate or Applicable Index Rate, as the case may be,
“Business Day” shall mean any Business Day on which dealings in foreign
currencies and exchange between banks may be carried on in London, England and
New York, New York.

 

“Calculation Date”:  (a) the last Business Day of each calendar month and (b) at
the Administrative Agent’s option in its sole discretion, any Business Day on
which a Borrower gives the Administrative Agent a notice requesting US$ Loans to
be made hereunder.

 

“Capital Lease”:  with respect to any Person, any obligation of such Person to
pay rent or other amounts under a lease with respect to any property (whether
real, personal or mixed) acquired or leased by such Person that is required to
be accounted for as a liability on a balance sheet of such Person in accordance
with GAAP.

 

“Code”:  the Internal Revenue Code of 1986, as amended from time to time.

 

4

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“Commitment Percentage”:  as to any Lender at any time, the percentage which
such Lender’s Revolving Credit Commitment then constitutes of the aggregate
Revolving Credit Commitments (or, at any time after the Revolving Credit
Commitments shall have expired or terminated, the percentage which the aggregate
principal amount of such Lender’s Loans and Funded Participations then
outstanding constitutes of the aggregate principal amount of the Loans and
Funded Participations of all Lenders then outstanding).

 

“Commitments”:  the collective reference to the Revolving Credit Commitments and
any commitments to make Local Currency Loans under any Local Currency Facility.

 

“Competitive Loan”:  each loan made pursuant to Section 2.7.

 

“Competitive Loan Assignee”:  as defined in Section 11.7(a).

 

“Competitive Loan Assignment”:  any assignment by a Competitive Loan Lender to a
Competitive Loan Assignee of a Competitive Loan; any such Competitive Loan
Assignment to be registered in the Register must set forth, in respect of the
Competitive Loan Assignee thereunder, the full name of such Competitive Loan
Assignee, its address for notices, its lending office address (in each case with
telephone and facsimile transmission numbers) and payment instructions for all
payments to such Competitive Loan Assignee, and must contain an agreement by
such Competitive Loan Assignee to comply with the provisions of Sections 2.18,
2.20, 11.7 and 11.21.

 

“Competitive Loan Borrowing Period”:  the period from and including the
Effective Date until the earlier of (a) the date which is 14 days prior to the
Termination Date and (b) the last day of the Revolving Credit Commitment Period.

 

“Competitive Loan Confirmation”:  each confirmation by the relevant Borrower of
its acceptance of Competitive Loan Offers, which Competitive Loan Confirmation
shall be substantially in the form of Exhibit A-1 and shall be delivered to the
Administrative Agent in writing or by facsimile transmission.

 

“Competitive Loan Lender”:  each Lender that has agreed to offer to make
Competitive Loans hereunder and each other Lender that shall hereafter be
designated as a Competitive Loan Lender in accordance with the provisions of
Sections 11.7 and 11.10.

 

“Competitive Loan Maturity Date”:  as to any Competitive Loan, the date
specified by the relevant Borrower pursuant to Section 2.8(d)(ii) in its
acceptance of the related Competitive Loan Offer.

 

“Competitive Loan Offer”:  each offer by a Competitive Loan Lender to make
Competitive Loans pursuant to a Competitive Loan Request, which Competitive Loan
Offer shall contain the information specified in Exhibit A-2 and shall be
delivered to the Administrative Agent by telephone, immediately confirmed by
facsimile transmission.

 

“Competitive Loan Request”:  each request by the relevant Borrower for
Competitive Loan Lenders to submit bids to make Competitive Loans, which request
shall contain the information in respect of such requested Competitive Loans
specified in Exhibit A-3 and shall be delivered to the Administrative Agent in
writing or by facsimile transmission, or by telephone, immediately confirmed by
facsimile transmission.

 

5

--------------------------------------------------------------------------------

 

“Consolidated Adjusted Cash Flow”:  for any period, earnings before income taxes
of IBM and its consolidated Subsidiaries for such period, excluding gains or
losses from the divestiture or sale of a business, plus, to the extent deducted
in arriving at earnings before income taxes of IBM and its consolidated
Subsidiaries for such period, the sum of (i) Consolidated Net Interest Expense,
(ii) depreciation expense, (iii) amortization expense and (iv) restructuring
charges minus the sum of (a) cash payments made during such period in respect of
restructuring charges, (b) payments made during such period for plant, rental
machines and other property excluding acquisitions of businesses (net of
proceeds received during such period from dispositions of plant, rental machines
and other property excluding divestitures or sales of businesses) and (c)
investment in software for such period, all as determined on a consolidated
basis in accordance with GAAP and, where applicable, determined by reference to
the consolidated statement of earnings or (including in the case of clauses (b)
and (c) above) statement of cash flows of IBM and its consolidated Subsidiaries.

 

“Consolidated Net Interest Expense”:  for any period, (a) total interest cost of
IBM and the Subsidiaries for such period minus (b) interest income of IBM and
the Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP.

 

“Consolidated Net Interest Expense Ratio”:  for any period, the ratio of
Consolidated Adjusted Cash Flow for such period to Consolidated Net Interest
Expense for such period.

 

“Consolidated Net Tangible Assets”:  at any date, the total assets appearing on
the consolidated statement of financial position of IBM and the Subsidiaries
most recently delivered to the Administrative Agent pursuant to Section 4.5,
6.2(a) or 6.2(b), as the case may be, less (a) all current liabilities as shown
on such statement and (b) intangible assets.  As used herein, “intangible
assets” means the value (net of any applicable reserves) as shown on or
reflected in such statement, of: (i) all trade names, trademarks, licenses,
patents, copyrights and goodwill; (ii) organizational and development costs;
(iii) deferred charges (other than prepaid items such as insurance, taxes,
interest, commissions, rents and similar items and tangible assets being
amortized); and (iv) unamortized debt discount and expense, less unamortized
premium; but in no event shall the term “intangible assets” include program
products.

 

“Controlled Person”:  any corporation, partnership or other entity of which
shares of stock or other ownership interests having ordinary voting power (other
than stock or such other ownership interests having such power only by reason of
the happening of a contingency) to elect a majority of the board of directors or
other managers of such corporation, partnership or other entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by IBM.

 

“Credit Default Swap Spread”:  at any determination date, the credit default
swap spread applicable to senior unsecured debt of IBM that is not guaranteed by
any other Person or subject to any other credit enhancement interpolated to the
Termination Date (or if the Termination Date is less than one year from such
determination date, the credit default swap spread applicable to senior
unsecured debt of IBM that is not guaranteed by any other Person or subject to
any other credit enhancement with a maturity of one year), in each case
determined as of the close of business on the Business Day immediately preceding
such determination date, as interpolated and reported by Markit Group Limited or
any successor thereto. The Credit Default Swap Spread is determined (a) in the
case of ABR Loans, initially on the Effective Date and thereafter on the first
Business Day of each calendar quarter, and (b) in the case of any Eurodollar
Loan, on the second Business Day prior to the first day of the Interest Period
of such Eurodollar Loan (and, if applicable, the last Business Day prior to the
continuation of such Eurodollar Loan), and

 

6

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thereafter, in the case of any Eurodollar Loan having an Interest Period of
greater than three months, at the end of each successive three-month period
during such Interest Period, with such Credit Default Swap Spread, as so
determined, to be in effect as to such Eurodollar Loan for each day commencing
with the first day of the applicable Interest Period until subsequently
re-determined in accordance with the foregoing.

 

“Credit Party”:  the Administrative Agent and the Swing Line Lenders.

 

“Debt”:  with respect to any Person, without duplication, all indebtedness
representing money borrowed which is created, assumed, incurred or guaranteed in
any manner by such Person or for which such Person is otherwise responsible or
liable (whether by agreement to purchase indebtedness of, or to supply funds to
or invest in, others).

 

“Default”:  any of the events specified in Section 8, whether or not any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.

 

“Defaulting Lender”:  any Lender that (a) has failed, within two Business Days
of the date required to be funded or paid, to (i) fund any portion of its Loans,
(ii) fund any portion of its participations in Swing Line Loans or (iii) pay
over to any Credit Party any other amount required to be paid by it hereunder,
unless, in the case of clause (i) above, such Lender notifies the Administrative
Agent in writing that such failure is the result of such Lender’s good faith
determination that a condition precedent to funding (specifically identified and
including the particular default, if any) has not been satisfied, (b) has
notified IBM or any Credit Party in writing, or has made a public statement to
the effect, that it does not intend or expect to comply with any of its funding
obligations under this Agreement (unless such writing or public statement
indicates that such position is based on such Lender’s good faith determination
that a condition precedent (specifically identified and including the particular
default, if any) to funding a loan under this Agreement cannot be satisfied) or
generally under other agreements in which it commits to extend credit, (c) has
failed, within three Business Days after request by a Credit Party, acting in
good faith, to provide a certification in writing from an authorized officer of
such Lender that it will comply with its obligations (and is financially able to
meet such obligations) to fund prospective Loans and participations in then
outstanding Swing Line Loans under this Agreement, provided that such Lender
shall cease to be a Defaulting Lender pursuant to this clause (c) upon such
Credit Party’s receipt of such certification in form and substance satisfactory
to it and the Administrative Agent, or (d) has become the subject of a
Bankruptcy Event.

 

“Dollars” and “$”:  dollars in lawful currency of the United States of America.

 

“Domestic Subsidiary Borrower”:  any Subsidiary Borrower which (a) is organized
under the laws of the United States of America, any state, Territory or
possession thereof or the District of Columbia or (b) conducts a substantial
portion of its business or maintains a substantial portion of its property or
assets in any one or more of the foregoing jurisdictions.

 

“Effective Date”:  as defined in Section 11.22(a).

 

“ERISA”:  the Employee Retirement Income Security Act of 1974, as amended from
time to time, and the rules and regulations promulgated thereunder, as from time
to time in effect.

 

“Eurodollar Loans”:  Revolving Credit Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.

 

7

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“Eurodollar Rate”:  with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, the rate of interest determined on the basis of
the rate for deposits in Dollars for a period equal to such Interest Period
commencing on the first day of such Interest Period appearing on the Reuters
Screen LIBOR01 Page as of 11:00 A.M., London time, two Business Days prior to
the beginning of such Interest Period.  In the event that such rate does not
appear on such page (or otherwise on such screen), the “Eurodollar Rate” shall
be determined by reference to such other publicly available service for
displaying eurodollar rates as may be agreed upon by the Administrative Agent
and IBM or, in the absence of such agreement, the “Eurodollar Rate” shall
instead be the rate per annum equal to the average (rounded upward, if
necessary, to the nearest 1/16th of 1%) of the respective rates notified to the
Administrative Agent by each of the Reference Lenders as the rate at which such
Reference Lender is offered Dollar deposits at or about 10:00 A.M., New York
City time, two Business Days prior to the beginning of such Interest Period, in
the interbank eurodollar market where the eurodollar and foreign currency and
exchange operations in respect of its Eurodollar Loans are then being conducted
for delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of its Eurodollar
Loan to be outstanding during such Interest Period.

 

“Eurodollar Tranche”:  the collective reference to Eurodollar Loans the then
current Interest Periods with respect to all of which begin on the same date and
end on the same later date (whether or not such Eurodollar Loans shall
originally have been made on the same day).

 

“Event of Default”:  any of the events specified in Section 8, provided that all
requirements for the giving of notice and/or the lapse of time have been
satisfied.

 

“Exchange Rate”:  with respect to any Local Currency on a particular date, the
rate at which such Local Currency may be exchanged into Dollars, as set forth on
such date on the relevant Reuters currency page.  In the event that such rate
does not appear on any Reuters currency page, the “Exchange Rate” with respect
to such Local Currency shall be determined by reference to such other publicly
available service for displaying exchange rates as may be agreed upon by the
Administrative Agent and IBM or, in the absence of such agreement, such
“Exchange Rate” shall instead be the Administrative Agent’s spot rate of
exchange in the interbank market where its foreign currency exchange operations
in respect of such Local Currency are then being conducted, at or about 10:00
A.M., local time, at such date for the purchase of Dollars with such Local
Currency, for delivery two Banking Days later; provided, that if at the time of
any such determination, for any reason, no such spot rate is being quoted, the
Administrative Agent may use any reasonable method as it deems applicable to
determine such rate, and such determination shall be conclusive absent manifest
error.

 

“Existing Credit Agreement”:  the Credit Agreement, dated as of June 28, 2006,
as amended, among IBM, the subsidiary borrowers parties thereto, the lenders
parties thereto, JPMorgan Chase Bank, as administrative agent and, Barclays
Capital, BNP Paribas and Citibank, N.A., as syndication agents.

 

“Existing Termination Date”:  as defined in Section 2.21(c).

 

“Extension Request”:  as defined in Section 2.21(a).

 

“Extension Request Deadline”:  as defined in Section 2.21(b).

 

“Facility Fee Rate”:  for any day, the applicable rate per annum set forth below
based on the Status in effect on such day:

 

8

--------------------------------------------------------------------------------

 

Level I
Status

 

Level II
Status

 

Level III
Status

 

Level IV
Status

 

Level V
Status

 

0.04

%

0.05

%

0.06

%

0.08

%

0.10

%

 

“FATCA”: Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with) and any current or future
regulations or official interpretations thereof.

 

“Federal Funds Effective Rate”:  for any day, the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the quotations for
such day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.

 

“Fixed Rate Competitive Loan Request”:  any Competitive Loan Request requesting
the Competitive Loan Lenders to offer to make Fixed Rate Competitive Loans.

 

“Fixed Rate Competitive Loans”:  Competitive Loans the rate of interest
applicable to which is equal to a fixed percentage rate per annum specified by
the Competitive Loan Lender making such Loan in its Competitive Loan Offer (as
opposed to a rate composed of the Applicable Index Rate plus or minus a margin).

 

“Foreign Subsidiary Borrower”:  any Subsidiary Borrower other than a Domestic
Subsidiary Borrower.

 

“Funded Debt”:  any Debt maturing by its terms more than one year from the date
of the issuance thereof, including any Debt renewable or extendible at the
option of the obligor to a date later than one year from the date of the
original issuance thereof.

 

“Funded Participations”:  any participations in Swing Line Loans or Local
Currency Loans that have actually been funded by a Lender pursuant to Section
2.5(c), 3.3(b) or 3.3(c), as applicable, and have not been repaid or converted
into Loans.

 

“GAAP”:  generally accepted accounting principles in the United States of
America in effect from time to time.

 

“Governmental Authority”:  any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.

 

“Incremental Commitment Supplement”:  as defined in Section 11.23(c).

 

“Indebtedness”:  with respect to any Person, without duplication, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services other than indebtedness to trade creditors and
service providers incurred in the ordinary course of business, (b) obligations,
contingent or otherwise, of such Person in connection with (i) letter of credit
facilities or bankers’ acceptance facilities and (ii) interest rate swap
agreements, interest rate cap agreements or similar arrangements used by a
Person to fix or cap a floating rate of interest to a negotiated maximum rate or
amount, or other similar facilities including currency

 

9

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swaps, (c) all obligations of such Person evidenced by bonds, notes, debentures
or other similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all obligations of such Person to pay rent or
other amounts under a Capital Lease, (f) all indebtedness referred to in clause
(a), (b), (c), (d) or (e) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property owned by such Person, even though such Person has
not assumed or become liable for the payment of such indebtedness, and (g) all
Indebtedness of others guaranteed by such Person.  For purposes of this
Agreement, the amount of any Indebtedness referred to in clause (b)(ii) of the
preceding sentence shall be the amounts, including any termination payments,
required to be paid to a counterparty rather than any notional amount with
regard to which payments may be calculated.  For purposes of this Agreement,
Indebtedness shall not include any indebtedness or other obligations issued by
any Person (or by a trust or other entity established by such Person or any of
its affiliates) which are primarily serviced by the cash flows of a discrete
pool of receivables, leases or other financial assets which have been sold or
transferred by IBM or any Subsidiary in securitization transactions
(“Securitization Transactions”) which, in accordance with GAAP, are accounted
for as sales for financial reporting purposes.  The definitions of Debt and
Indebtedness in this Section 1.1 shall be independent in construction,
interpretation and application.

 

“Index Rate Competitive Loan”:  Competitive Loans the rate of interest
applicable to which is equal to the Applicable Index Rate plus or minus a
margin.

 

“Index Rate Competitive Loan Request”:  any Competitive Loan Request requesting
the Competitive Loan Lenders to offer to make Index Rate Competitive Loans.

 

“Interest Payment Date”:  (a) as to any ABR Loan (other than Swing Line Loans
which do not constitute Unrefunded Swing Line Loans), the last day of each
March, June, September and December to occur while such Loan is outstanding and
the Termination Date, (b) as to any Swing Line Loan which does not constitute an
Unrefunded Swing Line Loan, the last day such Loan is outstanding, (c) as to any
Eurodollar Loan having an Interest Period of three months or less, the last day
of such Interest Period, (d) as to any Eurodollar Loan having an Interest Period
longer than three months, each day which is three months, or a whole multiple
thereof, after the first day of such Interest Period and the last day of such
Interest Period, (e) as to any Fixed Rate Competitive Loan, each interest
payment date specified by the relevant Borrower for such Loan in the related
Competitive Loan Request (including, in any event, the Competitive Loan Maturity
Date in respect of such Loan) and (f) as to any Index Rate Competitive Loan, (i)
the Competitive Loan Maturity Date in respect of such Loan and (ii) each date
(if any) occurring prior to such Competitive Loan Maturity Date which is three
months, or a whole multiple thereof, after the Borrowing Date in respect of such
Loan.

 

“Interest Period”:  with respect to any Eurodollar Loan:

 

(a)  initially, the period commencing on the borrowing or conversion date, as
the case may be, with respect to such Eurodollar Loan and ending one, two, three
or six months thereafter, as selected by the relevant Borrower in its notice of
borrowing or notice of conversion, as the case may be, given with respect
thereto; and

 

(b)  thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Eurodollar Loan and ending one, two, three or
six months thereafter, as

 

10

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selected by the relevant Borrower by irrevocable notice to the Administrative
Agent not less than three Business Days prior to the last day of the then
current Interest Period with respect thereto;

 

provided that, all of the foregoing provisions relating to Interest Periods are
subject to the following:

 

 (i)  if any Interest Period would otherwise end on a day that is not a Business
Day, such Interest Period shall be extended to the next succeeding Business Day
unless the result of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period shall end on the
immediately preceding Business Day;

 

(ii)  any Interest Period that would otherwise extend beyond the Termination
Date shall end on the Termination Date; and

 

(iii)  any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month.

 

“Joint Lead Arrangers”:  J.P. Morgan Securities LLC, Barclays Capital, the
investment banking division of Barclays Bank PLC, BNP Paribas Securities Corp.
and Citigroup Global Markets Inc., as Joint Lead Arrangers and Joint Bookrunners
pursuant to this Agreement.

 

“Lender Addendum” means an instrument, substantially in the form of Exhibit H-1,
by which a Lender becomes a party to this Agreement as of the Effective Date.

 

“Lender Parent”: with respect to any Lender, any Person as to which such Lender
is, directly or indirectly, a Subsidiary.

 

“Lender Parties”: the Administrative Agent, the Syndication Agents, the
Documentation Agents, the Swing Line Lenders and the Lenders.

 

“Level I Status”:  exists at any date if, at such date, IBM has a long-term
senior unsecured debt rating of AA or better by S&P or Aa2 or better by Moody’s.

 

“Level II Status”:  exists at any date if, at such date, Level I Status does not
exist and IBM has a long-term senior unsecured debt rating of AA- or better by
S&P or Aa3 or better by Moody’s.

 

“Level III Status”:  exists at any date if, at such date, neither Level I Status
nor Level II Status exists and IBM has a long-term senior unsecured debt rating
of A+ or better by S&P or A1 or better by Moody’s.

 

“Level IV Status”:  exists at any date if, at such date, neither Level I Status,
Level II Status nor Level III Status exists and IBM has a long-term senior
unsecured debt rating of A or better by S&P or A2 or better by Moody’s.

 

“Level V Status”:  exists at any date if, at such date, none of Level I Status,
Level II Status, Level III Status or Level IV Status exists.

 

“Lien”:  with respect to any asset, any mortgage, pledge, security interest,
lien, charge or other encumbrance whatsoever.

 

11

--------------------------------------------------------------------------------

 

“Loan”:  any US$ Loan or Local Currency Loan.

 

“Local Currency”:  Dollars and any currency other than Dollars as to which an
Exchange Rate may be calculated.

 

“Local Currency Facility”:  any credit facility designated as a “Local Currency
Facility” pursuant to a Local Currency Facility Addendum and providing for
borrowings in a Local Currency.

 

“Local Currency Facility Addendum”:  a Local Currency Facility Addendum received
by the Administrative Agent substantially in the form of Exhibit F and
conforming to the requirements of Section 3.

 

“Local Currency Facility Maximum Borrowing Amount”:  as defined in
Section 3.1(b).

 

“Local Currency Facility Stated Maximum Borrowing Amount”:  the stated amount of
any Local Currency Facility Maximum Borrowing Amount, without giving effect to
any reductions thereof effected pursuant to Section 3.2(c) or (d).

 

“Local Currency Lender”:  any Lender (or, if applicable, any affiliate, branch
or agency thereof) party to a Local Currency Facility.

 

“Local Currency Lender Maximum Borrowing Amount”:  as defined in Section 3.1(b).

 

“Local Currency Lender Stated Maximum Borrowing Amount”:  the stated amount of
any Local Currency Lender Maximum Borrowing Amount, without giving effect to any
reductions thereof pursuant to Section 3.2(c) or (d).

 

“Local Currency Loan”:  any loan made pursuant to a Local Currency Facility.

 

“Local Currency Loans (US$ Equivalent)”:  the US$ Equivalent of the relevant
Local Currency Loans.

 

“Local Currency Responsible Lender”:  with respect to any Lender, or affiliate,
branch or agency thereof, party to a Local Currency Facility, such Lender.

 

“Margin Stock”:  as defined under Regulation U.

 

“Material Adverse Effect”:  a material adverse effect on (a) the financial
condition of IBM and the Subsidiaries taken as a whole or (b) the validity or
enforceability of this Agreement or the rights or remedies of the Administrative
Agent and the Lenders hereunder.

 

“Maximum Subsidiary Borrowing Amount”:  as defined in Section 5.2(d).

 

“Moody’s”:  Moody’s Investors Service, Inc. and its successors.

 

“New Lender”:  as defined in Section 11.23(b).

 

“New Lender Supplement”:  as defined in Section 11.23(b).

 

“1985 Indenture”:  the Indenture, dated as of July 15, 1985, between IBM and The
Bank of New York (successor to Morgan Guaranty Trust Company of New York), as
Trustee.

 

12

--------------------------------------------------------------------------------

 

“1990 Indenture”:  the Indenture, dated as of March 1, 1990, between IBM and The
Bank of New York, as Trustee.

 

“Non-Excluded Taxes”:  as defined in Section 2.18(a).

 

“Non-Extending Lender”:  as defined in Section 2.21(b).

 

“Other Connection Taxes”: with respect to the Administrative Agent, any Lender
or any Transferee, taxes imposed as a result of a present or former connection
between the Administrative Agent, such Lender or such Transferee, and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from the Administrative Agent, such Lender or such
Transferee having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to, or enforced, this
Agreement, or sold or assigned an interest in any Loan or this Agreement).

 

“Other Taxes”:  all present or future stamp, court, or documentary, intangible,
recording, filing or similar taxes that arise from any payment made under, from
the execution, delivery, performance, enforcement or registration of, from the
receipt or perfection of a security interest under, or otherwise with respect
to, this Agreement, except any such taxes that are Other Connection Taxes
imposed with respect to an assignment (other than an assignment request by a
Borrower under Section 11.11).

 

“Participant”:  as defined in Section 11.6.

 

“Permitted Liens”:  (a)  pledges or deposits made to secure obligations of IBM
or a Restricted Subsidiary under workmen’s compensation laws or similar
legislation; (b) Liens imposed by law, such as materialmen’s, mechanics’,
carriers’, workmen’s, vendors’, repairmen’s or other like Liens incurred in the
ordinary course of business; (c) governmental (Federal, state or municipal)
Liens arising out of contracts for the purchase of products of IBM or a
Restricted Subsidiary, and deposits or pledges to obtain the release of any of
the foregoing Liens; (d) Liens created by or resulting from any litigation or
legal proceeding that is currently being contested in good faith by appropriate
proceedings; (e) leases made or existing on Principal Property entered into in
the ordinary course of business by IBM or a Restricted Subsidiary;
(f) landlords’ Liens under leases of Principal Property to which IBM or a
Restricted Subsidiary is a party; (g) zoning restrictions, easements, licenses
or restrictions on the use of Principal Property or minor irregularities in the
title thereto that in any such case do not interfere materially with the use of
such Principal Property by IBM or any Restricted Subsidiary; (h) deposits in
connection with bids, tenders or contracts (other than for the payment of money)
to which IBM or any Restricted Subsidiary is a party; (i) deposits to secure
public or statutory obligations of IBM or any Restricted Subsidiary;
(j) deposits in connection with obtaining or maintaining self-insurance or to
obtain the benefits of any law, regulation or arrangement pertaining to
unemployment insurance, old age pensions, social security or similar matters;
(k) deposits of cash or obligations of the United States of America to secure
surety, appeal or customs bonds to which IBM or any Restricted Subsidiary is a
party; and (l) Liens for taxes or assessments or governmental charges or levies
not yet due or delinquent, or which can thereafter be paid without penalty, or
which are being contested in good faith by appropriate proceedings.

 

13

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“Person”:  an individual, partnership, limited liability company, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.

 

“Principal Property”:  any land, land improvements, buildings and associated
factory, laboratory and office equipment (excluding all products marketed by IBM
or any Subsidiary) constituting a manufacturing facility, development facility,
warehouse facility, service facility or office facility (including any portion
thereof), which facility (a) is owned by or leased to IBM or any Restricted
Subsidiary, (b) is located within the United States, and (c) has an acquisition
cost plus capitalized improvements in excess of 0.15% of Consolidated Net
Tangible Assets as of the date of such determination, other than (i) any such
facility, or portion thereof, which has been financed by obligations issued by
or on behalf of a state, a Territory or a possession of the United States, or
any political subdivision of any of the foregoing, or the District of Columbia,
the interest on which is, or at the time of issuance of such obligations was
determined by counsel to be, excludable from the gross income of the holders
thereof (other than a “substantial user” of such facility or a “related person”
as those terms were used in Section 147 of the Code) pursuant to the provisions
of Section 103 and related Sections of the Code (or any similar provisions
hereafter enacted) as in effect at the time of issuance of such obligations,
(ii) any such facility which the Board of Directors of IBM, or a duly authorized
committee thereof, may by resolution declare is not of material importance to
IBM and the Restricted Subsidiaries, taken as a whole (provided that IBM has
delivered written notice of such declaration to the Administrative Agent), and
(iii) any such facility, or portion thereof, owned or leased jointly or in
common with one or more Persons other than IBM and any Subsidiary and in which
the interest of IBM and all Subsidiaries does not exceed 50%.

 

“Purchase Date”:  as defined in Section 2.21(c).

 

“Purchasing Lender”:  as defined in Section 11.8(a).

 

“Reference Lenders”:  JPMorgan Chase Bank, Barclays Capital, the investment
banking division of Barclays Bank PLC, BNP Paribas and Citibank, N.A..

 

“Register”:  as defined in Section 11.9(a).

 

“Regulation T”:  Regulation T of the Board as from time to time in effect and
all official rulings and interpretations thereunder or thereof.

 

“Regulation U”:  Regulation U of the Board as from time to time in effect and
all official rulings and interpretations thereunder or thereof.

 

“Regulation X”:  Regulation X of the Board as from time to time in effect and
all official rulings and interpretations thereunder or thereof.

 

“Required Lenders”:  at any date, the holders of more than 50% of the aggregate
Revolving Credit Commitments, or, if the Revolving Credit Commitments have been
terminated or for the purposes of determining whether to accelerate the Loans
pursuant to Section 8, of the aggregate unpaid principal amount of the Loans and
Funded Participations.

 

“Requirement of Law”:  as to any Person, the Certificate of Incorporation and
By-Laws or other organizational or governing documents of such Person, and any
law, treaty, rule or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each

 

14

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case applicable to or binding upon such Person or any of its property or assets
or to which such Person or any of its property or assets is subject.

 

“Reset Date”:  as defined in Section 3.2(a).

 

“Responsible Officer”:  the Chief Executive Officer, the Chief Financial
Officer, the Vice President and Treasurer, the Vice President and Controller,
any Assistant Controller and any Assistant Treasurer of IBM.

 

“Restricted Securities”:  any capital stock or Indebtedness of any Restricted
Subsidiary.

 

“Restricted Subsidiary”:  (a) any Subsidiary (i) which has substantially all its
property within the United States of America, (ii) which owns or is a lessee of
any property that would be a Principal Property but for clause (a) of the
definition of such term contained in this Section 1.1, and (iii) in which the
investment of IBM and all other Subsidiaries exceeds 0.15% of Consolidated Net
Tangible Assets as of the date of such determination; provided, however, that
the term “Restricted Subsidiary” shall not include (A) any Subsidiary
(x) primarily engaged in the business of purchasing, holding, collecting,
servicing or otherwise dealing in and with installment sales contracts, leases,
trust receipts, mortgages, commercial paper or other financing instruments, and
any collateral or agreements relating thereto, including in the business,
individually or through partnerships, of financing (whether through long- or
short-term borrowings, pledges, discounts or otherwise) the sales, leasing or
other operations of IBM and the Subsidiaries or any of them, or (y) engaged in
the business of financing the assets and operations of third parties, and (z) in
any case, not, except as incidental to such financing business, engaged in
owning, leasing or operating any property which but for this proviso would
qualify as Principal Property or (B) any Subsidiary acquired or organized after
July 15, 1985, for the purpose of acquiring the stock or business or assets of
any Person other than IBM or any Restricted Subsidiary, whether by merger,
consolidation, acquisition of stock or assets or similar transaction analogous
in purpose or effect, so long as such Subsidiary shall not have, since such
date, and does not hereafter acquire by merger, consolidation, acquisition of
stock or assets or similar transaction analogous in purpose or effect all or any
substantial part of the business or assets of IBM or any Restricted Subsidiary;
and (b) any other Subsidiary which is hereafter designated by the Board of
Directors of IBM, or a duly authorized committee thereof, as a Restricted
Subsidiary.

 

“Revolving Credit Borrowing Share”:  for any borrowing of Revolving Credit
Loans, with respect to any Lender, an amount equal to such Lender’s Adjusted
Revolving Credit Commitment Percentage of the amount of such borrowing.  As used
in this definition, “Adjusted Revolving Credit Commitment Percentage” means, as
to any Lender, at any time of determination, the percentage which such Lender’s
Available Revolving Credit Commitment then constitutes of the aggregate
Available Revolving Credit Commitments of all Lenders at such time.

 

“Revolving Credit Commitment”:  as to any Lender, the obligation of such Lender
to make Revolving Credit Loans to the Borrowers hereunder in an aggregate
principal amount at any one time outstanding not to exceed the amount set forth
opposite such Lender’s name on Schedule 1.1, as such amount may be changed from
time to time in accordance with the provisions of this Agreement.

 

“Revolving Credit Commitment Period”:  the period from and including the
Effective Date to but not including the Termination Date or such earlier date on
which the Revolving Credit Commitments shall terminate as provided herein.

 

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“Revolving Credit Loans”:  as defined in Section 2.1.

 

“S&P”:  Standard & Poor’s Ratings Services and its successors.

 

“Sale and Leaseback Transaction”:  any arrangement with any Person providing for
the leasing by IBM or any Restricted Subsidiary of any Principal Property
(whether such Principal Property is now owned or hereafter acquired) that has
been or is to be sold or transferred by IBM or such Restricted Subsidiary to
such Person, other than (a) temporary leases for a term, including renewals at
the option of the lessee, of not more than three years; (b) leases between IBM
and a Restricted Subsidiary or between Restricted Subsidiaries; and (c) leases
of Principal Property executed by the time of, or within 180 days after the
latest of, the acquisition, the completion of construction or improvement
(including any improvements on property which will result in such property
becoming Principal Property), or the commencement of commercial operation of
such Principal Property.

 

“SEC”:  the Securities and Exchange Commission and any successor agency.

 

“Secured Debt”:  (a) Debt of IBM or a Restricted Subsidiary which is secured by
any Lien other than a Permitted Lien upon any Principal Property or Restricted
Securities and (b) Indebtedness of IBM or a Restricted Subsidiary in respect of
any conditional sale or other title retention agreement covering Principal
Property or Restricted Securities; but “Secured Debt” shall not include any of
the following:

 

(i)            Debt of IBM and the Restricted Subsidiaries outstanding on
July 15, 1985, secured by then existing Liens upon, or incurred in connection
with conditional sales agreements or other title retention agreements with
respect to, Principal Property or Restricted Securities;

 

(ii)           Debt of IBM or a Restricted Subsidiary secured by (A) purchase
money Liens upon Principal Property or Restricted Securities acquired after
July 15, 1985, or (B) Liens placed on Principal Property after July 15, 1985,
during construction or improvement thereof (including any improvements on
property which resulted or will result in such property becoming Principal
Property) or placed thereon within 180 days after the later of acquisition,
completion of construction or improvement or the commencement of commercial
operation of such Principal Property or improvement, or placed on Restricted
Securities acquired after July 15, 1985, or (C) conditional sale agreements or
other title retention agreements with respect to any Principal Property or
Restricted Securities acquired after July 15, 1985, if (in each case referred to
in this subparagraph (ii)) (x) such Lien or agreement secures all or any part of
the Debt incurred for the purpose of financing all or any part of the purchase
price or cost of construction of such Principal Property or improvement or
Restricted Securities and (y) such Lien or agreement does not extend to any
Principal Property or Restricted Securities other than the Principal Property or
Restricted Securities so acquired or the Principal Property, or portion thereof,
on which the property so constructed, or such improvement, is located; provided,
however, that the amount by which the aggregate principal amount of Debt secured
by any such Lien or agreement exceeds the cost to IBM or such Restricted
Subsidiary of the related acquisition, construction or improvement shall be
considered to be “Secured Debt”;

 

(iii)          Debt of IBM or a Restricted Subsidiary secured by Liens on
Principal Property or Restricted Securities, which Liens exist at the time of
acquisition (by any

 

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manner whatsoever) of such Principal Property or Restricted Securities by IBM or
a Restricted Subsidiary;

 

(iv)          Debt of Restricted Subsidiaries owing to IBM or any other
Restricted Subsidiary or Debt of IBM owing to any Restricted Subsidiary;

 

(v)           in the case of any corporation which becomes (by any manner
whatsoever), as the case may be, a Restricted Subsidiary after the Effective
Date, Debt secured by Liens upon, or conditional sale agreements or other title
retention agreements with respect to, its property which constitutes Principal
Property or Restricted Securities, which Liens shall have existed or exist, as
the case may be, at the time such corporation shall have become or becomes, as
the case may be, a Restricted Subsidiary;

 

(vi)          guarantees by IBM of Secured Debt and Attributable Debt of any
Restricted Subsidiaries and guarantees by a Restricted Subsidiary of Secured
Debt and Attributable Debt of IBM and any other Restricted Subsidiaries;

 

(vii)         Debt arising from any Sale and Leaseback Transaction;

 

(viii)        Debt secured by Liens on property of IBM or a Restricted
Subsidiary in favor of the United States of America, any state, Territory or
possession thereof, or the District of Columbia, or any department, agency or
instrumentality or political subdivision of the United States of America or any
state, Territory or possession thereof, or the District of Columbia, or in favor
of any other country or any political subdivision thereof, if such Debt was
incurred for the purpose of financing all or any part of the purchase price or
the cost of construction of the property subject to such Liens; provided,
however, that the amount by which the aggregate principal amount of Debt secured
by any such Lien exceeds the cost to IBM or such Restricted Subsidiary of the
related acquisition or construction shall be considered to be “Secured Debt”;
and

 

(ix)           the replacement, extension or renewal (or successive
replacements, extensions or renewals) of any Debt (in whole or in part) excluded
from the definition of “Secured Debt” by subparagraphs (i) through (viii) above;
provided, however, that no Lien securing, or conditional sale or title retention
agreement with respect to, such Debt shall extend to or cover any Principal
Property or any Restricted Securities, other than such property which secured
the Debt so replaced, extended or renewed (plus improvements on or to any such
Principal Property); provided, further, however, that to the extent that such
replacement, extension or renewal increased or increases the principal amount of
Debt secured by such Lien or was or is in a principal amount in excess of the
principal amount of Debt excluded from the definition of “Secured Debt” by
subparagraphs (i) through (viii) above, the amount of such increase or excess
shall be considered to be “Secured Debt”.

 

In no event shall the foregoing provisions be interpreted to mean or their
operation to cause the same Debt to be included more than once in the
calculation of “Secured Debt” as that term is used herein.

 

“Securitization Transactions”:  as defined in the definition of Indebtedness.

 

“Significant Subsidiary”:  any Subsidiary that would be a “significant
subsidiary” within the meaning of Rule 1-02 of the SEC’s Regulation S-X.

 

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“Status”:  as to IBM, the existence of Level I Status, Level II Status, Level
III Status, Level IV Status or Level V Status, as the case may be.

 

“Subsidiary”:  (a) any corporation of which IBM owns or controls more than 50%
of the outstanding Voting Stock or (b) any such corporation of which such
percentage of shares of outstanding Voting Stock shall at the time be owned or
controlled by IBM or one or more Subsidiaries as defined in clause (a) or by one
or more such Subsidiaries.

 

“Subsidiary Borrower”:  a Subsidiary or Controlled Person (a) which is
designated as a Subsidiary Borrower by IBM with the consent of the
Administrative Agent, (b) which has delivered to the Administrative Agent a
Subsidiary Borrower Request and (c) whose designation as a Subsidiary Borrower
has not been terminated pursuant to Section 5.2(d).

 

“Subsidiary Borrower Addendum” means an instrument, substantially in the form of
Exhibit H-2, by which any Subsidiary that is a Subsidiary Borrower on the
Effective Date becomes a party to this Agreement.

 

“Subsidiary Borrower Notice and Designation”:  a notice and designation,
substantially in the form of Exhibit B-1, which may be delivered by IBM, and
received and consented to by the Administrative Agent, and which shall identify
a Subsidiary Borrower and the Maximum Subsidiary Borrowing Amount with respect
to such Subsidiary Borrower, and shall be accompanied by a Subsidiary Borrower
Request.

 

“Subsidiary Borrower Obligations”:  with respect to each Subsidiary Borrower,
the unpaid principal of and interest on (including, without limitation, interest
accruing after the maturity of the Loans made to such Borrower and interest
accruing after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to such Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) the US$ Loans and Local Currency Loans made to such Borrower
and all other obligations and liabilities of such Borrower to the Administrative
Agent or to any Lender, whether direct or indirect, absolute or contingent, due
or to become due, or now existing or hereafter incurred, which may arise under,
out of, or in connection with, this Agreement, any Local Currency Facility or
any other document made, delivered or given in connection herewith or therewith,
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses (including, without limitation, all fees, charges
and disbursements of counsel (including the allocated costs of internal counsel)
to the Administrative Agent or to any Lender that are required to be paid by
such Borrower pursuant to this Agreement or any Local Currency Facility) or
otherwise.

 

“Subsidiary Borrower Request”:  a request, substantially in the form of
Exhibit B-2, which is received by the Administrative Agent in connection with a
Subsidiary Borrower Notice and Designation.

 

“Swing Line Borrower”:  IBM and, subject to the approval of the Administrative
Agent (which approval shall not be unreasonably withheld), any Subsidiary
Borrower designated as a “Swing Line Borrower” in the relevant Subsidiary
Borrower Notice and Designation.

 

“Swing Line Borrowing Share”:  for any borrowing of Swing Line Loans, with
respect to any Swing Line Lender, an amount equal to such Swing Line Lender’s
Adjusted Swing Line Commitment Percentage of the amount of such borrowing.

 

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As used in this definition:

 

“Adjusted Swing Line Commitment Percentage” means, as to any Swing Line Lender,
at any time of determination, the percentage which such Swing Line Lender’s
Available Swing Line Commitment then constitutes of the aggregate Available
Swing Line Commitments of all Swing Line Lenders at such time.

 

“Available Swing Line Commitment”:  as to any Swing Line Lender, at any time of
determination, an amount equal to the lesser of (a) such Swing Line Lender’s
Swing Line Commitment at such time minus the aggregate principal amount of all
Swing Line Loans made by such Swing Line Lender then outstanding and (b) such
Swing Line Lender’s Revolving Credit Commitment at such time minus such Swing
Line Lender’s Aggregate Outstanding Revolving Extensions of Credit at such time.

 

“Swing Line Commitment”:  as to any Swing Line Lender, the obligation of such
Lender to make Swing Line Loans to the Swing Line Borrowers hereunder in an
aggregate principal amount at any one time outstanding not to exceed the amount
set forth opposite such Swing Line Lender’s name on Schedule 1.1, as such amount
may be changed from time to time in accordance with the provisions of this
Agreement.

 

“Swing Line Exposure”:  at any time, the sum of the aggregate amount of all
outstanding Swing Line Loans at such time.  The Swing Line Exposure of any
Lender at any time shall be its Revolving Credit Borrowing Share of the total
Swing Line Exposure at such time.

 

“Swing Line Lender”:  each of the Lenders that have agreed to make Swing Line
Loans hereunder as indicated on Schedule 1.1 and each other Lender that shall
hereafter be designated as a Swing Line Lender in accordance with the provisions
of Sections 11.8 and 11.10.

 

“Swing Line Loan”:  as defined in Section 2.5(a).

 

“taxes”: all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including interest, additions to tax or
penalties applicable thereto.

 

“Termination Date”:  November 10, 2016.

 

“Transactions”:  as defined in Section 4.2.

 

“Transferee”:  as defined in Section 11.9.

 

“Type”:  (a) as to any Revolving Credit Loan, its nature as a ABR Loan or a
Eurodollar Loan and (b) as to any Competitive Loan, its nature as a Fixed Rate
Competitive Loan or an Index Rate Competitive Loan.

 

“Undisclosed Administration”: in relation to a Lender, the appointment of an
administrator, provisional liquidator, conservator, receiver, trustee, custodian
or other similar official by a supervisory authority or regulator under or based
on the law in the country where such Lender is subject to home jurisdiction
supervision if applicable law requires that such appointment is not to be
publicly disclosed.

 

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“Unrefunded Swing Line Loans”:  as defined in Section 2.5(c).

 

“US$ Equivalent”:  on any date of determination, with respect to any amount in
any Local Currency, the equivalent in Dollars of such amount, determined by the
Administrative Agent using the Exchange Rate with respect to such Local Currency
then in effect as determined pursuant to Section 3.

 

“US$ Facility Overage”:  an amount equal to the excess of (a) the aggregate
Revolving Credit Commitments over (b) the aggregate amount of all Local Currency
Facility Maximum Borrowing Amounts (determined, if applicable, after giving
effect to any reduction therein made pursuant to Section 3.2(c)).

 

“US$ Loan”:  any Revolving Credit Loan, Swing Line Loan or Competitive Loan made
pursuant to this Agreement.

 

“US$ Revolving Credit Overage”:  with respect to any Lender, an amount equal to
the excess, if any, of (a) such Lender’s Revolving Credit Commitment over
(b) the aggregate Local Currency Lender Stated Maximum Borrowing Amounts with
respect to all Local Currency Facilities to which such Lender is a party.

 

“Voting Stock”:  with respect to any Person, outstanding capital stock of such
Person ordinarily (and apart from rights exercisable upon the occurrence of any
contingency) having the power to vote in the election of directors of such
Person.

 

1.2           Other Definitional Provisions.  (a)  Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in any instrument, certificate or other document made or delivered
pursuant hereto.

 

(b)           As used herein and in any instrument, certificate or other
document made or delivered pursuant hereto, accounting terms relating to IBM and
the Subsidiaries not defined in Section 1.1 and accounting terms partly defined
in Section 1.1, to the extent not defined, shall have the respective meanings
given to them under GAAP, provided that, if IBM notifies the Administrative
Agent that IBM requests an amendment of any provision hereof to eliminate the
effect of any change occurring after the date hereof in GAAP or in the
application thereof (or if the Administrative Agent notifies IBM that the
Required Lenders request an amendment of any provision hereof for such purpose),
regardless of whether such notice is given before or after such change in GAAP
or in the application thereof, then such provision shall be applied on the basis
of GAAP as in effect and applied immediately before such change shall have
become effective until such notice shall have been withdrawn or such provision
amended in accordance herewith.

 

(c)           The words “hereof”, “herein” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.  References
herein do not include references to any provision of any Local Currency Facility
or Loans outstanding thereunder unless otherwise specified.

 

(d)           The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

 

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(e)           Notwithstanding anything to the contrary herein, (i) in no event
shall any Lender be required to fund a Loan or participation hereunder to the
extent such funding would cause the aggregate outstanding principal amount of
Revolving Credit Loans, Swing Line Loans, Local Currency Loans (US$ Equivalent)
and Funded Participations made by such Lender to exceed such Lender’s Revolving
Credit Commitment and (ii) for all purposes of calculating the outstanding
amount of Swing Line Loans and Local Currency Loans held by any Lender, unless,
in the judgment of the Administrative Agent, the context otherwise requires, the
amount thereof shall be deemed to be reduced by the amount of Funded
Participations actually received by such Lender in respect of such Swing Line
Loans or Local Currency Loans, as applicable.

 

SECTION 2.           AMOUNT AND TERMS OF US$ FACILITIES

 

2.1           Revolving Credit Commitments.  (a)  Subject to the terms and
conditions hereof, each Lender severally agrees to make revolving credit loans
in Dollars (“Revolving Credit Loans”) to any of IBM or any Subsidiary Borrower
from time to time during the Revolving Credit Commitment Period.  During the
Revolving Credit Commitment Period each Borrower may use the Revolving Credit
Commitments by borrowing, prepaying the Revolving Credit Loans in whole or in
part, and reborrowing, all in accordance with the terms and conditions hereof. 
Notwithstanding anything to the contrary contained in this Agreement, in no
event may Revolving Credit Loans be borrowed under this Section 2 if, after
giving effect thereto, (i) the aggregate principal amount of the US$ Loans and
Local Currency Loans (US$ Equivalent) then outstanding would exceed the
aggregate Revolving Credit Commitments then in effect, (ii) the aggregate
principal amount of US$ Loans and Local Currency Loans (US$ Equivalent) made to
any Subsidiary Borrower then outstanding would exceed the Maximum Subsidiary
Borrowing Amount with respect to such Subsidiary Borrower set forth in the most
recent Subsidiary Borrower Notice and Designation delivered by IBM pursuant to
Section 5.2(d) or (iii) the aggregate principal amount of Revolving Credit
Loans, Swing Line Loans, Local Currency Loans (US$ Equivalent) and Funded
Participations made by any Lender then outstanding would exceed such Lender’s
Revolving Credit Commitment. IBM shall notify the Lenders (through the
Administrative Agent) promptly after it has determined to cause any Subsidiary
to become a Subsidiary Borrower, but in any event no later than the date such
Subsidiary actually becomes a Subsidiary Borrower hereunder.

 

(b)           The Revolving Credit Loans may from time to time be (i) Eurodollar
Loans, (ii) ABR Loans or (iii) a combination thereof, as determined by the
relevant Borrower and notified to the Administrative Agent in accordance with
Sections 2.2 and 2.3, provided that no Revolving Credit Loan shall be made as a
Eurodollar Loan after the day that is one month prior to the Termination Date.

 

2.2           Procedure for Revolving Credit Borrowing.  Each Borrower may
borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day; provided that such Borrower shall give
the Administrative Agent irrevocable notice (which notice must be received by
the Administrative Agent prior to (a) 11:00 A.M., New York City time, three
Business Days prior to the requested Borrowing Date, if all or any part of the
requested Revolving Credit Loans are to be initially Eurodollar Loans or
(b) 10:00 A.M., New York City time, on the requested Borrowing Date, otherwise),
specifying (i) the amount to be borrowed, (ii) the requested Borrowing Date,
(iii) whether the borrowing is to be of Eurodollar Loans, ABR Loans or a
combination thereof and (iv) if the borrowing is to be entirely or partly of
Eurodollar Loans, the respective amounts of each such Loan and the respective
lengths of the initial Interest Periods therefor.  Each borrowing under the
Revolving Credit Commitments shall be in a minimum aggregate principal amount of
the lesser of (i) $50,000,000 or an integral multiple of $5,000,000 in excess
thereof and (ii) the aggregate amount of the then Available Revolving Credit
Commitments.  Upon receipt of any such notice from any Borrower, the
Administrative Agent shall promptly notify each Lender of the aggregate amount
of such borrowing and of the amount of

 

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such Lender’s Revolving Credit Borrowing Share (if any) thereof.  Each Lender
will make the amount of its Revolving Credit Borrowing Share of each such
borrowing available to the Administrative Agent for the account of the relevant
Borrower at the office of the Administrative Agent specified in Section 11.2
prior to 2:00 P.M., New York City time, on the Borrowing Date requested by such
Borrower in funds immediately available to the Administrative Agent.  Such
borrowing will then be made available to the relevant Borrower by the
Administrative Agent crediting the account of such Borrower on the books of such
office with the aggregate of the amounts made available to the Administrative
Agent by the Lenders and in like funds as received by the Administrative Agent;
provided that if on the Borrowing Date of any Revolving Credit Loans to be made
to any Borrower, any Swing Line Loans made to such Borrower shall be then
outstanding, the proceeds of such Revolving Credit Loans shall first be applied
to pay in full such Swing Line Loans, with any remaining proceeds to be made
available to such Borrower as provided above.

 

2.3           Conversion and Continuation Options for Revolving Credit Loans. 
(a)  Each Borrower may elect from time to time to convert Eurodollar Loans to
ABR Loans, by giving the Administrative Agent at least one Business Day’s prior
irrevocable notice of such election; provided that if any such conversion of
Eurodollar Loans is made other than on the last day of an Interest Period with
respect thereto, such Borrower shall pay any amounts due to the Lenders pursuant
to Section 2.19 as a result of such conversion.  Each Borrower may elect from
time to time to convert ABR Loans to Eurodollar Loans by giving the
Administrative Agent at least three Business Days’ prior irrevocable notice of
such election.  Any such notice of conversion to Eurodollar Loans shall specify
the length of the initial Interest Period or Interest Periods therefor.  Upon
receipt of any such notice the Administrative Agent shall promptly notify each
Lender thereof.  All or any part of outstanding Eurodollar Loans or ABR Loans
may be converted as provided herein; provided that (i) no Loan may be converted
into a Eurodollar Loan when any Default or Event of Default has occurred and is
continuing and the Administrative Agent or the Required Lenders have determined
in its or their sole discretion that such a conversion is not appropriate,
(ii) any such conversion may only be made if, after giving effect thereto,
Section 2.4 shall not have been contravened and (iii) no Loan may be converted
into a Eurodollar Loan after the date that is one month prior to the Termination
Date.

 

(b)           Any Eurodollar Loans may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the relevant
Borrower giving at least three Business Days’ prior irrevocable notice to the
Administrative Agent, in accordance with the applicable provisions of the term
“Interest Period” set forth in Section 1.1, of the length of the next Interest
Period to be applicable to such Loans; provided that no Eurodollar Loan may be
continued as such (i) when any Default or Event of Default has occurred and is
continuing and the Administrative Agent or the Required Lenders have determined
in its or their sole discretion that such a continuation is not appropriate,
(ii) if, after giving effect thereto, Section 2.4 would be contravened or
(iii) after the date that is one month prior to the Termination Date and
provided, further, that if such Borrower shall fail to give any required notice
as described above in this Section 2.3 or if such continuation is not permitted
pursuant to the preceding proviso such Loans shall automatically be converted to
ABR Loans on the last day of such then expiring Interest Period.

 

2.4           Minimum Amounts and Maximum Number of Eurodollar Tranches.  All
borrowings, optional prepayments, conversions and continuations of Eurodollar
Loans hereunder and all selections of Interest Periods hereunder shall be in
such amounts and be made pursuant to such elections so that, after giving effect
thereto, (a) the aggregate principal amount of the Eurodollar Loans comprising
each Eurodollar Tranche shall be equal to $50,000,000 or a whole multiple of
$5,000,000 in excess thereof and (b) there shall be no more than twenty
Eurodollar Tranches outstanding at any one time.

 

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2.5           Swing Line Loans.  (a)  Subject to the terms and conditions
hereof, each Swing Line Lender severally agrees to make swing line loans in
Dollars (individually, a “Swing Line Loan”; collectively, the “Swing Line
Loans”) to any Swing Line Borrower from time to time during the Revolving Credit
Commitment Period in accordance with the procedures set forth in this
Section 2.5; provided, that (i) the aggregate outstanding principal amount of
all Swing Line Loans shall not exceed $2,000,000,000 at any one time, (ii) the
principal amount of any borrowing of Swing Line Loans may not exceed the
aggregate amount of the Available Revolving Credit Commitments of all Lenders
immediately prior to such borrowing, (iii) in no event may Swing Line Loans be
borrowed hereunder if, after giving effect thereto, (x) the aggregate principal
amount of Swing Line Loans, Revolving Credit Loans and Local Currency Loans (US$
Equivalent) made by any Swing Line Lender then outstanding would exceed such
Swing Line Lender’s Revolving Credit Commitment, (y) the aggregate principal
amount of US$ Loans and Local Currency Loans (US$ Equivalent) made to any
Subsidiary Borrower then outstanding would exceed the Maximum Subsidiary
Borrowing Amount with respect to such Subsidiary Borrower set forth in the most
recent Subsidiary Borrower Notice and Designation delivered by IBM pursuant to
Section 5.2(d) or (z) the aggregate principal amount of Swing Line Loans made by
any Swing Line Lender then outstanding would exceed the Swing Line Commitment of
such Swing Line Lender and (iv) in no event may Swing Line Loans be borrowed
hereunder if (x) the Administrative Agent shall have received notice from the
Required Lenders specifying that a Default or Event of Default shall have
occurred and be continuing and (y) such Default or Event of Default shall not
have been subsequently cured or waived.  Amounts borrowed by any Swing Line
Borrower under this Section 2.5 may be repaid and, up to but excluding the
Termination Date, reborrowed.  All Swing Line Loans shall at all times be ABR
Loans.  The relevant Swing Line Borrower shall give the Administrative Agent
irrevocable notice of any Swing Line Loans requested hereunder (which notice
must be received by the Administrative Agent prior to 11:00 A.M., New York City
time, on the requested Borrowing Date) specifying (A) the amount to be borrowed,
and (B) the requested Borrowing Date.  Upon receipt of such notice, the
Administrative Agent shall promptly notify each Swing Line Lender of the
aggregate amount of such borrowing and of the amount of such Swing Line Lender’s
Swing Line Borrowing Share (if any) thereof.  Not later than 2:00 P.M., New York
City time, on the Borrowing Date specified in such notice each Swing Line Lender
shall make its Swing Line Borrowing Share of such Swing Line Loans available to
the Administrative Agent for the account of the relevant Swing Line Borrower at
the office of the Administrative Agent set forth in Section 11.2 in funds
immediately available to the Administrative Agent.  The proceeds of such
borrowing will then be immediately made available to the relevant Swing Line
Borrower by the Administrative Agent crediting the account of such Swing Line
Borrower on the books of such office with the aggregate of the amounts made
available to the Administrative Agent by the Swing Line Lenders and in like
funds as received by the Administrative Agent.  The Administrative Agent and the
Swing Line Lenders acknowledge that the funding provisions in respect of the
Swing Line Commitments are material terms of this Agreement and that it is of
importance to the Swing Line Borrowers that the funding of Swing Line Loans be
made in a timely and efficient manner.  Each borrowing pursuant to this
Section 2.5 shall be in a minimum aggregate principal amount of the lesser of
(i) $20,000,000 or an integral multiple of $5,000,000 in excess thereof and
(ii) the aggregate amount of the then Available Swing Line Commitments.

 

(b)           Notwithstanding the occurrence of any Default or Event of Default
or noncompliance with the conditions precedent set forth in Section 5 or the
minimum borrowing amounts specified in Section 2.2, if any Swing Line Loans
shall remain outstanding at 10:00 A.M., New York City time, on the seventh
Business Day following the Borrowing Date thereof, or, in the Administrative
Agent’s sole discretion and subject to two Business Day’s advance notice to IBM,
at 10:00 A.M., New York City time on any other Business Day following the
Borrowing Date thereof designated by the Administrative Agent, and if by such
time on such seventh Business Day or designated Business Day, as the case may
be, the Administrative Agent shall have received neither (i) a notice of
borrowing delivered by the relevant Swing Line Borrower pursuant to Section 2.2
requesting that Revolving Credit Loans be

 

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made pursuant to Section 2.1 on the immediately succeeding Business Day in an
amount at least equal to the aggregate principal amount of such Swing Line
Loans, nor (ii) any other notice satisfactory to the Administrative Agent
indicating such Swing Line Borrower’s intent to repay all such Swing Line Loans
on the immediately succeeding Business Day with funds obtained from other
sources, the Administrative Agent shall be deemed to have received a notice from
such Swing Line Borrower pursuant to Section 2.2 requesting that ABR Loans be
made pursuant to Section 2.1 on such immediately succeeding Business Day in an
amount equal to the aggregate amount of such Swing Line Loans, and the
procedures set forth in Section 2.2 shall be followed in making such ABR Loans,
provided, that for the purposes of determining each Lender’s Revolving Credit
Borrowing Share with respect to such borrowing, the outstanding principal amount
of Swing Line Loans shall be deemed to be zero.  The proceeds of such ABR Loans
shall be applied to repay such Swing Line Loans.

 

(c)           If, for any reason, ABR Loans may not be, or are not, made
pursuant to paragraph (b) of this Section 2.5 to repay Swing Line Loans as
required by such paragraph, effective on the date such ABR Loans would otherwise
have been made, each Lender severally, unconditionally and irrevocably agrees
that it shall, without regard to the occurrence of any Default or Event of
Default, purchase a participating interest in such Swing Line Loans (“Unrefunded
Swing Line Loans”) in an amount equal to the amount of ABR Loans which would
otherwise have been made by such Lender pursuant to paragraph (b) of this
Section 2.5.  Each Lender will immediately transfer to the Administrative Agent,
in immediately available funds, the amount of its participation, and the
proceeds of such participation shall be distributed by the Administrative Agent
to each Swing Line Lender in such amount as will reduce the amount of the
participating interest retained by such Swing Line Lender in its Swing Line
Loans to the amount of the ABR Loans which were to have been made by it pursuant
to paragraph (b) of this Section 2.5.  All payments in respect of Unrefunded
Swing Line Loans and participations therein shall be made in accordance with
Section 2.15.

 

2.6           Optional Prepayments of Revolving Credit Loans and Swing Line
Loans  Each Borrower may at any time and from time to time prepay the Revolving
Credit Loans and the Swing Line Loans (subject, in the case of Eurodollar Loans,
to compliance with the terms of Sections 2.4 and 2.19), in whole or in part,
without premium or penalty, upon at least one Business Day’s irrevocable notice
to the Administrative Agent, specifying the date and amount of prepayment and
whether the prepayment is of Eurodollar Loans (including the Eurodollar
Tranche(s) to which such prepayment is to be applied), ABR Loans or a
combination thereof, and, if of a combination thereof, the amount allocable to
each, provided, that notice of any prepayment of Swing Line Loans may be
delivered to the Administrative Agent as late as, but no later than, 12:00 Noon,
New York City time, on the date of such prepayment.  Upon receipt of any such
notice the Administrative Agent shall promptly notify each relevant Lender
thereof.  If any such notice is given, the amount specified in such notice shall
be due and payable on the date specified therein, together with (except in the
case of ABR Loans) accrued interest to such date on the amount prepaid.  Partial
prepayments of Revolving Credit Loans shall be in an aggregate principal amount
of $50,000,000 or a whole multiple of $5,000,000 in excess thereof (or, if less,
the remaining outstanding principal amount thereof).  Partial prepayments of
Swing Line Loans shall be in an aggregate principal amount of $20,000,000 or a
whole multiple of $5,000,000 in excess thereof (or, if less, the remaining
outstanding principal amount thereof).

 

2.7           The Competitive Loans.  Subject to the terms and conditions of
this Agreement, each Borrower may borrow Competitive Loans in Dollars from time
to time during the Competitive Loan Borrowing Period on any Business Day,
provided, that in no event may Competitive Loans be borrowed hereunder if, after
giving effect thereto (a) the aggregate principal amount of US$ Loans and Local
Currency Loans (US$ Equivalent) then outstanding would exceed the aggregate
amount of the Revolving Credit Commitments at such time or (b) the aggregate
principal amount of US$ Loans and Local Currency Loans (US$ Equivalent) made to
any Subsidiary Borrower then outstanding would exceed the

 

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Maximum Subsidiary Borrowing Amount with respect to such Subsidiary Borrower set
forth in the most recent Subsidiary Borrower Notice and Designation delivered by
IBM pursuant to Section 5.2(d).  Within the limits and on the conditions
hereinafter set forth with respect to Competitive Loans, each Borrower from time
to time may borrow, repay and reborrow Competitive Loans.

 

2.8           Procedure for Competitive Loan Borrowing.  (a)  The relevant
Borrower shall request Competitive Loans by delivering a Competitive Loan
Request to the Administrative Agent, not later than 12:00 Noon (New York City
time) four Business Days prior to the proposed Borrowing Date (in the case of an
Index Rate Competitive Loan Request), and not later than 10:00 A.M. (New York
City time) one Business Day prior to the proposed Borrowing Date (in the case of
a Fixed Rate Competitive Loan Request).  Each Competitive Loan Request may
solicit bids for Competitive Loans in an aggregate principal amount of
$20,000,000 or an integral multiple of $5,000,000 in excess thereof and having
not more than three alternative maturity dates.  The maturity date for each
Fixed Rate Competitive Loan shall be not less than 14 days nor more than 180
days after the Borrowing Date therefor and the maturity date for each Index Rate
Competitive Loan shall be not less than one month nor more than six months after
the Borrowing Date therefor, and in any event shall be not later than the
Termination Date.  The Administrative Agent shall notify each Competitive Loan
Lender promptly by facsimile transmission of the contents of each Competitive
Loan Request received by the Administrative Agent.

 

(b)           In the case of an Index Rate Competitive Loan Request, upon
receipt of notice from the Administrative Agent of the contents of such
Competitive Loan Request, each Competitive Loan Lender may elect, in its sole
discretion, to offer irrevocably, subject to Section 5, to make one or more
Competitive Loans at the Applicable Index Rate plus or minus a margin determined
by such Competitive Loan Lender in its sole discretion for each such Competitive
Loan.  Any such irrevocable offer shall be made by delivering a Competitive Loan
Offer to the Administrative Agent, before 10:30 A.M. (New York City time) on the
day that is three Business Days before the proposed Borrowing Date, setting
forth:

 

(i)            the maximum amount of Competitive Loans for each maturity date
and the aggregate maximum amount of Competitive Loans for all maturity dates
which such Competitive Loan Lender would be willing to make (which amounts may,
subject to Section 2.7, exceed such Competitive Loan Lender’s Revolving Credit
Commitment); and

 

(ii)           the margin above or below the Applicable Index Rate at which such
Competitive Loan Lender is willing to make each such Competitive Loan.

 

The Administrative Agent shall advise the relevant Borrower before 11:00 A.M.
(New York City time) on the date which is three Business Days before the
proposed Borrowing Date of the contents of each such Competitive Loan Offer
received by it.  If the Administrative Agent, in its capacity as a Competitive
Loan Lender, shall elect, in its sole discretion, to make any such Competitive
Loan Offer, it shall advise the relevant Borrower of the contents of its
Competitive Loan Offer before 10:15 A.M. (New York City time) on the date which
is three Business Days before the proposed Borrowing Date.

 

(c)           In the case of a Fixed Rate Competitive Loan Request, upon receipt
of notice from the Administrative Agent of the contents of such Competitive Loan
Request, each Competitive Loan Lender may elect, in its sole discretion, to
offer irrevocably, subject to Section 5, to make one or more Competitive Loans
at a rate of interest determined by such Competitive Loan Lender in its sole
discretion for each such Competitive Loan.  Any such irrevocable offer shall be
made by delivering a Competitive Loan Offer to the Administrative Agent before
9:30 A.M. (New York City time) on the proposed Borrowing Date, setting forth:

 

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(i)            the maximum amount of Competitive Loans for each maturity date,
and the aggregate maximum amount for all maturity dates, which such Competitive
Loan Lender would be willing to make (which amounts may, subject to Section 2.7,
exceed such Competitive Loan Lender’s Revolving Credit Commitment); and

 

(ii)           the rate of interest at which such Competitive Loan Lender is
willing to make each such Competitive Loan.

 

The Administrative Agent shall advise the relevant Borrower before 10:00 A.M.
(New York City time) on the proposed Borrowing Date of the contents of each such
Competitive Loan Offer received by it.  If the Administrative Agent, in its
capacity as a Competitive Loan Lender, shall elect, in its sole discretion, to
make any such Competitive Loan Offer, it shall advise the relevant Borrower of
the contents of its Competitive Loan Offer before 9:15 A.M. (New York City time)
on the proposed Borrowing Date.

 

(d)           Before 11:30 A.M. (New York City time) three Business Days before
the proposed Borrowing Date (in the case of Index Rate Competitive Loans) and
before 10:30 A.M. (New York City time) on the proposed Borrowing Date (in the
case of Fixed Rate Competitive Loans), the relevant Borrower, in its absolute
discretion, shall:

 

(i)            cancel such Competitive Loan Request by giving the Administrative
Agent telephone notice to that effect, or

 

(ii)           by giving telephone notice to the Administrative Agent
(immediately confirmed by delivery to the Administrative Agent of a Competitive
Loan Confirmation in writing or by facsimile transmission) (1) subject to the
provisions of Section 2.8(e), accept one or more of the offers made by any
Competitive Loan Lender or Competitive Loan Lenders pursuant to
Section 2.8(b) or Section 2.8(c), as the case may be, of the amount of
Competitive Loans for each relevant maturity date and (2) reject any remaining
offers made by Competitive Loan Lenders pursuant to Section 2.8(b) or
Section 2.8(c), as the case may be.

 

(e)           Each Borrower’s acceptance of Competitive Loans in response to any
Competitive Loan Request shall be subject to the following limitations:

 

(i)            The amount of Competitive Loans accepted for each maturity date
specified by any Competitive Loan Lender in its Competitive Loan Offer shall not
exceed the maximum amount for such maturity date specified in such Competitive
Loan Offer;

 

(ii)           the aggregate amount of Competitive Loans accepted for all
maturity dates specified by any Competitive Loan Lender in its Competitive Loan
Offer shall not exceed the aggregate maximum amount specified in such
Competitive Loan Offer for all such maturity dates;

 

(iii)          a Borrower may not accept offers for Competitive Loans for any
maturity date in an aggregate principal amount in excess of the maximum
principal amount requested in the related Competitive Loan Request; and

 

(iv)          if a Borrower accepts any of such offers, (1) it must accept such
offers based solely upon pricing for such relevant maturity date (including any
amounts which shall be payable to the relevant Competitive Loan Lender in
respect of the relevant Competitive Loans pursuant to Section 2.17) and upon no
other criteria whatsoever and

 

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(2) if (x) two or more Competitive Loan Lenders submit offers for any maturity
date at identical pricing and such Borrower accepts any of such offers but does
not wish to (or by reason of the limitations set forth in Section 2.7 or in this
Section 2.8, cannot) borrow the total amount offered by such Competitive Loan
Lenders with such identical pricing, such Borrower shall accept offers from all
of such Competitive Loan Lenders in amounts allocated among them pro rata
according to the amounts offered by such Competitive Loan Lenders (or as nearly
pro rata as shall be practicable after giving effect to the requirement that
Competitive Loans made by a Competitive Loan Lender on a Borrowing Date for each
relevant maturity date shall be in a principal amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof) or (y) a Competitive Loan
Lender submits offers for multiple maturity dates specifying a maximum aggregate
principal amount for all maturity dates, and the relevant Borrower accepts
offers from such Competitive Loan Lender for more than one maturity date, then
such Borrower shall instruct the Administrative Agent how to apportion such
Borrower’s acceptances among such offers for different maturity dates to the
extent, if any, necessary to provide for acceptance of offers from such
Competitive Loan Lender equal to but not exceeding such specified maximum
aggregate amount.

 

(v)           If the relevant Borrower notifies the Administrative Agent that a
Competitive Loan Request is cancelled pursuant to Section 2.8(d)(i), the
Administrative Agent shall give prompt telephone notice thereof to the
Competitive Loan Lenders.

 

(f)            If the relevant Borrower accepts pursuant to
Section 2.8(d)(ii) one or more of the offers made by any one or more Competitive
Loan Lenders, the Administrative Agent promptly shall notify each Competitive
Loan Lender which has made such a Competitive Loan Offer of (i) the aggregate
amount of such Competitive Loans to be made on such Borrowing Date for each
maturity date, (ii) the acceptance or rejection of any offers to make such
Competitive Loans made by such Competitive Loan Lender and (iii) in the case of
Index Rate Competitive Loans, the Applicable Index Rate in respect thereof. 
Before 12:00 Noon (New York City time) on the Borrowing Date specified in the
applicable Competitive Loan Request, each Competitive Loan Lender whose
Competitive Loan Offer has been accepted shall make available to the
Administrative Agent at its office set forth in Section 11.2 the amount of
Competitive Loans to be made by such Competitive Loan Lender, in immediately
available funds.  The Administrative Agent will make such funds available to the
relevant Borrower as soon as practicable on such date at the Administrative
Agent’s aforesaid address.  As soon as practicable after each Borrowing Date,
the Administrative Agent shall notify each Competitive Loan Lender of the
aggregate amount of Competitive Loans advanced on such Borrowing Date, the
respective maturity dates thereof and the respective interest rates applicable
thereto.

 

(g)           Nothing in Section 2.7 or this Section 2.8 shall be construed as a
right of first offer in favor of the Lenders or to otherwise limit the ability
of any Borrower to request and accept credit facilities from any Person
(including any of the Lenders).

 

2.9           Repayment of US$ Loans; Evidence of Debt.  (a)  Each Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of the relevant Lenders (i) on the Termination Date (or such earlier
date as the US$ Loans become due and payable pursuant to Section 2.6 or
Section 8), the unpaid principal amount of each US$ Loan (including, without
limitation, each Swing Line Loan) made to it by each such Lender and (ii) on the
Competitive Loan Maturity Date in respect thereof, the unpaid principal amount
of each Competitive Loan made to it by each such Lender.  No Borrower shall have
the right to prepay any principal amount of any Competitive Loan.  Each Borrower
hereby further agrees to pay interest in immediately available funds at the
office of the

 

27

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Administrative Agent on the unpaid principal amount of the US$ Loans from time
to time from the date hereof until payment in full thereof at the rates per
annum, and on the dates, set forth in Section 2.10.

 

(b)           Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of each Borrower to the
appropriate lending office of such Lender resulting from each US$ Loan made by
such lending office of such Lender from time to time, including the amounts of
principal and interest payable and paid to such lending office of such Lender
from time to time under this Agreement.

 

(c)           The Administrative Agent shall maintain the Register pursuant to
Section 11.9(a), and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount of each US$ Loan
made hereunder, whether such US$ Loan is a Revolving Credit Loan, a Swing Line
Loan or a Competitive Loan, the Type of each US$ Loan made and the Interest
Period or maturity date (if any) applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from each
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder from each Borrower and each Lender’s share
thereof.

 

(d)           The entries made in the Register and accounts maintained pursuant
to paragraphs (b) and (c) of this Section 2.9 shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of each Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain such account, such
Register or such subaccount, as applicable, or any error therein, shall not in
any manner affect the obligation of any Borrower to repay (with applicable
interest) the US$ Loans made to such Borrower by such Lender in accordance with
the terms of this Agreement.

 

2.10         Interest Rates and Payment Dates.  (a)  Each Eurodollar Loan shall
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the Eurodollar Rate determined for such Interest Period
plus the Applicable Margin minus the Facility Fee Rate then in effect.  Interest
in respect of Eurodollar Loans shall accrue from and including the first day of
an Interest Period to but excluding the last day of such Interest Period.

 

(b)           Each ABR Loan shall bear interest at a rate per annum equal to the
ABR plus the Applicable Margin minus the Facility Fee Rate then in effect.

 

(c)           Each Competitive Loan shall bear interest for each day from the
applicable Borrowing Date to (but excluding) the applicable Competitive Loan
Maturity Date at the rate of interest specified in the Competitive Loan Offer
accepted by the relevant Borrower in connection with such Competitive Loan.

 

(d)           If all or a portion of (i) the principal amount of any Loan,
(ii) any interest payable thereon or (iii) any facility fee or other amount
payable hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum which is (x) in the case of overdue principal (except as otherwise
provided in clause (y) below), the rate that would otherwise be applicable
thereto pursuant to the foregoing provisions of this Section 2.10 plus 2% or
(y) in the case of principal of any Competitive Loan which remains overdue past
the stated maturity date thereof, or any overdue interest, facility fee or other
amount, the rate described in Section 2.10(b) plus 2%, in each case from the
date of such non-payment to (but excluding) the date on which such amount is
paid in full (as well after as before judgment).

 

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(e)           Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to Section 2.10(d) shall be
payable from time to time on demand.

 

2.11         Fees.  (a)  IBM agrees to pay to the Administrative Agent, for the
account of each Lender, a facility fee for each day during the Revolving Credit
Commitment Period.  Such fee shall be payable quarterly in arrears on the last
day of each March, June, September and December and on the Termination Date and
shall be computed for each day during such period at a rate per annum equal to
the Facility Fee Rate in effect on such day on the aggregate amount of the
Revolving Credit Commitments in effect on such day regardless of usage (or, if
the Revolving Credit Commitments shall have been terminated, on the average
aggregate outstanding principal amount of the Loans on such day).

 

(b)           IBM shall pay to the Administrative Agent, for its own account,
the fees in the amounts and on the dates previously agreed to in writing by IBM.

 

2.12         Computation of Interest and Fees.  (a)  Facility fees and interest
(other than interest calculated on the basis of the Prime Rate) shall be
calculated on the basis of a 360-day year for the actual days elapsed.  Interest
calculated on the basis of the Prime Rate shall be calculated on the basis of a
365- (or 366-, as the case may be) day year for the actual days elapsed.  The
Administrative Agent shall as soon as practicable notify the relevant Borrower
and the Lenders of each determination of a Eurodollar Rate.  Any change in the
interest rate on a US$ Loan resulting from a change in the ABR shall become
effective as of the opening of business on the day on which such change becomes
effective.  The Administrative Agent shall as soon as practicable notify the
relevant Borrower and the Lenders of the effective date and the amount of each
such change in interest rate.

 

(b)           Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrowers and the Lenders in the absence of manifest error.  The
Administrative Agent shall, at the request of the relevant Borrower, deliver to
such Borrower a statement showing the quotations furnished by the Reference
Lenders (if any) used by the Administrative Agent in determining any interest
rate with respect to a Eurodollar Loan or an Index Rate Competitive Loan.

 

(c)           If any Reference Lender shall for any reason no longer have a
Revolving Credit Commitment, such Reference Lender shall thereupon cease to be a
Reference Lender, and if, as a result, there shall only be one Reference Lender
remaining, the Administrative Agent (with the consent of IBM) shall, by notice
to the Borrowers and the Lenders, designate another Lender as a Reference Lender
so that there shall at all times be at least two Reference Lenders.

 

(d)           Each Reference Lender shall use its best efforts to furnish
quotations of rates to the Administrative Agent on a timely basis as
contemplated hereby.  If any of the Reference Lenders shall be unable or shall
otherwise fail to supply such rates to the Administrative Agent upon its
request, the rate of interest shall, subject to the provisions of Section 2.14,
be determined on the basis of the quotations of the remaining Reference Lenders
or Reference Lender.

 

2.13         Termination or Reduction of Revolving Credit Commitments.  IBM
shall have the right, upon not less than three Business Days’ irrevocable notice
to the Administrative Agent, to terminate the Revolving Credit Commitments or,
from time to time, to reduce the amount of the Revolving Credit Commitments;
provided that no such termination or reduction of Revolving Credit Commitments
shall be permitted if, after giving effect thereto and to any repayments of the
Loans made on the effective date thereof, (a) the aggregate principal amount of
the US$ Loans and Local Currency Loans (US$ Equivalent) then outstanding would
exceed the aggregate Revolving Credit Commitments then in effect or (b) the
aggregate principal amount of Revolving Credit Loans, Swing Line Loans, Local

 

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Currency Loans (US$ Equivalent) and Funded Participations made by any Lender
then outstanding would exceed such Lender’s Revolving Credit Commitment.  Any
such reduction shall be in an amount equal to $50,000,000 or a whole multiple of
$5,000,000 in excess thereof and shall reduce permanently the Revolving Credit
Commitments then in effect.

 

2.14         Inability to Determine Interest Rate.  If prior to the first day of
any Interest Period:

 

(a)  the Administrative Agent shall have determined (which determination shall
be conclusive and binding upon the Borrowers) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, or

 

(b)  the Administrative Agent shall have received notice from the Required
Lenders that the Eurodollar Rate determined or to be determined for such
Interest Period will not adequately and fairly reflect the cost to such Lenders
(as conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period,

 

the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrowers and the Lenders as soon as practicable thereafter.  If such notice is
given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as ABR Loans and (y) any US$ Loans that, on the
first day of such Interest Period, were to have been converted to or continued
as Eurodollar Loans shall be continued as or converted to ABR Loans.  Until such
notice has been withdrawn by the Administrative Agent, no further Eurodollar
Loans shall be made or continued as such, nor shall any Borrower have the right
to convert ABR Loans to Eurodollar Loans.

 

2.15         Pro Rata Treatment and Payments.  (a)  Each reduction of the
Revolving Credit Commitments of the Lenders shall be made pro rata according to
the Lenders’ respective Commitment Percentages.  Each payment (including each
prepayment other than any prepayment made pursuant to Section 3.2(f)) by a
Borrower on account of principal of and interest on Revolving Credit Loans which
are ABR Loans shall be made pro rata according to the respective outstanding
principal amounts of such ABR Loans then held by the Lenders.  Each payment
(including each prepayment other than any prepayment made pursuant to
Section 3.2(f)) by a Borrower on account of principal of and interest on
Eurodollar Loans designated by a Borrower to be applied to a particular
Eurodollar Tranche shall be made pro rata according to the respective
outstanding principal amounts of such Eurodollar Loans then held by the
Lenders.  Each payment (including each prepayment other than any prepayment made
pursuant to Section 3.2(f)) by any Swing Line Borrower on account of principal
of and interest on Swing Line Loans shall be made pro rata according to the
respective outstanding principal amounts of the Swing Line Loans or
participating interests therein, as the case may be, then held by the relevant
Lenders.  All payments (including prepayments) to be made by a Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Administrative Agent’s office specified in
Section 11.2, in Dollars and in immediately available funds.  The Administrative
Agent shall distribute such payments to the Lenders promptly upon receipt in
like funds as received.  If any payment hereunder (other than payments on
Eurodollar Loans or Index Rate Competitive Loans) becomes due and payable on a
day other than a Business Day, such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.  If
any payment on a Eurodollar Loan or an Index Rate Competitive Loan becomes due
and payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day (and, with

 

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respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension) unless the result of such extension would
be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day.  The provisions
of this Section 2.15(a) shall, to the extent applicable, be subject to the
procedures set forth in Section 2.21.

 

(b)           Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the relevant
Borrower a corresponding amount.  If such amount is not made available to the
Administrative Agent by the required time on the Borrowing Date therefor, such
Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Effective
Rate for the period until such Lender makes such amount immediately available to
the Administrative Agent.  A certificate of the Administrative Agent submitted
to any Lender with respect to any amounts owing under this Section 2.15(b) shall
be conclusive in the absence of manifest error.  If such Lender’s share of such
borrowing is not made available to the Administrative Agent by such Lender
within three Business Days of such Borrowing Date, the Administrative Agent
shall also be entitled to recover such amount with interest thereon at the rate
per annum applicable to ABR Loans hereunder, on demand, from the relevant
Borrower

 

(c)           If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.5(b), 2.5(c), 2.15(b), 2.18(c) or 9.7, then the
Administrative Agent may, in its discretion and notwithstanding any contrary
provision hereof, (i) apply any amounts thereafter received by the
Administrative Agent for the account of such Lender for the benefit of the
Administrative Agent or the Swing Line Lenders to satisfy such Lender’s
obligations under such Sections until all such unsatisfied obligations are fully
paid, and/or (ii) hold any such amounts in a segregated account as cash
collateral for, and application to, any future funding obligations of such
Lender under any such Section, in the case of each of clauses (i) and
(ii) above, in any order as determined by the Administrative Agent in its
discretion.

 

2.16         Illegality.  Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans or Index Rate Competitive Loans as contemplated by this
Agreement, (a) the commitment of such Lender hereunder to make Eurodollar Loans,
continue Eurodollar Loans as such and convert ABR Loans to Eurodollar Loans
shall forthwith be cancelled, (b) such Lender’s Revolving Credit Loans then
outstanding as Eurodollar Loans, if any, shall be converted automatically to ABR
Loans on the respective last days of the then current Interest Periods with
respect to such Loans or within such earlier period as required by law and
(c) the relevant Borrower shall, with respect to any Index Rate Competitive Loan
of such Lender, take such action as such Lender may reasonably request.

 

2.17         Requirements of Law.  (a)  If the adoption of or any change in any
Requirement of Law applicable to any Lender or in the interpretation or
application thereof or compliance by any Lender with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority made subsequent to the Effective Date (or, in the case of
Index Rate Competitive Loans, made subsequent to acceptance by a Borrower of
such Loan):

 

(i)            shall subject any Lender or the Administrative Agent to any taxes
(other than (A) Non-Excluded Taxes and (B) taxes described in
Section 2.18(a)(i) through (iv)) on its Loans,

 

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Commitments, or other obligations, or its deposits, reserves, other liabilities
or capital attributable thereto;

 

(ii)           shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by, deposits
or other liabilities in or for the account of, advances, loans or other
extensions of credit by, or any other acquisition of funds by, any office of
such Lender which is not otherwise included pursuant to Section 2.17(c) in the
determination of the Eurodollar Rate or the Applicable Index Rate, as the case
may be; or

 

(iii)          shall impose on such Lender any other condition;

 

and the result of any of the foregoing is to increase the cost to such Lender or
the Administrative Agent, by an amount which such Lender or the Administrative
Agent deems to be material, of making, converting into, continuing or
maintaining Eurodollar Loans or Index Rate Competitive Loans (or any Loan in the
case of (i)), or to reduce any amount receivable hereunder in respect thereof,
then, in any such case, the relevant Borrower shall promptly pay such Lender or
the Administrative Agent, upon its demand, any additional amounts necessary to
compensate such Lender or the Administrative Agent for such increased cost or
reduced amount receivable.  If any Lender or the Administrative Agent becomes
entitled to claim any additional amounts pursuant to this Section 2.17(a), it
shall promptly notify the relevant Borrower, through the Administrative Agent,
of the event by reason of which it has become so entitled.

 

(b)           If any Lender shall have determined that any change in any
Requirement of Law regarding capital or liquidity adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital or liquidity adequacy (whether or not having the force of law) from any
Governmental Authority, in each case made subsequent to the Effective Date, does
or shall have the effect of reducing the rate of return on such Lender’s or such
corporation’s capital as a consequence of its obligations hereunder to a level
below that which such Lender or such corporation could have achieved but for
such application or compliance (taking into consideration such Lender’s or such
corporation’s policies with respect to capital or liquidity adequacy) by an
amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the relevant Borrower (with a copy to the
Administrative Agent) of a written request therefor, such Borrower shall pay to
such Lender such additional amount or amounts as will compensate such Lender for
such reduction.

 

(c)           Notwithstanding anything herein to the contrary, (i) all requests,
rules, guidelines, requirements and directives promulgated by the Bank for
International Settlements, the Basel Committee on Banking Supervision (or any
successor or similar authority) or by United States or foreign regulatory
authorities, in each case pursuant to Basel III, and (ii) the Dodd-Frank Wall
Street Reform and Consumer Protection Act and all requests, rules, guidelines,
requirements and directives thereunder or issued in connection therewith or in
implementation thereof, shall in each case be deemed to be a change in
Requirements of Law, regardless of the date enacted, adopted, issued or
implemented.

 

(d)           Each Borrower agrees to pay to each Lender which requests
compensation under this Section 2.17(d) (by notice to such Borrower), on the
last day of each Interest Period with respect to any Eurodollar Loan made by
such Lender or on the Competitive Loan Maturity Date with respect to any Index
Rate Competitive Loan made by such Lender, as the case may be, so long as such
Lender shall be required to maintain reserves against “Eurocurrency liabilities”
under Regulation D of the Board (or, so long as such Lender may be required by
the Board or by any other Governmental Authority to maintain reserves against
any other category of liabilities which includes deposits by reference to which
the interest rate on Eurodollar Loans or Index Rate Competitive Loans is
determined as provided in this Agreement

 

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or against any category of extensions of credit or other assets of such Lender
which includes any Eurodollar Loans or Index Rate Competitive Loans), an
additional amount (determined by such Lender and notified to the relevant
Borrower) representing such Lender’s calculation or, if an accurate calculation
is impracticable, reasonable estimate (using such reasonable means of allocation
as such Lender shall determine) of the actual costs, if any, incurred by such
Lender during such Interest Period or during the period such Index Rate
Competitive Loan was outstanding (a “Competitive Loan Period”), as the case may
be, as a result of the applicability of the foregoing reserves to such
Eurodollar Loans or Index Rate Competitive Loans, which amount in any event
shall not exceed the product of the following for each day of such Interest
Period or Competitive Loan Period:

 

(i)            the principal amount of the Eurodollar Loans or Index Rate
Competitive Loans, as the case may be, made by such Lender to which such
Interest Period or Competitive Loan Period relates and outstanding on such day;
and

 

(ii)           the difference between (x) a fraction the numerator of which is
the Eurodollar Rate or the Applicable Index Rate, as the case may be (expressed
as a decimal) applicable to such Eurodollar Loan or Index Rate Competitive Loan,
and the denominator of which is one minus the maximum rate (expressed as a
decimal) at which such reserve requirements are imposed by the Board or other
Governmental Authority on such date minus (y) such numerator; and

 

(iii)          a fraction the numerator of which is one and the denominator of
which is 360.

 

Any Lender which gives notice under this Section 2.17(d) shall promptly withdraw
such notice (by written notice of withdrawal given to the Administrative Agent
and the relevant Borrowers) in the event such Lender is no longer required to
maintain such reserves or the circumstances giving rise to such notice shall
otherwise cease to exist.  Notwithstanding the foregoing, no Lender shall be
entitled to request compensation under this Section 2.17(d) with respect to any
Index Rate Competitive Loan if it shall have obtained actual knowledge of the
change giving rise to such request at the time of submission of such Lender’s
Competitive Loan Offer pursuant to which such Competitive Loan shall have been
made, unless notice of such Lender’s entitlement to such compensation shall have
been furnished to the relevant Borrower at or prior to such time.

 

(e)           A certificate as to any additional amounts payable pursuant to
this Section 2.17 submitted by any Lender, through the Administrative Agent, to
the relevant Borrower shall specify in reasonable detail the basis for the
request for compensation of such additional amounts and the method of
computation thereof and shall be conclusive in the absence of manifest error. 
Subject to the provisions of the next succeeding sentence, the relevant Borrower
shall (except as otherwise provided in Section 2.17(d)) pay each Lender the
amount shown as due on any such certificate delivered by it within 30 days after
receipt thereof.  Notwithstanding any other provision of this Section 2.17,
(i) each Lender shall be entitled to compensation under this Section 2.17 for
only such costs as are incurred or reductions as are suffered as to which a
certificate has been delivered in accordance with the terms of this paragraph
(d) within 90 days after such Lender obtained actual knowledge of such costs or
reductions and (ii) a Borrower shall not be required to compensate a Lender
pursuant to this Section 2.17 for any increased costs or reductions incurred
more than 90 days prior to the date that such Lender notifies such Borrower of
the change giving rise to such increased costs or reductions and of such
Lender’s intention to claim compensation therefor; provided that, if the change
giving rise to such increased costs or reductions is retroactive, then the
90-day period referred to in this clause (ii) shall be extended to include the
period of retroactive effect thereof.  Each Lender agrees to use its best
efforts to notify the relevant Borrower as promptly as practicable after
obtaining knowledge of any such costs or reductions.  The obligations of the

 

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Borrowers pursuant to this Section 2.17 shall survive the termination of this
Agreement and the payment of the US$ Loans and all other amounts payable
hereunder.  Notwithstanding any other provision of this Section 2.17, no Lender
shall demand compensation for any increased cost or reduction or other amount
referred to above if such demand would be arbitrary or exceptional in light of
similar circumstances under comparable provisions of other credit agreements.

 

(f)            Notwithstanding the foregoing, no Lender shall be entitled to
request compensation under Section 2.17(a) or 2.17(b) with respect to any
Competitive Loan if it shall have obtained actual knowledge of the change giving
rise to such request at the time of, or such change shall have been publicly
announced prior to, submission of such Lender’s Competitive Loan Offer pursuant
to which such Competitive Loan shall have been made, unless notice of such
Lender’s entitlement to such compensation shall have been furnished to the
relevant Borrower at or prior to such time.

 

2.18         Taxes.  (a)  Unless otherwise required by applicable law, all
payments made by or on account of the Borrowers under this Agreement shall be
made free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, excluding (i) net income
taxes and franchise taxes (imposed in lieu of net income taxes) imposed on the
Administrative Agent, any Lender or any Transferee that are Other Connection
Taxes, (ii) U.S. Federal withholding taxes imposed on amounts payable to or for
the account of a Lender with respect to an applicable interest in a Loan
pursuant to a law in effect on the date on which (x) such Lender acquires such
interest in the Loan (other than pursuant to an assignment request by a Borrower
under Section 11.11) or (y) such Lender changes its lending office, except in
each case to the extent that, pursuant to this Section 2.18, amounts with
respect to such taxes were payable either to such Lender’s assignor immediately
before such Lender acquired the applicable interest in a Loan or to such Lender
immediately before it changed its lending office, (iii) any taxes attributable
to a Lender’s failure to comply with the requirements of Section 2.18(d), and
(iv) any U.S. Federal withholding taxes imposed under FATCA.  If any such
non-excluded taxes, levies, imposts, duties, charges, fees deductions or
withholdings imposed on or with respect to any payment made by or on account of
any obligation of any Borrower under this Agreement (“Non-Excluded Taxes”) are
required to be withheld from any amounts payable to the Administrative Agent or
any Lender (or Transferee) hereunder, the amounts so payable by the applicable
Borrower shall be increased to the extent necessary to yield to the
Administrative Agent or such Lender (or Transferee) (after payment of all
Non-Excluded Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in this Agreement.  Whenever any Non-Excluded
Taxes are payable by any Borrower, as promptly as possible thereafter such
Borrower shall send to the Administrative Agent for its own account or for the
account of such Lender (or Transferee), as the case may be, a certified copy of
an original official receipt received by such Borrower showing payment thereof. 
If any Borrower fails to pay any Non-Excluded Taxes when due to the appropriate
taxing authority or fails to remit to the Administrative Agent the required
receipts or other required documentary evidence, such Borrower shall indemnify
the Administrative Agent and the Lenders (or Transferees) for any incremental
taxes, interest or penalties that may become payable by the Administrative Agent
or any Lender (or Transferee) as a result of any such failure.  The obligations
contained in this Section 2.18 shall survive the termination of this Agreement
and the payment of all other amounts payable hereunder.

 

(b)           The Borrowers shall timely pay to the relevant Governmental
Authority in accordance with applicable law, or at the option of the
Administrative Agent timely reimburse it for, Other Taxes.  The Borrowers shall
jointly and severally indemnify the Administrative Agent and each Lender, within
10 days after demand therefor, for the full amount of any Non-Excluded Taxes
(including Non-Excluded Taxes imposed or asserted on or attributable to amounts
payable under this Section) payable or paid by the Administrative Agent or such
Lender or required to be withheld or deducted from a payment to the
Administrative Agent or such Lender and any reasonable expenses arising
therefrom or with respect thereto, whether or not such Non-Excluded Taxes were
correctly or legally imposed or

 

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asserted by the relevant Governmental Authority.  A certificate as to the amount
of such payment or liability delivered to any Borrower by a Lender (with a copy
to the Administrative Agent), or by the Administrative Agent on its own behalf
or on behalf of a Lender, shall be conclusive absent manifest error.

 

(c)           Each Lender shall severally, within 10 days after demand therefor,
indemnify (i) the Administrative Agent for (A) any taxes attributable to such
Lender (but only to the extent that any Borrower has not already indemnified the
Administrative Agent for such Non-Excluded Taxes and without limiting the
obligation of the Borrowers to do so) and (B) any taxes attributable to such
Lender’s failure to comply with the provisions of Section 11.6 relating to the
maintenance of a Participant Register and (ii) any Borrower for any taxes
described in Section 2.18(a)(i) through (iv) and attributable to such Lender, in
each case, that are payable or paid by the Administrative Agent or any Borrower
(as applicable) in connection with this Agreement, and any reasonable expenses
arising therefrom or with respect thereto, whether or not such taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority.  A certificate as to the amount of such payment or liability
delivered to any Lender by the Administrative Agent shall be conclusive absent
manifest error.  Each Lender hereby authorizes the Administrative Agent or any
Borrower, as applicable, to set off and apply any and all amounts at any time
owing to such Lender under this Agreement or otherwise payable by the
Administrative Agent or any Borrower, as applicable, to the Lender from any
other source against any amount due to the Administrative Agent or any Borrower,
as applicable, under this paragraph (c).

 

(d)           To the extent permitted by law, each Lender (or Transferee) that
is not a “United States person” within the meaning of Section 7701(a)(30) of the
Code (such Lender (or Transferee), a “Non-U.S. Lender”) shall:

 

(i)            on the date it becomes a Lender or Transferee, deliver to each
Borrower, IBM and the Administrative Agent two properly completed and duly
executed originals of either (w) in the case of Non-U.S. Lender claiming
exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of
the Code with respect to payments of “portfolio interest,” United States
Internal Revenue Service Form W-8BEN (together with a certificate substantially
in the form of Exhibit K-1 through K-4, as applicable, representing that such
Non-U.S. Lender is not a bank for purposes of Section 881(c) of the Code, is not
a 10 percent shareholder (within the meaning of Section 871(h)(3)(B) of the
Code) of any Borrower and is not a controlled foreign corporation related to any
Borrower (within the meaning of Section 864(d)(4) of the Code) (a “United States
Tax Compliance Certificate”)), (x) Internal Revenue Service Form W-8BEN or
Form W-8ECI, (y) to the extent a Non-U.S. Lender is not the beneficial owner
(for example, where the Non-U.S. Lender is a partnership or a participating
Lender), Internal Revenue Service Form W-8IMY (or any successor forms) of the
Non-U.S. Lender, accompanied by a Form W-8ECI, W-8BEN, United States Tax
Compliance Certificate, Form W-9, Form W-8IMY or any other required information
from each beneficial owner, as applicable (provided that, if one or more
beneficial owners are claiming the portfolio interest exemption, the United
States Tax Compliance Certificate may be provided by such Non-U.S. Lender on
behalf of such beneficial owner), or (z) any other form prescribed by applicable
U.S. federal income tax laws (including the Treasury Regulations) as a basis for
claiming a complete exemption from, or a reduction in, U.S. federal withholding
tax on any payments to such Lender, in each case properly completed and duly
executed by such Non-U.S. Lender claiming complete exemption from, or reduced
rate of, U.S. federal withholding tax on payments by the Borrower under this
Agreement;

 

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(ii)           deliver to each Borrower, IBM and the Administrative Agent two
properly completed and duly executed originals of any such form or certification
on or before the date that any such form or certification described above
expires or becomes obsolete and after the occurrence of any event requiring a
change in the most recent form previously delivered by it to each Borrower, IBM
and the Administrative Agent; and

 

(iii)          obtain such extensions of time for filing and complete such forms
or certifications as may reasonably be requested by each Borrower, IBM or the
Administrative Agent;

 

except that the forms and certificates described above shall not be required if
any change in Requirement of Law has occurred prior to the date on which any
such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Lender (or Transferee) from duly
completing and delivering any such form with respect to it and such Lender (or
Transferee) so advises each Borrower, IBM and the Administrative Agent.  In
addition, if a payment made to a Lender under this Agreement would be subject to
U.S. federal withholding tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to IBM and the Administrative Agent at the time or times
prescribed by law and at such time or times reasonably requested by IBM or the
Administrative Agent such documentation prescribed by applicable law (including
as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional
documentation reasonably requested by IBM or the Administrative Agent as may be
necessary for IBM, any Borrower and the Administrative Agent to comply with
their obligations under FATCA and to determine that such Lender has complied
with such Lender’s obligations under FATCA or to determine the amount to deduct
and withhold from such payment.  Solely for purposes of the preceding sentence,
“FATCA” shall include any amendments made to FATCA after the date of this
Agreement.

 

(e)           Each Person that shall become a Participant pursuant to
Section 11.6, a Competitive Loan Assignee pursuant to Section 11.7, or a Lender
pursuant to Section 11.8, including for this purpose a Lender that arranges a
US$ Loan through or transfers a US$ Loan to a different branch of such Lender,
shall, upon the effectiveness of the related designation or transfer, be
required to provide all of the forms and statements required pursuant to this
Section 2.18, provided that in the case of a Participant such Participant shall
furnish all such required forms and statements to the Lender from which the
related participation shall have been purchased.

 

(f)            If any Lender (or Transferee) or the Administrative Agent
determines, in its sole discretion exercised in good faith, that it has received
a refund of any Non-Excluded Taxes as to which it has been indemnified by any
Borrower pursuant to this Section 2.18, it shall promptly notify such Borrower
of such refund and shall, within 30 days after receipt of such refund, repay the
amount of such refund to such Borrower (to the extent of amounts that have been
paid by such Borrower under this Section 2.18 with respect to Non-Excluded Taxes
giving rise to such refund), net of all reasonable out-of-pocket expenses of
such Lender (or Transferee) or the Administrative Agent and without interest
(other than interest actually received from the relevant taxing authority or
other Governmental Authority with respect to such refund); provided, however,
that such Borrower, upon the request of such Lender (or Transferee) or the
Administrative Agent, agrees to return the amount of such refund (plus interest)
to such Lender (or Transferee) or the Administrative Agent in the event such
Lender (or Transferee) or the Administrative Agent is required to repay the
amount of such refund to the relevant taxing authority or other Governmental
Authority.  Notwithstanding anything to the contrary in this paragraph (f), in
no event will any Lender (or Transferee) or the Administrative Agent be required
to pay any amount to a Borrower pursuant to this paragraph (f) the payment of
which would place the Lender (or Transferee) or the Administrative Agent in a
less favorable net after-tax position than the Lender (or Transferee) or the

 

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Administrative Agent would have been in if the indemnification payments or
additional amounts giving rise to such refund had never been paid.  This
paragraph shall not be construed to require any indemnified party to make
available its tax returns (or any other information relating to its taxes that
it deems confidential) to any Person.

 

2.19         Indemnity.  Each Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of (a) default by such Borrower in making a borrowing
of Eurodollar Loans or Competitive Loans, or in the conversion into or
continuation of Eurodollar Loans, after such Borrower has given a notice
requesting or accepting the same in accordance with the provisions of this
Agreement, (b) default by such Borrower in making any prepayment after such
Borrower has given a notice thereof in accordance with the provisions of this
Agreement, or (c) the making of a prepayment of Eurodollar Loans or Competitive
Loans on a day which is not the last day of an Interest Period or the applicable
Competitive Loan Maturity Date, as the case may be, with respect thereto.  Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
the relevant Interest Period (or proposed Interest Period) or, in the case of
Competitive Loans, the applicable Competitive Loan Maturity Date (or proposed
Competitive Loan Maturity Date), in each case at the applicable rate of interest
for such Loans provided for herein (excluding, however, the Applicable Margin or
any positive margin applicable to Index Rate Competitive Loans included therein,
if any) over (ii) the amount of interest (as reasonably determined by such
Lender) which would have accrued to such Lender on such amount by placing such
amount on deposit for a comparable period with leading banks in the interbank
eurodollar market.  The obligations contained in this Section 2.19 shall survive
the termination of this Agreement and the payment of all other amounts payable
hereunder.

 

2.20         Change of Lending Office.  Each Lender (or Transferee) agrees that,
upon the occurrence of any event giving rise to the operation of Section 2.16,
2.17 or 2.18 with respect to such Lender (or Transferee), it will, if requested
by IBM, use reasonable efforts (subject to overall policy considerations of such
Lender (or Transferee)) to designate another lending office for any Loans
affected by such event with the object of avoiding the consequences of such
event; provided, that such designation is made on terms that, in the sole
judgment of such Lender, cause such Lender and its lending office(s) to suffer
no material economic, legal or regulatory disadvantage, and provided, further,
that nothing in this Section 2.20 shall affect or postpone any of the
obligations of any Borrower or the rights of any Lender (or Transferee) pursuant
to Section 2.16, 2.17 and 2.18.

 

2.21         Extension of Termination Date.  (a)  IBM may, by written request
(an “Extension Request”) to the Administrative Agent, substantially in the form
of Exhibit J, delivered at any time during the 60-day period preceding each
anniversary of the Effective Date, request that the Lenders extend the
Termination Date then in effect by one year, provided, that, in the case of each
Extension Request other than the first Extension Request made hereunder, an
Extension Request shall have been made and approved in accordance with this
Section 2.21 prior to each previous anniversary of the Effective Date.

 

(b)           Upon receipt of an Extension Request, the Administrative Agent
shall promptly notify each Lender thereof, and each Lender shall notify the
Administrative Agent in writing by the deadline (the “Extension Request
Deadline”) specified in such Extension Request, which deadline shall in any case
not be later than 5:00 P.M., New York City time, on the date which is 30 days
after delivery of such Extension Request, of such Lender’s election, in its sole
discretion, (i) to extend the Termination Date by one year (provided that the
Termination Date shall be so extended only to the extent expressly provided in
paragraph (c) below) or (ii) not to extend the Termination Date by one year (any
Lender not electing to extend, a “Non-Extending Lender”).  Any Lender that fails
to notify the Administrative Agent

 

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in writing of its election by the Extension Request Deadline shall be deemed to
be a Non-Extending Lender.

 

(c)           If Lenders whose Revolving Credit Commitments aggregate at least
51% of the Revolving Credit Commitments of all Lenders agree to extend the
Termination Date by one year, then the Termination Date shall automatically be
so extended, provided that any Lender that became a Non-Extending Lender
pursuant to any previous Extension Request shall be deemed to be a Non-Extending
Lender in respect of each subsequent Extension Request, and provided, further,
that if all Lenders do not agree to extend the Termination Date, then (i) IBM
shall have the right to cancel any such extension by so notifying the
Administrative Agent within five Business Days after the relevant Extension
Request Deadline, in which case the Termination Date then in effect shall not be
extended and (ii) in the event that such extension is not so cancelled, then,
with respect to each Non-Extending Lender, IBM shall either (directly or, where
applicable, through the relevant Subsidiary Borrowers):

 

(x)  (i) during the six-month period preceding the Termination Date in effect on
the date of the relevant Extension Request (the “Existing Termination Date”), on
each date on which US$ Loans are borrowed or continued as, or converted into,
Eurodollar Loans having an Interest Period ending after the Existing Termination
Date, repay the portion of such Non-Extending Lender’s Loans which would
otherwise have been part of such borrowing, continuation or conversion and
permanently reduce such Non-Extending Lender’s Revolving Credit Commitment by a
like amount, (ii) on the Existing Termination Date, terminate the Revolving
Credit Commitment and Swing Line Commitment (if any) of such Non-Extending
Lender and repay the then outstanding US$ Loans made by such Non-Extending
Lender, together with accrued but unpaid interest, facility fees and all other
amounts then due and payable to such Non-Extending Lender hereunder, including,
without limitation, amounts payable pursuant to Section 2.19, and (iii) on the
Existing Termination Date either (A) terminate the Commitments of such
Non-Extending Lender under any Local Currency Facility and repay the then
outstanding Local Currency Loans made by such Non-Extending Lender, together
with accrued but unpaid interest, facility fees and all other amounts then due
and payable to such Non-Extending Lender under any Local Currency Facility or
(B) to the extent the option described in clause (A) above is not exercised,
obtain the written agreement of such Non-Extending Lender that the loans and
other obligations outstanding under each relevant Local Currency Facility shall
on the Existing Termination Date automatically cease to be subject to the terms
of this Agreement (including the guarantee of IBM contained in Section 10); or

 

(y)  on or prior to the date which is 90 days after the relevant Extension
Request Deadline, or, if earlier, the Termination Date then in effect, cause one
or more banks or other financial institutions to purchase at par, pursuant to
Section 11.8, such Non-Extending Lender’s Revolving Credit Commitment and
outstanding US$ Loans (which purchase shall be accompanied by payment of accrued
but unpaid interest, facility fees and all other amounts then due and payable to
such Non-Extending Lender hereunder, including, without limitation, amounts
payable pursuant to Section 2.19), in which case such Non-Extending Lender
shall, promptly upon request by IBM, agree to transfer its Revolving Credit
Commitment and US$ Loans upon the terms and subject to the conditions of
Section 11.8 to such banks or other financial institutions (provided that the
registration and processing fee referred to therein shall be paid by either IBM
or the relevant transferee); provided, that on the date (the “Purchase Date”) of
any such purchase of such Non-Extending Lender’s Revolving Credit Commitment and
US$ Loans, such Non-Extending Lender’s Swing Line Commitment (if any) shall be

 

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terminated, and provided, further, that on the Purchase Date either (A) the
Commitments of such Non-Extending Lender under any Local Currency Facility shall
be terminated or purchased and the then outstanding Local Currency Loans made by
such Non-Extending Lender shall be repaid or purchased (which repayment or
purchase shall be accompanied by payment of accrued but unpaid interest,
facility fees and all other amounts then due and payable to such Non-Extending
Lender under any Local Currency Facility), in each case on terms satisfactory to
such Non-Extending Lender, or (B) to the extent the option described in clause
(A) above is not exercised, IBM shall have obtained the written agreement of
such Non-Extending Lender that the loans and other obligations outstanding under
each relevant Local Currency Facility shall on such Purchase Date automatically
cease to be subject to the terms of this Agreement (including the guarantee of
IBM contained in Section 10).

 

2.22         Defaulting Lenders

 

Notwithstanding any provision of this Agreement to the contrary, if any Lender
becomes a Defaulting Lender, then the following provisions shall apply for so
long as such Lender is a Defaulting Lender:

 

(a)           fees shall cease to accrue on the Revolving Credit Commitment of
such Defaulting Lender pursuant to Section 2.11(a);

 

(b)           the Revolving Credit Commitment and Loans of such Defaulting
Lender shall not be included in determining whether the Required Lenders have
taken or may take any action hereunder (including any consent to any amendment,
waiver or other modification pursuant to Section 11.1); provided, that this
clause (b) shall not apply to the vote of a Defaulting Lender in the case of an
amendment, waiver or other modification requiring the consent of such Lender or
each Lender affected thereby;

 

(c)           if any Swing Line Exposure exists at the time such Lender becomes
a Defaulting Lender then:

 

(i)           all or any part of the Swing Line Exposure of such Defaulting
Lender shall be reallocated among the non-Defaulting Lenders in accordance with
their respective Revolving Credit Borrowing Shares, but only to the extent
sufficient Available Revolving Credit Commitments of non-Defaulting Lenders
exist to support such reallocation; or

 

(ii)           if the reallocation described in clause (i) above cannot, or can
only partially, be effected, the relevant Swing Line Borrower shall within one
Business Day following notice by the Administrative Agent prepay such Swing Line
Exposure;

 

(d)           so long as such Lender is a Defaulting Lender, no Swing Line
Lender shall be required to fund any Swing Line Loan unless it is satisfied that
the related exposure will be 100% covered by the Available Revolving Credit
Commitments of the non-Defaulting Lenders and participating interests in any
newly made Swing Line Loan shall be allocated among non-Defaulting Lenders in a
manner consistent with clause (c)(i) (and such Defaulting Lender shall not
participate therein).

 

If a Bankruptcy Event with respect to a Lender Parent of any Lender shall occur
following the date hereof and for so long as such event shall continue, each
Swing Line Lender shall not

 

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be required to fund any Swing Line Loan unless such Swing Line Lender shall be
satisfied that appropriate arrangements have been entered into to defease any
risk to it in respect of such Lender hereunder.

 

In the event that the Administrative Agent, IBM and the Swing Line Lenders agree
that a Defaulting Lender has adequately remedied all matters that caused such
Lender to be a Defaulting Lender, then the Swing Line Exposure of the Lenders
shall be readjusted to reflect the inclusion of such Lender’s Revolving Credit
Commitment.

 

SECTION 3.           LOCAL CURRENCY FACILITIES

 

3.1           Terms of Local Currency Facilities.  (a)  Subject to the
provisions of this Section 3, each Lender hereby agrees that IBM may in its
discretion from time to time designate any credit facility to which any one or
more Borrowers and any one or more Lenders is a party as a “Local Currency
Facility”, with the consent of each such Lender in its sole discretion, by
delivering a Local Currency Facility Addendum to the Administrative Agent
executed by IBM and each such Borrower and executed or acknowledged in writing
by each such Lender, provided, that on the effective date of such designation
(i) an Exchange Rate with respect to each Local Currency covered by such Local
Currency Facility shall be determinable by reference to the Reuters currency
pages (or comparable publicly available screen) and (ii) no Event of Default
shall have occurred and be continuing.  Concurrently with the delivery of a
Local Currency Facility Addendum, IBM or the relevant Borrower shall furnish to
the Administrative Agent or its counsel copies of all documentation executed and
delivered by any Borrower in connection therewith, together with, if applicable,
an English translation thereof (provided, that IBM may instead furnish an
English translation of a summary term sheet in respect thereof describing all
material terms thereof so long as an English translation of all such
documentation is furnished to the Administrative Agent or its counsel within 90
days after the date of delivery of such Local Currency Facility Addendum). 
Except as otherwise provided in this Section 3, the terms and conditions of each
Local Currency Facility shall be determined by mutual agreement of the relevant
Borrower(s) and Local Currency Lender(s).  The documentation governing each
Local Currency Facility shall contain an express acknowledgement that such Local
Currency Facility shall be subject to the provisions of this Section 3.  Each of
IBM and, by agreeing to any Local Currency Facility designation as contemplated
hereby, each relevant Local Currency Lender (if any) which is an affiliate,
branch or agency of a Lender, acknowledges and agrees that each reference in
this Agreement to any Lender shall, to the extent applicable, be deemed to be a
reference to such Local Currency Lender.  In the event of any inconsistency
between the terms of this Agreement and the terms of any Local Currency
Facility, the terms of this Agreement shall prevail.  Each of IBM, each relevant
Subsidiary Borrower and each relevant Local Currency Lender confirms that each
reference to the “IBM Credit Agreement” (or any comparable term) in the
documentation governing each Local Currency Facility shall mean and be a
reference to this Agreement.

 

(b)           The documentation governing each Local Currency Facility shall set
forth (i) the maximum amount (expressed in Dollars) available to be borrowed
from all Local Currency Lenders under such Local Currency Facility (as the same
may be reduced from time to time pursuant to Section 3.2(c) or (d), a “Local
Currency Facility Maximum Borrowing Amount”) and (ii) with respect to each Local
Currency Lender party to such Local Currency Facility, the maximum amount
(expressed in Dollars) available to be borrowed from such Local Currency Lender
thereunder (as the same may be reduced from time to time pursuant to
Section 3.2(c) or (d), a “Local Currency Lender Maximum Borrowing Amount”).  In
no event shall (i) the aggregate of all Local Currency Facility Stated Maximum
Borrowing Amounts at any time exceed $5,000,000,000 or (ii) the aggregate of all
Local Currency Lender Stated Maximum Borrowing Amounts in respect of any Local
Currency Lender at any time exceed such Lender’s Revolving Credit Commitment. 
The making of Local Currency Loans by a Local Currency Lender under

 

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a Local Currency Facility shall under no circumstances reduce the amount
available to be borrowed from such Lender under any other Local Currency
Facility to which such Lender is a party.

 

(c)           Except as otherwise required by applicable law, in no event shall
the Local Currency Lenders party to a Local Currency Facility have the right to
accelerate the Local Currency Loans outstanding thereunder, or to terminate
their Commitments (if any) to make such Loans prior to the stated termination
date in respect thereof, except, in each case, in connection with an
acceleration of the Loans or a termination of the Commitments pursuant to
Section 8 of this Agreement, provided, that nothing in this paragraph (c) shall
be deemed to require any Local Currency Lender to make a Local Currency Loan if
the applicable conditions precedent to the making of such Local Currency Loan
set forth in the relevant Local Currency Facility have not been satisfied.  No
Local Currency Loan may be made under a Local Currency Facility if (i) an Event
of Default shall have occurred and be continuing or would result therefrom,
(ii) the Termination Date has occurred or (iii) after giving effect thereto,
(x) the aggregate principal amount of the US$ Loans and Local Currency Loans
(US$ Equivalent) then outstanding would exceed the aggregate Revolving Credit
Commitments then in effect, (y) the aggregate principal amount of US$ Loans and
Local Currency Loans (US$ Equivalent) made to any Subsidiary Borrower then
outstanding would exceed the Maximum Subsidiary Borrowing Amount with respect to
such Subsidiary Borrower set forth in the most recent Subsidiary Borrower Notice
and Designation delivered by IBM pursuant to Section 5.2(d) or (z) the aggregate
principal amount of Revolving Credit Loans, Swing Line Loans, Local Currency
Loans (US$ Equivalent) and Funded Participations made by any Lender then
outstanding would exceed such Lender’s Revolving Credit Commitment.

 

(d)           Each Local Currency Responsible Lender shall furnish to the
Administrative Agent, (i) immediately upon its request (and, in any event,
within one hour after any such request is made on the date that a Borrower has
made a request to borrow Swing Line Loans hereunder), a statement setting forth
the outstanding Local Currency Loans made under each Local Currency Facility of
such Lender or any affiliate, branch or agency thereof, and the amount and terms
of any pending prepayment notices or borrowing requests received pursuant to
each such Local Currency Facility through the date of the Administrative Agent’s
request, (ii) within one Business Day after any change in the outstanding amount
of any Local Currency Loans under any Local Currency Facility of such Lender or
any affiliate, branch or agency thereof, a written statement to the
Administrative Agent setting forth the outstanding amount of the Local Currency
Loans under such Local Currency Facility after giving effect to such change and
(iii) within three Business Days after the last Business Day of each calendar
quarter, either (x) a written statement setting forth the outstanding amount of
Local Currency Loans under each Local Currency Facility of such Lender or any
affiliate, branch or agency thereof, as of the last Business Day of such
calendar quarter or (y) if no such amounts are outstanding, a written notice to
that effect.  In the event that any Lender does not comply with its obligations
under this Section 3.1(d) with respect to any Local Currency Facility, the
Administrative Agent shall have the option to assume that no Local Currency
Loans are outstanding under such Local Currency Facility.

 

(e)           The relevant Borrower shall furnish to the Administrative Agent or
its counsel copies of any amendment, supplement or other modification (including
any change in commitment amounts or in the Lenders participating in any Local
Currency Facility) to the terms of any Local Currency Facility promptly after
the effectiveness thereof (together with, if applicable, an English translation
thereof).  If any such amendment, supplement or other modification to a Local
Currency Facility shall (i) add a Lender as a Local Currency Lender thereunder
or (ii) change the Local Currency Facility Stated Maximum Borrowing Amount or
any Local Currency Lender Stated Maximum Borrowing Amount with respect
thereto, IBM shall promptly furnish an appropriately revised Local Currency
Facility Addendum, executed by IBM, the relevant Borrower and the affected Local
Currency Lenders (or any agent acting on their behalf), to the Administrative
Agent.  In addition, upon the request of the Administrative Agent, IBM shall
promptly furnish to the Administrative Agent, to the extent available to

 

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IBM, such information with respect to any Local Currency Facility or the amount
of Local Currency Loans outstanding thereunder requested by the Administrative
Agent.

 

(f)            IBM may terminate its designation of a facility as a Local
Currency Facility, with the consent of each Local Currency Lender party thereto
in its sole discretion, by written notice to the Administrative Agent, which
notice shall be executed by IBM, the relevant Borrower and each Lender party to
such Local Currency Facility (or any agent acting on their behalf).  Once notice
of such termination is received by the Administrative Agent, such Local Currency
Facility and the loans and other obligations outstanding thereunder shall
immediately cease to be subject to the terms of this Agreement (including the
guarantee of IBM contained in Section 10).  Notwithstanding anything to the
contrary in this Agreement, any loans made under a Local Currency Facility at
any time when an exchange rate with respect to the relevant Local Currency
cannot be calculated by the Administrative Agent in accordance with the
definition of “Exchange Rate” contained in Section 1.1 shall be deemed not to
constitute “Local Currency Loans” for the purposes of this Agreement unless and
until an exchange rate with respect to such loans may be so calculated.

 

(g)           Nothing in this Section 3 shall be deemed to limit the ability of
IBM or any of the Subsidiaries or Controlled Persons to enter into credit
facilities which do not constitute Local Currency Facilities.

 

3.2           Currency Fluctuations, etc.  (a)  No later than 2:00 P.M., New
York City time, on each Calculation Date, the Administrative Agent shall
(i) determine the Exchange Rate as of such Calculation Date with respect to each
Local Currency covered by a Local Currency Facility and (ii) give notice thereof
to the Lenders, IBM and the relevant Borrowers.  Except as otherwise provided in
Section 3.3, the Exchange Rates so determined shall become effective on the
first Business Day immediately following the relevant Calculation Date (a “Reset
Date”) and shall remain effective until the next succeeding Reset Date.

 

(b)           No later than 2:00 P.M., New York City time, on each Reset Date
and each Borrowing Date, the Administrative Agent shall (i) determine the US$
Equivalent of the Local Currency Loans then outstanding under each Local
Currency Facility (after giving effect to any Local Currency Loans to be made or
repaid on such date) and (ii) notify the Lenders, IBM and the relevant Borrowers
of the results of such determination.

 

(c)           If, on any Reset Date or any Borrowing Date (after giving effect
to (i) any Loans to be made or repaid on such date and (ii) any amendment,
supplement or other modification to any Local Currency Facility effective on
such date of which the Administrative Agent has received notice), the Aggregate
Outstanding US$ Revolving Extensions of Credit of any Lender exceed the US$
Revolving Credit Overage of such Lender (the amount of such excess, the “US$
Revolving Credit Excess”), then the Local Currency Lender Maximum Borrowing
Amount under each Local Currency Facility to which such Lender is a party shall
be reduced on such date by an amount equal to the product of such US$ Revolving
Credit Excess times a fraction the numerator of which shall equal the Local
Currency Lender Stated Maximum Borrowing Amount under such Local Currency
Facility and the denominator of which shall equal the aggregate of the Local
Currency Lender Stated Maximum Borrowing Amounts under all Local Currency
Facilities to which such Lender is a party.  After giving effect to any such
reduction in Local Currency Lender Maximum Borrowing Amounts, the Local Currency
Facility Maximum Borrowing Amount with respect to each Local Currency Facility
shall in turn be reduced to an amount equal to the aggregate of the Local
Currency Lender Maximum Borrowing Amounts of all Local Currency Lenders party to
such Local Currency Facility.  Reductions in Local Currency Lender Maximum
Borrowing Amounts and Local Currency Facility Maximum Borrowing Amounts pursuant
to this paragraph (c) shall be effective until the amount thereof shall be
recalculated by the Administrative Agent on the next

 

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succeeding Reset Date or Borrowing Date, and shall not be deemed to reduce the
stated amount of any Commitment of any Local Currency Lender in respect of any
Local Currency Facility.

 

(d)           If, on any Reset Date or Borrowing Date (after giving effect to
(i) any Loans to be made or repaid on such date, (ii) any amendment, supplement
or other modification to any Local Currency Facility effective on such date of
which the Administrative Agent has received notice and (iii) any changes in any
Local Currency Lender Maximum Borrowing Amounts effected pursuant to
Section 3.2(c) on such date), the aggregate outstanding principal amount of the
US$ Loans exceeds the US$ Facility Overage (the amount of such excess, the “US$
Facility Excess”), then the Local Currency Facility Maximum Borrowing Amount
under each Local Currency Facility shall be reduced on such date by an amount
equal to the product of such US$ Facility Excess times a fraction the numerator
of which shall equal the Local Currency Facility Stated Maximum Borrowing Amount
under such Local Currency Facility and the denominator of which shall equal the
aggregate of the Local Currency Facility Stated Maximum Borrowing Amounts with
respect to all Local Currency Facilities.  Each such reduction in the Local
Currency Facility Maximum Borrowing Amount under a Local Currency Facility shall
in turn reduce the respective Local Currency Lender Maximum Borrowing Amounts of
each Local Currency Lender party to such Local Currency Facility, pro rata on
the basis of the respective Local Currency Lender Stated Maximum Borrowing
Amounts of such Lenders.  Reductions in Local Currency Facility Maximum
Borrowing Amounts and Local Currency Lender Maximum Borrowing Amounts pursuant
to this paragraph (d) shall be effective until the amount thereof shall be
recalculated by the Administrative Agent on the next succeeding Reset Date or
Borrowing Date, and shall not be deemed to reduce the stated amount of any
Commitment of any Local Currency Lender in respect of any Local Currency
Facility.

 

(e)           If, on any Reset Date, the US$ Equivalent of the Local Currency
Loans outstanding under a Local Currency Facility exceeds an amount equal to
105% of the Local Currency Facility Maximum Borrowing Amount with respect
thereto (after giving effect to any reductions therein effected pursuant to
Section 3.2(c) or (d) on such date), then the relevant Borrower shall, within
three Business Days after notice thereof from the Administrative Agent,
(i) increase the Local Currency Facility Stated Maximum Borrowing Amount with
respect to such Local Currency Facility in accordance with Section 3.1(e) and/or
(ii) prepay such Local Currency Loans in accordance with the terms of the
relevant Local Currency Facilities in an aggregate amount such that, after
giving effect thereto, (x) the US$ Equivalent of all such Local Currency Loans
shall be equal to or less than such Local Currency Facility Maximum Borrowing
Amount and (y) the US$ Equivalent of the Local Currency Loans of each relevant
Local Currency Lender shall be equal to or less than such Local Currency
Lender’s Local Currency Lender Maximum Borrowing Amount with respect to such
Local Currency Facility.

 

(f)            If, on any Reset Date, the Aggregate Outstanding Revolving
Extensions of Credit of any Lender exceed an amount equal to 105% of such
Lender’s Revolving Credit Commitment, then, within three Business Days after
notice thereof from the Administrative Agent, IBM shall prepay and/or cause the
Subsidiary Borrowers to prepay the Loans in accordance with this Agreement or
the relevant Local Currency Facilities, as the case may be, in an aggregate
amount such that, after giving effect thereto, the Aggregate Outstanding
Revolving Extensions of Credit of such Lender shall be equal to or less than
such Lender’s Revolving Credit Commitment.

 

(g)           The Administrative Agent shall promptly notify the relevant
Lenders of the amount of any reductions in Local Currency Facility Maximum
Borrowing Amounts or Local Currency Lender Maximum Borrowing Amounts, and the
amount of any prepayments, required pursuant to paragraph (c), (d), (e) or
(f) of this Section 3.2.

 

3.3           Refunding of Local Currency Loans.  (a)  Notwithstanding
noncompliance with the conditions precedent set forth in Section 5, if any Local
Currency Loans are outstanding on (i) any

 

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date on which an Event of Default pursuant to Section 8(f) or (g) shall have
occurred with respect to IBM, (ii) any date (the “Acceleration Date”) on which
the Commitments shall have been terminated and/or the Loans shall have been
declared immediately due and payable pursuant to Section 8 or (iii) any date on
which an Event of Default pursuant to Section 8(a)(ii) shall have occurred and
be continuing for three or more Business Days and, in the case of clause
(iii) above, any Local Currency Lender party to the affected Local Currency
Facility shall have given notice thereof to the Administrative Agent requesting
that the Local Currency Loans (“Affected Local Currency Loans”) outstanding
thereunder be refunded pursuant to this Section 3.3, then, at 10:00 A.M., New
York City time, on the second Business Day immediately succeeding (x) the date
on which such Event of Default occurs (in the case of clause (i) above),
(y) such Acceleration Date (in the case of clause (ii) above) or (z) the date on
which such notice is received by the Administrative Agent (in the case of clause
(iii) above), the Administrative Agent shall be deemed to have received a notice
from IBM (or any one or more Subsidiary Borrowers designated by the
Administrative Agent after consultation with IBM, provided, that any Subsidiary
Borrower so designated shall in each case be the relevant Subsidiary Borrower
party to the relevant Local Currency Facility unless otherwise agreed by the
requisite Local Currency Lenders party to such Local Currency Facility) pursuant
to Section 2.2 requesting that ABR Loans be made pursuant to Section 2.1 on such
second Business Day in an aggregate amount equal to the US$ Equivalent of the
aggregate amount of all Local Currency Loans (in the case of clause (i) or
(ii) above) or the Affected Local Currency Loans (in the case of clause
(iii) above) (calculated on the basis of Exchange Rates determined by the
Administrative Agent on the Business Day immediately preceding such second
Business Day), and the procedures set forth in Section 2.2 shall be followed in
making such ABR Loans, provided, that (x) for the purposes of determining each
Lender’s Revolving Credit Borrowing Share of such borrowing, the outstanding
principal amount of Local Currency Loans or Affected Local Currency Loans, as
the case may be, shall be deemed to be zero and (y) each Lender’s Revolving
Credit Borrowing Share of such borrowing shall be reduced to the extent (if any)
necessary to prevent the Aggregate Outstanding Revolving Extensions of Credit of
such Lender from exceeding its Revolving Credit Commitment after giving effect
to such borrowing.  The proceeds of such ABR Loans shall be applied to repay
such Local Currency Loans; it being understood, however, that IBM (or such
designated Borrower or Borrowers) shall have the right to make payment through
the original Borrower or Borrowers of such Local Currency Loans and become a
creditor of such original Borrower or Borrowers to the extent of such proceeds.

 

(b)           If, for any reason, ABR Loans may not be made pursuant to
paragraph (a) of this Section 3.3 to repay Local Currency Loans as required by
such paragraph, effective on the date such ABR Loans would otherwise have been
made, (i) the principal amount of each relevant Local Currency Loan shall be
converted into Dollars (calculated on the basis of Exchange Rates determined by
the Administrative Agent as of the immediately preceding Business Day)
(“Converted Local Currency Loans”) and (ii) each Lender severally,
unconditionally and irrevocably agrees that it shall purchase in Dollars a
participating interest in such Converted Local Currency Loans in an amount equal
to the amount of ABR Loans which would otherwise have been made by such Lender
pursuant to paragraph (a) of this Section 3.3.  Each Lender will immediately
transfer to the Administrative Agent, in immediately available funds, the amount
of its participation, and the proceeds of such participation shall be
distributed by the Administrative Agent to each relevant Local Currency Lender
in such amount as will reduce the amount of the participating interest retained
by such Local Currency Lender in the Converted Local Currency Loans to the
amount of the ABR Loans which were to have been made by it pursuant to paragraph
(a) of this Section 3.3.  All Converted Local Currency Loans shall bear interest
at the rate which would otherwise be applicable to ABR Loans.  Each Lender shall
share on a pro rata basis (calculated by reference to its participating interest
in such Converted Local Currency Loans) in any interest which accrues thereon
and in all repayments thereof.

 

(c)           If, for any reason, ABR Loans may not be made pursuant to
paragraph (a) of this Section 3.3 to repay Local Currency Loans as required by
such paragraph and the principal amount of any

 

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Local Currency Loans may not be converted into Dollars in the manner
contemplated by paragraph (b) of this Section 3.3, (i) the Administrative Agent
shall determine the US$ Equivalent of such Local Currency Loans (calculated on
the basis of Exchange Rates determined by the Administrative Agent as of the
Business Day immediately preceding the date on which ABR Loans would otherwise
have been made pursuant to said paragraph (a)) and (ii) effective on the date on
which ABR Loans would otherwise have been made pursuant to said paragraph (a),
each Lender severally, unconditionally and irrevocably agrees that it shall
purchase in Dollars a participating interest in such Local Currency Loans in an
amount equal to the amount of ABR Loans which would otherwise have been made by
such Lender pursuant to paragraph (a) of this Section 3.3.  Each Lender will
immediately transfer to the Administrative Agent, in immediately available
funds, the amount of its participation, and the proceeds of such participation
shall be distributed by the Administrative Agent to each relevant Local Currency
Lender in such amount as will reduce the US$ Equivalent as of such date of the
amount of the participating interest retained by such Local Currency Lender in
such Local Currency Loans to the amount of the ABR Loans which were to have been
made by it pursuant to paragraph (a) of this Section 3.3.  Each Lender shall
share on a pro rata basis (calculated by reference to its participating interest
in such Local Currency Loans) in any interest which accrues thereon, in all
repayments of principal thereof and in the benefits of any collateral furnished
in respect thereof and the proceeds of such collateral.

 

(d)           Notwithstanding anything to the contrary herein, the procedures
specified in Section 2.5(b) or (c), as applicable, for refunding any outstanding
Swing Line Loans shall be completed before the refunding of any Local Currency
Loans pursuant to this Section 3.3, and the Administrative Agent in its
discretion may adjust the procedures specified in this Section 3.3 to the extent
necessary to so complete such refunding of such Swing Line Loans.

 

3.4           Existing Local Currency Facilities, etc.  Each of IBM, each
Subsidiary Borrower, each Lender and the Administrative Agent acknowledges and
agrees that (a) effective as of the Effective Date, the “Commitments” under the
Existing Credit Agreement shall be terminated, (b) each “Local Currency
Facility” entered into pursuant to the Existing Credit Agreement and described
on Schedule 3.4 shall, effective on the Effective Date, automatically constitute
a Local Currency Facility hereunder, (c) notwithstanding the termination of the
“Commitments” under the Existing Credit Agreement, all “Local Currency Loans”
outstanding pursuant to each “Local Currency Facility” on the Effective Date in
the amount set forth on Schedule 3.4 shall constitute Local Currency Loans
outstanding pursuant hereto and (d) each reference to the Existing Credit
Agreement in any document relating to any such Local Currency Facility shall be
deemed to be a reference to this Agreement.

 

SECTION 4.           REPRESENTATIONS AND WARRANTIES

 

To induce the Administrative Agent and the Lenders to enter into this Agreement
and to make the Loans, IBM hereby represents and warrants, and each Subsidiary
Borrower represents and warrants (to the extent specifically applicable to such
Subsidiary Borrower), to the Administrative Agent and each Lender that:

 

4.1           Organization; Powers.  Each of IBM, each Significant Subsidiary
and each Subsidiary Borrower (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has all
requisite power and authority to own its property and assets and to carry on its
business in all material respects as now conducted and as proposed to be
conducted, (c) is qualified to do business in every jurisdiction where such
qualification is required, except where the failure so to qualify would not,
individually or in the aggregate, result in a Material Adverse Effect, and
(d) in the case of each Borrower, has the power and authority to execute,
deliver and perform its obligations under

 

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this Agreement and each other agreement or instrument contemplated hereby to
which it is or will be a party and to borrow hereunder.

 

4.2           Authorization.  The execution, delivery and performance by each
Borrower of this Agreement and the borrowings and other transactions
contemplated hereby (collectively, the “Transactions”) (a) have been duly
authorized by all requisite corporate or other organizational action and, if
required, stockholder action and (b) will not (i) violate (A) any provision of
law, statute, material rule or material regulation, or of the certificate or
articles of incorporation or other constitutive documents or by-laws of IBM, any
Significant Subsidiary or any Subsidiary Borrower, (B) any material order of any
Governmental Authority or (C) any provision of any material indenture, material
agreement or other material instrument to which IBM, any Significant Subsidiary
or any Subsidiary Borrower is a party or by which any of them or any of their
property is or may be bound, (ii) be in conflict with, result in a breach of or
constitute (alone or with notice or lapse of time or both) a default under any
such indenture, agreement or other instrument or (iii) except as contemplated
hereby, result in the creation or imposition of any Lien upon or with respect to
any property or assets now owned or hereafter acquired by IBM, any Significant
Subsidiary or any Subsidiary Borrower.

 

4.3           Enforceability.  This Agreement has been duly executed and
delivered by each Borrower and constitutes a legal, valid and binding obligation
of each Borrower enforceable against each such Borrower in accordance with its
terms, except as enforceability may be limited by (a) any applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer, or similar laws
relating to or affecting creditors’ rights generally and (b) general principles
of equity.

 

4.4           Governmental Approvals.  No action, consent or approval of,
registration or filing with, or any other action by, any Governmental Authority
is or will be required in connection with the Transactions, except (a) such as
have been made or obtained and are in full force and effect or as to which the
failure to be made or obtained or to be in full force and effect would not
result, individually or in the aggregate, in a Material Adverse Effect and
(b) such periodic and current reports, if any, as (i) are required to disclose
the Transactions and (ii) will be filed with the SEC on a timely basis.

 

4.5           Financial Statements.  IBM has heretofore furnished to the Lenders
its consolidated statement of financial position and related consolidated
statements of earnings, cash flows and stockholders’ equity as of and for the
fiscal year ended December 31, 2010, audited by and accompanied by the opinion
of PricewaterhouseCoopers, independent accountants.  Such financial statements
present fairly the financial position, results of operations, cash flows and
changes in stockholders’ equity of IBM and the Subsidiaries in accordance with
GAAP.

 

4.6           No Material Adverse Change.  Except as publicly disclosed in
filings by IBM with the SEC prior to the Effective Date, between December 31,
2010 and the Effective Date, there has been no development or event which has
had a Material Adverse Effect.

 

4.7           No Material Litigation, etc.  (a)  Except as set forth in the
Form 10-K of IBM for its fiscal year ended December 31, 2010 or the Form 10-Q of
IBM for the fiscal quarter ended September 30, 2011, no litigation,
investigation or proceeding of or before any arbitrator or Governmental
Authority is pending or, to the knowledge of IBM, threatened by or against IBM
or any of the Subsidiaries or against any of its or their respective properties,
assets or revenues as of the Effective Date (i) with respect to this Agreement
or any of the Transactions, or (ii) which involves a probable risk of an adverse
decision which would materially restrict the ability of IBM to comply with its
obligations under this Agreement.

 

(b)           None of IBM or the Significant Subsidiaries is in violation of any
law, rule or regulation, or in default with respect to any order, judgment,
writ, injunction or decree of any

 

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Governmental Authority, where such violation or default has resulted or could
reasonably be expected to result, individually or in the aggregate, in a
Material Adverse Effect.

 

4.8           Federal Reserve Regulations.  (a)  No Borrower is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying Margin Stock.

 

(b)           No part of the proceeds of any Loan will be used, whether directly
or indirectly, for any purpose which entails a violation of, or which is
inconsistent with, the provisions of Regulation T, U or X.

 

(c)           After giving effect to the application of the proceeds of each
Loan, not more than 25% of the value of the assets of IBM and the Subsidiaries
(as determined in good faith by IBM) subject to the provisions of Section 7.1
will consist of or be represented by Margin Stock.  In the event any portion of
the Loans made to any Borrower constitutes a “purpose credit” within the meaning
of Regulation U and the Loans are directly or indirectly secured by any Margin
Stock pursuant to the operation of Section 7.1, then, at the time of any
borrowing which increases the outstanding amount of Loans, the aggregate
“maximum loan value” (within the meaning of Regulation U) of all Margin Stock
and all collateral other than Margin Stock which directly or indirectly secures
the Loans will be greater than the aggregate principal amount of Loans and other
extensions of credit to all Borrowers (whether made by the Lenders or other
Persons) which are subject to Regulation T, U or X and which are directly or
indirectly secured by such Margin Stock or other collateral.

 

4.9           Investment Company Act, etc.  No Borrower is (a) an “investment
company” as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) subject to regulation under the Federal Power Act or (except
as contemplated by Section 4.8) any foreign, federal, state or local statute or
regulation limiting such Borrower’s ability to incur Borrower Obligations.

 

4.10         Tax Returns.  Each of IBM and the Significant Subsidiaries has
filed or caused to be filed all Federal, state and local tax returns required to
have been filed by it and has paid or caused to be paid all taxes shown to be
due and payable on such returns or on any assessments received by it except
taxes, assessments, fees, liabilities, penalties or charges that are being
contested in good faith by appropriate proceedings and for which IBM or
Significant Subsidiary shall have set aside on its books reserves in accordance
with GAAP.

 

4.11         No Material Misstatements.  The written information, reports,
financial statements, exhibits and schedules furnished by or on behalf of any
Borrower to the Administrative Agent or any Lender in connection with this
Agreement and the Transactions or included herein or delivered pursuant hereto,
taken as a whole, do not contain any material misstatement of fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.

 

4.12         ERISA.  Each Borrower is in compliance with all material provisions
of ERISA, except to the extent that all failures to be in compliance could not,
in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

4.13         Use of Proceeds.  The proceeds of all US$ Loans will be used by the
Borrowers for general corporate purposes.

 

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SECTION 5.           CONDITIONS PRECEDENT

 

5.1           Conditions to Initial US$ Loans.  The agreement of each Lender to
make the initial US$ Loan requested to be made by it is subject to the
satisfaction, on or prior to the date of such US$ Loan, of the following
conditions precedent:

 

(a)  Effective Date; Existing Credit Agreement.  (i) The Effective Date shall
have occurred in accordance with Section 11.22 and (ii) subject to Section 3.4,
the Existing Credit Agreement shall have been terminated (and the parties hereto
hereby waive compliance with any provision of the Existing Credit Agreement
requiring advance notice of such termination).

 

(b)  Closing Certificate.  The Administrative Agent shall have received a
certificate of IBM, dated the Effective Date, substantially in the form of
Exhibit C, with appropriate insertions and attachments, satisfactory in form and
substance to the Administrative Agent, executed by the President or any Vice
President and the Secretary or any Assistant Secretary of IBM.

 

(c)  Fees.  The Administrative Agent shall have received the fees to be received
on or prior to the Effective Date referred to in Section 2.11(b).

 

(d)  PATRIOT Act, etc.  The Administrative Agent and the Joint Lead Arrangers
shall have received all documentation and other information about the Borrowers
as has been reasonably requested in writing at least 5 days prior to the
Effective Date by the Administrative Agent or the Joint Lead Arrangers that they
reasonably determine is required by regulatory authorities under applicable
“know your customer” and anti-money laundering rules and regulations, including
the PATRIOT Act.

 

(e)  Legal Opinions.  The Administrative Agent shall have received the following
executed legal opinions, with a copy for each Lender:

 

(i)            the executed legal opinion of Simpson Thacher & Bartlett LLP,
counsel to the Administrative Agent, substantially in the form of Exhibit D-1;
and

 

(ii)           the executed legal opinion of Andrew Bonzani, Esq., Vice
President and Assistant General Counsel of IBM, substantially in the form of
Exhibit D-2.

 

5.2           Conditions to Each US$ Loan.  The agreement of each Lender to make
any US$ Loan requested to be made by it on any date (including, without
limitation, its initial US$ Loan) is subject to the satisfaction of the
following conditions precedent:

 

(a)  Notice.  The Administrative Agent shall have received notice of such
borrowing in conformity with the applicable requirements of this Agreement.

 

(b)  Representations and Warranties.  Each of the representations and warranties
made by any Borrower in or pursuant to this Agreement shall be true and correct
in all material respects on and as of such date as if made on and as of such
date, except to the extent such representations and warranties expressly relate
to an earlier date.

 

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(c)  No Default.  No Default or Event of Default shall have occurred and be
continuing on such date or shall occur after giving effect to the borrowing of
the US$ Loans requested to be made on such date.

 

(d)  Subsidiary Borrower Notice and Designation; Subsidiary Borrower Request.

 

(i)            If the relevant Borrower is a Subsidiary Borrower, IBM shall have
delivered to the Administrative Agent a Subsidiary Borrower Notice and
Designation for such Subsidiary Borrower specifying the maximum amount (the
“Maximum Subsidiary Borrowing Amount”) which may be borrowed by such Subsidiary
Borrower, and such Subsidiary Borrower shall have furnished to the
Administrative Agent a Subsidiary Borrower Request.  Following the delivery of a
Subsidiary Borrower Notice and Designation, if the designation of such
Subsidiary Borrower obligates the Administrative Agent or any Lender to comply
with “know your customer” or similar identification procedures in circumstances
where the necessary information is not already available to it, IBM shall,
promptly upon the request of the Administrative Agent or any Lender, supply such
documentation and other evidence as is reasonably requested by the
Administrative Agent or any Lender in order for the Administrative Agent or such
Lender to carry out and be satisfied it has complied with the results of all
necessary “know your customer” or other similar checks under all applicable laws
and regulations.  If the relevant Borrower is a Subsidiary Borrower, in the case
of the initial borrowing by such Subsidiary Borrower, such Subsidiary Borrower
shall have notified the Lenders (through the Administrative Agent) of its intent
to give notice of a borrowing pursuant to Section 2.2 at least five Business
Days prior to the date it intends to give notice of such borrowing.

 

(ii)           If IBM shall designate a Foreign Subsidiary Borrower hereunder
any Lender may, with notice to the Administrative Agent and IBM, fulfill its
Commitment by causing an affiliate of such Lender to act as the Lender in
respect of such Foreign Subsidiary Borrower (and such Lender shall, to the
extent of Loans made to such Foreign Subsidiary Borrower, be deemed for all
purposes hereof to have pro tanto assigned such Loans to such affiliate in
compliance with the provisions of Section 11.8).

 

(iii)          IBM may from time to time deliver a subsequent Subsidiary
Borrower Notice and Designation with respect to such Subsidiary Borrower,
countersigned by such Subsidiary Borrower, for the purpose of changing the
Maximum Subsidiary Borrowing Amount specified therein or terminating such
Subsidiary Borrower’s designation as such, so long as (i) in the case of any
reduction of any Maximum Subsidiary Borrowing Amount, on the effective date of
such reduction, the aggregate principal amount of US$ Loans and Local Currency
Loans (US$ Equivalent) made to such Subsidiary Borrower shall not exceed the
Maximum Subsidiary Borrowing Amount as so reduced and (ii) in the case of any
termination of such designation, on the effective date of such termination, all
Subsidiary Borrower Obligations in respect of such Subsidiary Borrower shall
have been paid in full or shall have been assigned to another Subsidiary
Borrower in accordance with the relevant Local Currency Facility to which such
assignee Subsidiary Borrower is a party.  In addition, if on any date a
Subsidiary Borrower shall cease to be a Subsidiary or Controlled Person, all
Subsidiary Borrower Obligations in respect of such Subsidiary Borrower shall
automatically become due and payable on such date and no further Loans may be
borrowed by such Subsidiary Borrower hereunder or under any Local Currency
Facility.

 

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Each borrowing of a US$ Loan by a Borrower shall constitute a representation and
warranty by such Borrower (and, in the case of a Subsidiary Borrower, IBM) as of
the date of such US$ Loan that the conditions contained in paragraphs (b) and
(c) of this Section 5.2 have been satisfied.

 

Notwithstanding any other provision of this Agreement, no Lender shall be
obligated to make any Loan to IBM, if (i) the adoption of any law, rule or
regulation after the date of this Agreement, (ii) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (iii) compliance by any Lender
with any request, guideline or directive (whether or not having the force of
law) of any Governmental Authority made or issued after the date of this
Agreement, shall make it unlawful for such Lender to make such Loan to IBM.

 

Notwithstanding any other provision of this Agreement, no Lender shall be
obligated to make any Loan to a Subsidiary Borrower if any law, rule, regulation
or interpretation or application thereof by any Governmental Authority, or
compliance by any Lender with any request, guideline or directive (whether or
not having the force of law) of any Governmental Authority shall make it
unlawful for such Lender to make such Loan to such Subsidiary Borrower.

 

SECTION 6.           AFFIRMATIVE COVENANTS

 

IBM and each Subsidiary Borrower agrees that, so long as the Commitments remain
in effect, any Loan remains outstanding and unpaid or any other amount is owing
to any Lender or the Administrative Agent hereunder, it shall and (in the case
of IBM) shall cause each of the Significant Subsidiaries to:

 

6.1           Existence; Business and Properties.  (a)  Do or cause to be done
all things necessary to preserve, renew and keep in full force and effect its
legal existence, except as would not cause or result in a Default or Event of
Default under this Agreement.

 

(b)           Do or cause to be done all things reasonably necessary to preserve
and keep in full force and effect the rights, licenses, permits, franchises,
authorizations, patents, copyrights, trademarks and trade names material to the
conduct of its business; except in each case where the failure to do so would
not result in a Material Adverse Effect; and at all times maintain and preserve
all property material to the conduct of its business and keep such property in
good repair, working order and condition and from time to time make, or cause to
be made, all needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times; provided, however,
that nothing in this Section 6.1(b) shall prevent IBM, any Subsidiary or any
Subsidiary Borrower from (x) discontinuing any of its businesses no longer
deemed advantageous to it or discontinuing the operation and maintenance of any
of its properties no longer deemed useful in the conduct of its business or
(y) selling or disposing of any assets, Subsidiaries or capital stock thereof,
in a transaction not prohibited by Section 7.2.

 

6.2           Financial Statements, Reports, etc.  In the case of IBM, furnish
to the Administrative Agent for distribution to the Lenders:

 

(a)  as soon as available and in any event within 90 days after the end of each
fiscal year, copies of the report filed by IBM with the SEC on Form 10-K in
respect of such fiscal year, each accompanied by IBM’s annual report in respect
of such fiscal year or, if IBM is not required to file such a report in respect
of such fiscal year, the consolidated statements of financial position and
related consolidated statements of

 

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earnings, cash flows and stockholders’ equity of IBM and the Subsidiaries, as of
the close of such fiscal year, all audited by PricewaterhouseCoopers or other
independent accountants of recognized national standing and accompanied by an
opinion of such accountants to the effect that such consolidated financial
statements fairly present the financial position, results of operations, cash
flows and changes in stockholders’ equity of IBM and the Subsidiaries, in
accordance with GAAP;

 

(b)  as soon as available and in any event within 50 days after the end of each
of the first three quarterly periods of each fiscal year, copies of the
unaudited quarterly reports filed by IBM with the SEC on Form 10-Q in respect of
such quarterly period, or if IBM is not required to file such a report in
respect of such quarterly period, the unaudited consolidated statements of
financial position and related unaudited consolidated statements of earnings,
cash flows and stockholders’ equity of IBM and the Subsidiaries, as of the close
of such fiscal quarter, certified by a Responsible Officer of IBM as fairly
presenting the financial position, results of operations, cash flows and changes
in stockholders’ equity of IBM and the Subsidiaries, in accordance with GAAP,
subject to normal year-end audit adjustments which are not expected to be
material in amount;

 

(c)  concurrently with any delivery of financial statements by IBM described in
paragraph (a) or (b) above (whether contained in a report filed with the SEC or
otherwise), a certificate of a Responsible Officer of IBM substantially in the
form of Schedule 6.2(c);

 

(d)  promptly after the same become publicly available, copies of (i) all
financial statements, notices, reports and proxy materials distributed to
stockholders of IBM and (ii) all reports on Form 10-K, 10-Q and 8-K (or their
equivalents) filed by IBM with the SEC (or with any Governmental Authority
succeeding to any or all of the functions of the SEC) pursuant to the periodic
reporting requirements of the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder; provided, that documents
required to be furnished under this paragraph (d) shall be deemed furnished when
made available via the EDGAR (or any successor) system of the SEC;

 

(e)  promptly, from time to time, such other publicly available documents and
information regarding the operations, business affairs and financial condition
of IBM, any Significant Subsidiary or any Subsidiary Borrower (including
information relating to “know your customer” or similar identification
procedures), or compliance with the terms of this Agreement, as the
Administrative Agent or any Lender (through the Administrative Agent) may
reasonably request; and

 

(f)  within ten Business Days after the occurrence thereof, written notice of
any change in Status; provided that the failure to provide such notice shall not
delay or otherwise affect any change in the Applicable Margin or other amount
payable hereunder which is to occur upon a change in Status pursuant to the
terms of this Agreement.

 

With respect to the documents referred to in paragraphs (a) through
(e) above, IBM shall furnish such number of copies as the Administrative Agent
or the Lenders shall reasonably require for distribution to their personnel in
connection with this Agreement.

 

6.3           Notices.  Promptly after any Responsible Officer or the Director
of Treasury Operations of IBM obtains knowledge thereof, give notice to the
Administrative Agent and each Lender of the occurrence of any Default or Event
of Default, accompanied by a statement of a Responsible

 

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Officer setting forth details of the occurrence referred to therein and stating
what action the relevant Borrower proposes to take with respect thereto.

 

SECTION 7.           NEGATIVE COVENANTS

 

IBM and, in the case of Sections 7.2 and 7.3, each Subsidiary Borrower agrees
that, so long as the Commitments remain in effect, any Loan remains outstanding
and unpaid or any other amount is owing to any Lender or the Administrative
Agent hereunder:

 

7.1           Limitation on Secured Debt and Sale and Leaseback Transactions. 
(a)  IBM will not create, assume, incur or guarantee, and will not permit any
Restricted Subsidiary to create, assume, incur or guarantee, any Secured Debt
without making provision whereby all Borrower Obligations shall be secured
equally and ratably with (or prior to) such Secured Debt (together with, if IBM
shall so determine, any other Debt of IBM or such Restricted Subsidiary then
existing or thereafter created which is not by its terms subordinate to the
Borrower Obligations) so long as such Secured Debt shall be outstanding unless
such Secured Debt, when added to (a) the aggregate amount of all Secured Debt
then outstanding (not including in this computation Secured Debt if the Borrower
Obligations are secured equally and ratably with (or prior to) such Secured Debt
and further not including in this computation any Secured Debt which is
concurrently being retired) and (b) the aggregate amount of all Attributable
Debt then outstanding pursuant to Sale and Leaseback Transactions entered into
by IBM after July 15, 1985, or entered into by a Restricted Subsidiary after
July 15, 1985, or, if later, the date on which it became a Restricted Subsidiary
(not including in this computation any Attributable Debt which is concurrently
being retired), would not exceed 10% of Consolidated Net Tangible Assets.

 

(b)           IBM will not, and will not permit any Restricted Subsidiary to,
enter into any Sale and Leaseback Transaction unless (a) the sum of (i) the
Attributable Debt to be outstanding pursuant to such Sale and Leaseback
Transaction, (ii) all Attributable Debt then outstanding pursuant to all other
Sale and Leaseback Transactions entered into by IBM after July 15, 1985, or
entered into by a Restricted Subsidiary after July 15, 1985, or, if later, the
date on which it became a Restricted Subsidiary, and (iii) the aggregate of all
Secured Debt then outstanding (not including in this computation Secured Debt if
the Borrower Obligations are secured equally and ratably with (or prior to) such
Secured Debt) would not exceed 10% of Consolidated Net Tangible Assets or (b) an
amount equal to the greater of (i) the net proceeds to IBM or the Restricted
Subsidiary of the sale of the Principal Property sold and leased back pursuant
to such Sale and Leaseback Transaction and (ii) the amount of Attributable Debt
to be outstanding pursuant to such Sale and Leaseback Transaction, is applied to
the retirement of Funded Debt of IBM or any Restricted Subsidiaries (other than
Funded Debt which is subordinated to the Loans or which is owing to IBM or any
Restricted Subsidiaries) within 180 days after the consummation of such Sale and
Leaseback Transaction.

 

7.2           Mergers, Consolidations and Sales of Assets.  (a)  No Borrower
will consolidate with or merge with or into any other Person (unless, in the
case of any Subsidiary Borrower, such Subsidiary Borrower’s designation as such
is terminated pursuant to Section 5.2(d) concurrently with such transaction),
except that, so long as no Default or Event of Default shall have occurred and
be continuing or would result therefrom, IBM may merge with any other U.S.
corporation and each Subsidiary Borrower may merge with any other Person,
provided that (i) in the case of any such merger involving IBM, IBM is the
surviving corporation, (ii) in the case of any such merger involving a
Subsidiary Borrower, the surviving corporation assumes all of such Borrower’s
obligations under this Agreement and remains a “Subsidiary Borrower” and
(iii) on the date of consummation of any merger involving IBM, IBM shall deliver
to the Administrative Agent a certificate of a Responsible Officer of IBM
demonstrating that, on a pro forma basis determined as if such merger had been
consummated on the

 

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date occurring twelve months prior to the last day of the most recently ended
fiscal quarter, IBM would have been in compliance with Section 7.4 as of the
last day of such fiscal quarter.

 

(b)           IBM will not sell, convey or otherwise transfer all or
substantially all of its properties or assets to any Person, provided that this
paragraph (b) shall not prohibit IBM from entering into a merger transaction
expressly permitted by Section 7.2(a).

 

7.3           Margin Regulations.  (a)  No Borrower will permit any part of the
proceeds of any Loan to be used in any manner that would result in a violation
of, or be inconsistent with, the provisions of Regulation T, U or X.  No
Borrower will take, or permit the Subsidiaries to take, any action at any time
that would (A) result in a violation of the substitution and withdrawal
requirements of Regulation T or U, in the event the same should become
applicable to any Loans or this Agreement or (B) cause the representations and
warranties contained in Section 4.8 at any time to be other than true and
correct.

 

(b)           Whenever required to ensure compliance with Regulations T, U and X
or requested by the Administrative Agent or one or more Lenders, each Borrower
will furnish to the Administrative Agent and each Lender a statement in
conformity with the requirements of Federal Reserve Form U-1 referred to in
Regulation U, and any other notice or form required under Regulation U, the
statements made and information contained in which shall be sufficient, in the
good faith opinion of each Lender, to permit the extensions of Loans hereunder
in compliance with Regulation U.

 

7.4           Consolidated Net Interest Expense Ratio.  IBM will not permit the
Consolidated Net Interest Expense Ratio, for any period of four consecutive
fiscal quarters taken as a single accounting period (commencing with the period
of four consecutive fiscal quarters ending September 30, 2011), to be less than
2.20 to 1.0.

 

SECTION 8.           EVENTS OF DEFAULT

 

If any of the following events shall occur and be continuing:

 

(a) (i) Any Borrower shall (x) fail to pay any principal of any US$ Loan when
due in accordance with the applicable terms of this Agreement or (y) fail to pay
any interest on any US$ Loan, or any fee or other amount payable hereunder or
under any Local Currency Facility (other than as provided in clause (ii) below),
within five Business Days after any such interest, fee or other amount becomes
due in accordance with the terms hereof or thereof; or (ii) any Borrower shall
fail to pay any principal of or interest on any Local Currency Loan when due in
accordance with the applicable terms of the relevant Local Currency Facility and
such default shall continue unremedied for a period of three Business Days (in
the case of principal) or five Business Days (in the case of interest) after
written notice thereof shall have been given to IBM by the Administrative Agent
or any affected Local Currency Lender (with a copy to the Administrative Agent);
or

 

(b)  Any representation or warranty made or deemed made by any Borrower herein
or in any Local Currency Facility or which is contained in any certificate,
document or financial or other statement furnished by it at any time pursuant to
this Agreement or any Local Currency Facility shall prove to have been incorrect
in any material respect on or as of the date made or deemed made; or

 

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(c)  IBM shall default in the observance or performance of the agreement
contained in Section 7.4; or

 

(d)  Any Borrower shall default in the observance or performance of any other
agreement contained in this Agreement or in any Local Currency Facility or any
other event or condition constituting a default under any Local Currency
Facility shall occur (in each case other than as provided in paragraphs
(a) through (c) of this Section 8), and such default shall continue unremedied
for a period of 30 days after written notice thereof shall have been given to
IBM by the Administrative Agent or the Required Lenders; or

 

(e)  IBM or any Significant Subsidiary shall default in the payment of any
principal or interest, regardless of amount, due in respect of any Indebtedness
in an aggregate principal amount of $500,000,000 or more, when and as the same
shall become due and payable (after the expiration of any applicable grace
period); or

 

(f)  An involuntary proceeding shall be commenced or an involuntary petition
shall be filed in a court of competent jurisdiction seeking (i) relief in
respect of IBM or any Significant Subsidiary, or of a substantial part of the
property or assets of IBM or any Significant Subsidiary, under Title 11 of the
United States Code, as now constituted or hereafter amended, or any other
Federal, state or foreign bankruptcy, insolvency, receivership or similar law,
(ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for IBM or any Significant Subsidiary or for a
substantial part of the property or assets of IBM or any Significant Subsidiary
or (iii) the winding-up or liquidation of IBM or any Significant Subsidiary; and
such proceeding or petition shall continue undismissed for 90 days or an order
or decree approving or ordering any of the foregoing shall be entered; or

 

(g)  IBM or any Significant Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other Federal,
state or foreign bankruptcy, insolvency, receivership or similar law,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described in
paragraph (f) of this Section 8, (iii) apply for or consent to the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for IBM or any Significant Subsidiary or for a substantial part of the property
or assets of IBM or any Significant Subsidiary, (iv) file an answer admitting
the material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors, or (vi) take any
action for the purpose of effecting any of the foregoing; or

 

(h)  One or more judgments for the payment of money which are due and payable in
an aggregate amount of $500,000,000 (exclusive of any amount thereof covered by
insurance so long as such coverage is not being disputed) or more shall be
rendered by a court of competent jurisdiction against IBM, any Significant
Subsidiary or any combination of IBM and Significant Subsidiaries and the same
shall remain undischarged for a period of 60 days during which execution shall
not be effectively stayed (for this purpose, a judgment shall effectively be
stayed during a period when it is not yet due and payable), or any action shall
be legally taken by a judgment creditor to levy upon assets or properties of IBM
or any Significant Subsidiary to enforce any such judgment; or

 

(i)  The guarantee contained in Section 10 shall cease, for any reason, to be in
full force and effect or IBM shall so assert;

 

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then, and in any such event, (A) if such event is an Event of Default specified
in paragraph (f) or (g) above with respect to IBM, automatically the Commitments
shall immediately terminate and the Loans (with accrued interest thereon) and
all fees and other amounts owing under this Agreement and the Local Currency
Facilities shall immediately become due and payable, and (B) if such event is
any other Event of Default, either or both of the following actions may be
taken:  (i) with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to IBM declare the Commitments to be terminated forthwith,
whereupon such Commitments shall immediately terminate; and (ii) with the
consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
IBM, declare the Loans (with accrued interest thereon) and all fees and other
amounts owing under this Agreement and the Local Currency Facilities to be due
and payable forthwith, whereupon the same shall immediately become due and
payable.  Except as expressly provided above in this Section 8, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.

 

SECTION 9.           THE ADMINISTRATIVE AGENT

 

9.1           Appointment.  Each Lender hereby irrevocably designates and
appoints JPMorgan Chase Bank as the agent of such Lender under this Agreement,
and each such Lender irrevocably authorizes JPMorgan Chase Bank, as the
Administrative Agent for such Lender, to take such action on its behalf under
the provisions of this Agreement and to exercise such powers and perform such
duties as are expressly delegated to the Administrative Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto.  Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any Local Currency Facility or otherwise exist against the
Administrative Agent.

 

9.2           Delegation of Duties.  The Administrative Agent may execute any of
its duties under this Agreement by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties.  The Administrative Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys in-fact selected by it with reasonable
care.

 

9.3           Exculpatory Provisions.  Neither the Administrative Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact or affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement (except for its or
such Person’s own gross negligence or willful misconduct) or (ii) responsible in
any manner to any of the Lenders for any recitals, statements, representations
or warranties made by any Borrower or any officer thereof contained in this
Agreement or any Local Currency Facility or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any Local
Currency Facility or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any Local Currency Facility
or for any failure of any Borrower to perform its obligations hereunder or
thereunder.  The Administrative Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any Local
Currency Facility, or to inspect the properties, books or records of any
Borrower.

 

9.4           Reliance by Administrative Agent.  The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or

 

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Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to any Borrower), independent accountants and other experts
selected by the Administrative Agent.  The Administrative Agent may deem and
treat the Lender specified in the Register with respect to any amount owing
hereunder as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent.  The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement unless it shall
first receive such advice or concurrence of the Required Lenders or all Lenders,
as the case may be, as it deems appropriate or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such
action.  The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement in accordance with a
request of the Required Lenders, or all Lenders, as the case may be, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders and all future holders of the obligations owing by any
Borrower hereunder.

 

9.5           Notice of Default.  The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or a
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a “notice of default”.  In the event
that the Administrative Agent receives such a notice, the Administrative Agent
shall promptly give notice thereof to the Lenders.  The Administrative Agent
shall take such action with respect to such Default or Event of Default as shall
be reasonably directed by the Required Lenders; provided that unless and until
the Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.

 

9.6           Non-Reliance on Administrative Agent and Other Lenders.  Each
Lender expressly acknowledges that neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates has
made any representations or warranties to it and that no act by the
Administrative Agent hereinafter taken, including any review of the affairs of
any Borrower, shall be deemed to constitute any representation or warranty by
the Administrative Agent to any Lender.  Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrowers and made its own decision to
make its Loans and enter into this Agreement and any Local Currency Facilities. 
Each Lender also represents that it will, independently and without reliance
upon the Administrative Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement or any Local Currency Facility, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrowers.  Except for notices, reports and other documents expressly required
to be furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
any Borrower which may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.

 

9.7           Indemnification.  The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Borrowers and without limiting the obligation of the Borrowers to do so),
ratably according to their respective Commitment Percentages in effect on the
date on which indemnification is sought under this Section 9.7 (or, if
indemnification is sought after the date

 

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upon which the Revolving Credit Commitments shall have terminated and the US$
Loans shall have been paid in full, ratably in accordance with their Commitment
Percentages immediately prior to such date), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the amounts
owing hereunder) be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of this Agreement or
any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Administrative Agent under or in connection with any of the foregoing;
provided that (a) no Lender shall be liable for the payment of any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the gross negligence or
willful misconduct of the Administrative Agent and (b) in the event that the
Administrative Agent is reimbursed by any Borrower for any amount paid to it by
the Lenders pursuant to this Section 9.7, the amount of such reimbursement shall
in turn be paid over to the Lenders on a ratable basis.  The agreements in this
Section 9.7 shall survive the payment of the Loans and all other amounts payable
hereunder.

 

9.8           Administrative Agent in Its Individual Capacity.  Each of the
Administrative Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrowers as though the
Administrative Agent were not the Administrative Agent hereunder.  With respect
to its Loans made or renewed by it, the Administrative Agent shall have the same
rights and powers under this Agreement as any Lender and may exercise the same
as though it were not the Administrative Agent, and the terms “Lender” and
“Lenders” shall include the Administrative Agent in its individual capacity.

 

9.9           Successor Administrative Agent.  Subject to the appointment and
acceptance of a successor Administrative Agent as provided below, the
Administrative Agent may resign as Administrative Agent at any time by giving
notice to the Lenders and IBM.  If the Administrative Agent shall resign as
Administrative Agent under this Agreement, then the Required Lenders shall
appoint from among the Lenders a successor administrative agent for the Lenders,
which successor administrative agent shall be subject to the approval of IBM
(which approval shall not be unreasonably withheld).  If no successor shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent shall have
given notice of its resignation, then the retiring Administrative Agent may, on
behalf of the Lenders, appoint a successor Administrative Agent from among the
Lenders, which successor administrative agent shall be subject to the approval
of IBM (which approval shall not be unreasonably withheld).  Upon the acceptance
of any appointment as Administrative Agent hereunder by a permitted successor,
such successor administrative agent shall succeed to the rights, powers and
duties of the Administrative Agent, and the term “Administrative Agent” shall
mean such successor administrative agent effective upon such appointment and
approval, and the former Administrative Agent’s rights, powers and duties as
Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to
this Agreement or any holders of the obligations owing hereunder.  After any
retiring Administrative Agent’s resignation as Administrative Agent, the
provisions of this Section 9 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Administrative Agent under this
Agreement.

 

9.10         Syndication and Documentation Agents.  The Syndication Agents and
the Documentation Agents shall not have any duties or responsibilities hereunder
in its capacity as such.

 

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SECTION 10.         GUARANTEE

 

10.1         Guarantee.  In order to induce the Administrative Agent and the
Lenders to execute and deliver this Agreement and to make or maintain the Loans,
and in consideration thereof, IBM hereby unconditionally and irrevocably
guarantees, as primary obligor and not merely as surety, to the Administrative
Agent, for the ratable benefit of the Lenders, the prompt and complete payment
and performance by each Subsidiary Borrower when due (whether at stated
maturity, by acceleration or otherwise) of the Subsidiary Borrower Obligations,
and IBM further agrees to pay any and all reasonable expenses (including,
without limitation, all reasonable fees, charges and disbursements of counsel)
which may be paid or incurred by the Administrative Agent or by the Lenders in
enforcing, or obtaining advice of counsel in respect of, any of their rights
under the guarantee contained in this Section 10.  The guarantee contained in
this Section 10, subject to Section 10.5, shall remain in full force and effect
until the Subsidiary Borrower Obligations are paid in full and the Commitments
are terminated, notwithstanding that from time to time prior thereto any
Subsidiary Borrower may be free from any Subsidiary Borrower Obligations.

 

IBM agrees that whenever, at any time, or from time to time, it shall make any
payment to the Administrative Agent or any Lender on account of its liability
under this Section 10, it will notify the Administrative Agent and such Lender
in writing that such payment is made under the guarantee contained in this
Section 10 for such purpose.  No payment or payments made by any Subsidiary
Borrower or any other Person or received or collected by the Administrative
Agent or any Lender from any Subsidiary Borrower or any other Person by virtue
of any action or proceeding or any setoff or appropriation or application, at
any time or from time to time, in reduction of or in payment of the Subsidiary
Borrower Obligations shall be deemed to modify, reduce, release or otherwise
affect the liability of IBM under this Section 10 which, notwithstanding any
such payment or payments, shall remain liable for the unpaid and outstanding
Subsidiary Borrower Obligations until, subject to Section 10.5, the Subsidiary
Borrower Obligations are paid in full and the Commitments are terminated.

 

10.2         No Subrogation.  Notwithstanding any payment made by IBM pursuant
to this Section 10 or any set-off or application of funds of IBM by the
Administrative Agent or any Lender in connection with the guarantee contained in
this Section 10, IBM shall not be entitled to be subrogated to any of the rights
of the Administrative Agent or any Lender against any Subsidiary Borrower or any
collateral security or guarantee or right of offset held by the Administrative
Agent or any Lender for the payment of the Subsidiary Borrower Obligations, nor
shall IBM seek or be entitled to seek any contribution or reimbursement from any
Subsidiary Borrower in respect of payments made by IBM under this Section 10,
until all amounts owing to the Administrative Agent and the Lenders on account
of the Subsidiary Borrower Obligations are paid in full and the Commitments are
terminated.  If any amount shall be paid to IBM on account of such subrogation
rights at any time when all of the Subsidiary Borrower Obligations shall not
have been paid in full, such amount shall be held by IBM in trust for the
Administrative Agent and the Lenders, segregated from other funds of IBM, and
shall, forthwith upon receipt by IBM, be turned over to the Administrative Agent
in the exact form received by IBM (duly indorsed by IBM to the Administrative
Agent, if required), to be applied against the Subsidiary Borrower Obligations,
whether matured or unmatured, in such order as the Administrative Agent may
determine.  The provisions of this Section 10.2 shall survive the term of the
guarantee contained in this Section 10 and the payment in full of the Subsidiary
Borrower Obligations and the termination of the Commitments.

 

10.3         Amendments, etc. with respect to the Subsidiary Borrower
Obligations.  IBM shall remain obligated under this Section 10 notwithstanding
that, without any reservation of rights against IBM, and without notice to or
further assent by IBM, any demand for payment of or reduction in the principal
amount of any of the Subsidiary Borrower Obligations made by the Administrative
Agent or any Lender may be rescinded by the Administrative Agent or such Lender,
and any of the Subsidiary

 

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Borrower Obligations continued, and the Subsidiary Borrower Obligations, or the
liability of any other party upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by the Administrative
Agent or any Lender, and this Agreement and any other documents executed and
delivered in connection herewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Lenders (or the Required Lenders, as the
case may be) may deem advisable from time to time, and any collateral security,
guarantee or right of offset at any time held by the Administrative Agent or any
Lender for the payment of the Subsidiary Borrower Obligations may be sold,
exchanged, waived, surrendered or released.  Neither the Administrative Agent
nor any Lender shall have any obligation to protect, secure, perfect or insure
any lien at any time held by it as security for the Subsidiary Borrower
Obligations or for the guarantee contained in this Section 10 or any property
subject thereto.

 

10.4         Guarantee Absolute and Unconditional.  IBM waives any and all
notice of the creation, renewal, extension or accrual of any of the Subsidiary
Borrower Obligations and notice of or proof of reliance by the Administrative
Agent or any Lender upon the guarantee contained in this Section 10 or
acceptance of the guarantee contained in this Section 10; the Subsidiary
Borrower Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon the guarantee contained in this Section 10; and all dealings
between IBM or the Subsidiary Borrowers, on the one hand, and the Administrative
Agent and the Lenders, on the other, shall likewise be conclusively presumed to
have been had or consummated in reliance upon the guarantee contained in this
Section 10.  IBM waives diligence, presentment, protest, demand for payment and
notice of default or nonpayment to or upon IBM or any Subsidiary Borrower with
respect to the Subsidiary Borrower Obligations.  To the full extent permitted by
law, the guarantee contained in this Section 10 shall be construed as a
continuing, absolute and unconditional guarantee of payment without regard to
(a) the validity or enforceability of this Agreement, any Local Currency
Facility, any of the Subsidiary Borrower Obligations or any collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Administrative Agent or any Lender, (b) the
legality under applicable Requirements of Law of repayment by the relevant
Subsidiary Borrower of any Subsidiary Borrower Obligations or the adoption of
any Requirement of Law purporting to render any Subsidiary Borrower Obligations
null and void, (c) any defense, setoff or counterclaim (other than a defense of
payment or performance by the applicable Subsidiary Borrower) which may at any
time be available to or be asserted by IBM against the Administrative Agent or
any Lender, (d) any change in ownership of the relevant Subsidiary Borrower, any
merger or consolidation of the relevant Subsidiary Borrower into another Person
or any loss of the relevant Subsidiary Borrower’s separate legal identity or
existence, or (e) any other circumstance whatsoever (with or without notice to
or knowledge of IBM or any Subsidiary Borrower) which constitutes, or might be
construed to constitute, an equitable or legal discharge of any Subsidiary
Borrower for any Subsidiary Borrower Obligations, or of IBM under the guarantee
contained in this Section 10, in bankruptcy or in any other instance.  When the
Administrative Agent or any Lender is pursuing its rights and remedies under
this Section 10 against IBM, the Administrative Agent or any Lender may, but
shall be under no obligation to, pursue such rights and remedies as it may have
against any Subsidiary Borrower or any other Person or against any collateral
security or guarantee for the Subsidiary Borrower Obligations or any right of
offset with respect thereto, and any failure by the Administrative Agent or any
Lender to pursue such other rights or remedies or to collect any payments from
any Subsidiary Borrower or any such other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of any Subsidiary Borrower or any such other Person or of any such
collateral security, guarantee or right of offset, shall not relieve IBM of any
liability under this Section 10, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of the
Administrative Agent and the Lenders against IBM.

 

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10.5         Reinstatement.  The guarantee contained in this Section 10 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Subsidiary Borrower Obligations is
rescinded or must otherwise be restored or returned by the Administrative Agent
or any Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of any Subsidiary Borrower or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, any Subsidiary Borrower or any substantial part of its property, or
otherwise, all as though such payments had not been made.

 

10.6         Payments.  IBM hereby agrees that any payments in respect of the
Subsidiary Borrower Obligations pursuant to this Section 10 will be paid to the
Administrative Agent without setoff or counterclaim in Dollars (in the case of
Subsidiary Borrower Obligations arising under this Agreement) or, at the option
of the relevant Local Currency Lender(s), in Dollars or in the relevant Local
Currency (in the case of Subsidiary Borrower Obligations arising under any Local
Currency Facility), at (a) the office of the Administrative Agent specified in
Section 11.2 (in the case of Subsidiary Borrower Obligations arising under this
Agreement) or (b) at the office specified for payments under the relevant Local
Currency Facility or such other office as shall have been specified by the
relevant Local Currency Lender(s) in each case to the extent permitted by
applicable law (in the case of Subsidiary Borrower Obligations arising under any
Local Currency Facility).

 

10.7         Judgments Relating to Guarantee.  (a)  If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum due under the
guarantee contained in this Section 10 in one currency into another
currency, IBM agrees, to the fullest extent that it may effectively do so, that
the rate of exchange used shall be that at which in accordance with normal
banking procedures in the relevant jurisdiction the relevant Lender (or agent
acting on its behalf) could purchase the first currency with such other currency
for the first currency on the Banking Day immediately preceding the day on which
final judgment is given.

 

(b)           The obligations of IBM in respect of any sum due under the
guarantee contained in this Section 10 shall, notwithstanding any judgment in a
currency (the “Judgment Currency”) other than that in which such sum is
denominated in accordance with this Section 10 (the “Agreement Currency”), be
discharged only to the extent that, on the Banking Day following receipt by any
Lender (or agent acting on its behalf) (the “Applicable Creditor”) of any sum
adjudged to be so due in the Judgment Currency, the Applicable Creditor may in
accordance with normal banking procedures in the relevant jurisdiction purchase
the Agreement Currency with the Judgment Currency; if the amount of the
Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the Agreement Currency, IBM agrees, as a separate
obligation and notwithstanding any such judgment, to indemnify the Applicable
Creditor against such loss, provided, that if the amount of the Agreement
Currency so purchased exceeds the sum originally due to the Applicable Creditor,
the Applicable Creditor agrees to remit such excess to IBM.  The obligations of
IBM contained in this Section 10.7 shall survive the termination of the
guarantee contained in this Section 10 and the payment of all amounts owing
hereunder.

 

10.8         Independent Obligations.  The obligations of IBM under the
guarantee contained in this Section 10 are independent of the obligations of
each Subsidiary Borrower, and a separate action or actions may be brought and
prosecuted against IBM whether or not the relevant Subsidiary Borrower be joined
in any such action or actions.  IBM waives, to the full extent permitted by law,
the benefit of any statute of limitations affecting its liability hereunder or
the enforcement thereof.  Any payment by the relevant Subsidiary Borrower or
other circumstance which operates to toll any statute of limitations as to such
Subsidiary Borrower shall operate to toll the statute of limitations as to IBM.

 

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SECTION 11.         MISCELLANEOUS

 

11.1         Amendments and Waivers.  Neither this Agreement nor any terms
hereof may be amended, supplemented or modified except in accordance with the
provisions of this Section 11.1.  The Required Lenders may, or, upon receipt of
written consent of the Required Lenders to all terms thereof, the Administrative
Agent may, from time to time, (a) enter into with the Borrowers written
amendments, supplements or modifications hereto for the purpose of adding any
provisions to this Agreement or changing in any manner the rights of the Lenders
or of the Borrowers hereunder or thereunder or (b) waive, on such terms and
conditions as the Required Lenders or the Administrative Agent, as the case may
be, may specify in such instrument, any of the requirements of this Agreement or
any Default or Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, supplement or modification shall (i) reduce
the amount or extend the scheduled date of maturity of any US$ Loan, or reduce
the stated rate of any interest or fee payable hereunder or extend the scheduled
date of any payment thereof or increase the amount or extend the expiration date
of any Lender’s Revolving Credit Commitment or Swing Line Commitment, in each
case without the consent of each Lender directly affected thereby, or
(ii) reduce any amounts payable to any Lender pursuant to Section 2.5(b),
2.5(c), 3.3 or 10 (including, without limitation, pursuant to any release of the
guarantee contained in Section 10), or increase any amounts payable by any
Lender pursuant to Section 2.5(b), 2.5(c) or 3.3, in each case without the
consent of each Lender materially and adversely affected thereby, or
(iii) amend, modify or waive any provision of this Section 11.1 or reduce the
percentage specified in the definition of Required Lenders, or consent to the
assignment or transfer by any Borrower of any of its rights and obligations
under this Agreement, in each case without the written consent of all the
Lenders, (iv) release the guaranty contained in Section 10 without the consent
of each Lender or (v) amend, modify or waive any provision of Section 9 without
the written consent of the then Administrative Agent.  Any such waiver and any
such amendment, supplement or modification shall apply equally to each of the
Lenders and shall be binding upon the Borrowers, the Lenders, the Administrative
Agent and all future holders of the obligations owing hereunder.  In the case of
any waiver, the Borrowers, the Lenders and the Administrative Agent shall be
restored to their former position and rights hereunder, and any Default or Event
of Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.

 

11.2         Notices.  All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or three Business Days
after being deposited in the mail, postage prepaid, or, in the case of telecopy
notice, when received, addressed as follows in the case of IBM and the
Administrative Agent, as set forth in the relevant Subsidiary Borrower Notice
and Designation in the case of the Subsidiary Borrowers and as notified by each
Lender to the Administrative Agent in the case of the Lenders, or to such other
address as may be hereafter notified by the respective parties hereto and any
future holders of the obligations owing hereunder:

 

IBM:

INTERNATIONAL BUSINESS MACHINES CORPORATION

One New Orchard Road

Armonk, New York 10504

Attention: Vice President and Treasurer

Telecopy: 914-499-2883

 

With a copy to CHQ Legal Department

Telecopy: 914-499-6445

 

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The Administrative Agent:

JPMORGAN LOAN AND AGENCY SERVICES GROUP

Loan & Agency Services - Account Manager

Talitha Humes

1111 Fannin St., 10th Floor, Houston TX 77002

Phone: 713-427-6190

Fax: 713-750-2878

E-mail: Talitha.L.Humes@jpmorgan.com

 

With copies to:

 

JPMORGAN CHASE BANK

John Kowalczuk

270 Park Avenue, 4th Floor

New York NY 10017

E-mail: john.kowalczuk@jpmorgan.com

Telephone: (212) 270-6782

Fax: (212) 270-4584

 

JPMORGAN CHASE BANK

Padmini Persaud

270 Park Avenue, 15th Floor

New York NY 10017

E-mail: padmini.persaud@jpmorgan.com

Telephone: (212) 270-6155

Fax: (212) 270-4164

 

provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to Section 2.2, 2.3, 2.5, 2.6, 2.8 or 2.13 shall not be
effective until received.

 

11.3         No Waiver; Cumulative Remedies.  No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.  The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.

 

11.4         Survival of Representations and Warranties.  All representations
and warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the making of the US$ Loans hereunder.

 

11.5         Payment of Expenses.  Each of IBM and, as applicable, each
Subsidiary Borrower agrees (a) to pay or reimburse the Administrative Agent for
all its reasonable out-of-pocket costs and expenses incurred in connection with
the development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement and any other documents prepared in connection
herewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements of a single counsel to the Administrative Agent, (b) to
pay or reimburse each Lender and the Administrative Agent for all its

 

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reasonable costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement and any such other documents,
including, without limitation, the reasonable fees and disbursements of separate
counsel to the Administrative Agent and to each Lender, and (c) to pay,
indemnify, and hold each Lender and the Administrative Agent harmless from, any
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other similar taxes, if
any, which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement and any such
other documents, and (d) to pay, indemnify, and hold each Lender, each Local
Currency Lender, each Syndication Agent, each Documentation Agent, each Joint
Lead Arranger, the Administrative Agent and their respective directors,
officers, employees and agents (each, an “indemnified person”) harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements, including
reasonable fees and disbursements of counsel, incurred by or asserted against
such indemnified person which arise out of or in connection with any claim,
litigation or proceeding relating to this Agreement or any such other documents,
any Loan or any actual or proposed use of proceeds of any Loan or any of the
Transactions, or any failure by any Borrower to repay any Local Currency Loans
or other obligations owing under any Local Currency Facility when due in
accordance with the terms of such Local Currency Facility (all the foregoing in
this clause (d), collectively, the “indemnified liabilities”), provided, that no
Borrower shall have any obligation hereunder to any indemnified person with
respect to indemnified liabilities arising from the gross negligence or willful
misconduct of such indemnified person, in each case as determined by a final,
non-appealable judgment of a court of competent jurisdiction and provided
further, that nothing contained in this Section 11.5 (other than
Section 11.5(c)) shall require IBM or any Subsidiary Borrower to pay any taxes
of any indemnified person or any Transferee or any indemnity with respect
thereto.  No indemnified person or IBM shall be liable for any damages arising
from the use by unauthorized persons of information or other materials sent
through electronic, telecommunications or other information transmission systems
that are intercepted by such persons.  No indemnified person shall be liable for
any special, indirect, consequential or punitive damages in connection with this
Agreement.  The agreements in this Section 11.5 shall survive repayment of the
Loans and the payment of all other amounts payable hereunder.

 

11.6         Participations.  Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time sell to one or more
banks or other entities (each, a “Participant”) participating interests in any
US$ Loan owing to such Lender, any Revolving Credit Commitment of such Lender or
any other interest of such Lender hereunder.  In the event of any such sale by a
Lender of a participating interest to a Participant, such Lender’s obligations
under this Agreement to the other parties to this Agreement shall remain
unchanged, such Lender shall remain solely responsible for the performance
thereof, such Lender shall remain the holder of any such obligation owing to it
hereunder for all purposes under this Agreement, and the Borrowers and the
Administrative Agent shall continue to deal solely and directly with such Lender
in connection with such Lender’s rights and obligations under this Agreement. 
In no event shall any Participant under any such participation have any right to
approve any amendment or waiver of any provision of this Agreement, or any
consent to any departure by any Borrower therefrom, except to the extent that
such amendment, waiver or consent would reduce the principal of, or interest on,
the US$ Loans or any fees payable hereunder, postpone the date of the final
maturity of the US$ Loans, or release the guarantee contained in Section 10, in
each case to the extent subject to such participation.  Each Borrower agrees
that, while an Event of Default shall have occurred and be continuing, if
amounts outstanding under this Agreement are due or unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of setoff in respect
of its participating interest in amounts owing under this Agreement to the same
extent as if the amount of its participating interest were owing directly to it
as a Lender under this Agreement, provided that, in purchasing such
participating interest,

 

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such Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 11.12 as fully as if it were a Lender
hereunder.  Each Borrower also agrees that each Participant shall be entitled to
the benefits of Sections 2.16, 2.17, 2.18 and 2.19 with respect to its
participation in the Revolving Credit Commitments and the US$ Loans outstanding
from time to time as if it was a Lender; provided that, in the case of
Section 2.18, such Participant shall have complied with the requirements of said
Section and provided, further, that no Participant shall be entitled to receive
any greater amount pursuant to any such Section than the transferor Lender would
have been entitled to receive in respect of the amount of the participation
transferred by such transferor Lender to such Participant had no such transfer
occurred.  Each Lender that sells a participation shall, acting solely for this
purpose as an agent of the Borrower, maintain a register on which it enters the
name and address of each Participant and the principal amounts (and stated
interest) of each Participant’s interest in the Loans or other obligations under
this Agreement (the “Participant Register”); provided that no Lender shall have
any obligation to disclose all or any portion of the Participant Register to any
Person (including the identity of any Participant or any information relating to
a Participant’s interest in any Commitments, Loans or other obligations under
this Agreement) except to the extent that such disclosure is necessary to
establish that such Commitment, Loan or other obligation is in registered form
under Section 5f.103-1(c) of the United States Treasury Regulations.  The
entries in the Participant Register shall be conclusive absent manifest error,
and such Lender shall treat each person whose name is recorded in the
Participant Register as the owner of such participation for all purposes of this
Agreement notwithstanding any notice to the contrary.  For the avoidance of
doubt, the Administrative Agent (in its capacity as Administrative Agent) shall
have no responsibility for maintaining a Participant Register.

 

11.7         Transfers of Competitive Loans.  (a)  Any Competitive Loan Lender,
in the ordinary course of its business and in accordance with applicable law, at
any time may assign to one or more banks or other entities (each, a “Competitive
Loan Assignee”) any Competitive Loan owing to such Competitive Loan Lender,
pursuant to a Competitive Loan Assignment executed by the assignor Competitive
Loan Lender and the Competitive Loan Assignee.

 

(b)           Upon such execution, from and after the date of such Competitive
Loan Assignment, the Competitive Loan Assignee shall be deemed, to the extent of
the assignment provided for in such Competitive Loan Assignment, and subject to
the provisions of Sections 11.7(c) and 11.7(d), to have the same rights and
benefits of payment and enforcement with respect to such Competitive Loan
(including, without limitation, the applicable rights set forth in Sections
2.16, 2.17, 2.18 and 2.19) and the same rights of setoff and obligation to share
pursuant to Section 11.12 as it would have had if it were a Competitive Loan
Lender hereunder.

 

(c)           Unless such Competitive Loan Assignment shall otherwise specify
and a copy of such Competitive Loan Assignment shall have been delivered to the
Administrative Agent for its acceptance and recording in the Register in
accordance with Section 11.9(a), the assignor under the Competitive Loan
Assignment shall act as collection agent for the Competitive Loan Assignee
thereunder, and the Administrative Agent shall pay all amounts received from the
relevant Borrower which are allocable to the assigned Competitive Loan directly
to such assignor without any liability to such Competitive Loan Assignee.

 

(d)           A Competitive Loan Assignee under a Competitive Loan Assignment
shall not, by virtue of such Competitive Loan Assignment, become a party to this
Agreement or a “Competitive Loan Lender”, or have any rights to consent to or
refrain from consenting to any amendment, waiver or other modification of any
provision of this Agreement or any related document; provided that (i) the
assignor under such Competitive Loan Assignment and such Competitive Loan
Assignee may, in their discretion, agree between themselves upon the manner in
which such assignor will exercise its rights under this Agreement and any
related document, and (ii) if a copy of such Competitive Loan Assignment

 

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shall have been delivered to the Administrative Agent for its acceptance and
recording in the Register in accordance with Section 11.9(a), no such amendment,
waiver or modification may reduce or postpone any payment of principal or
interest in respect of any Competitive Loan assigned to such Competitive Loan
Assignee without the written consent of such Competitive Loan Assignee.

 

(e)           If a Competitive Loan Assignee has caused a Competitive Loan
Assignment to be recorded in the Register in accordance with Section 11.9(a),
such Competitive Loan Assignee may thereafter, in the ordinary course of its
business and in accordance with applicable law, assign the relevant Competitive
Loans to any Competitive Loan Lender, to any affiliate or subsidiary of such
Competitive Loan Assignee or to any other financial institution that has total
assets in excess of $1,000,000,000 and that in the ordinary course of its
business extends credit of the same type as the Competitive Loans, and the
foregoing provisions of this Section 11.7 shall apply, mutatis mutandis, to any
such assignment by a Competitive Loan Assignee.  Except in accordance with the
preceding sentence, Competitive Loans may not be further assigned by a
Competitive Loan Assignee, subject to any legal or regulatory requirement that
the Competitive Loan Assignee’s assets must remain under its control.

 

(f)            Upon its receipt of a Competitive Loan Assignment executed by an
assignor Competitive Loan Lender and a Competitive Loan Assignee, together with
payment to the Administrative Agent of a registration and processing fee of
$3,500 (which shall not be payable by any Borrower), the Administrative Agent
promptly shall (i) accept such Competitive Loan Assignment, (ii) record the
information contained therein in the Register and (iii) give notice of such
acceptance and recordation to the assignor Competitive Loan Lender, the
Competitive Loan Assignee and the relevant Borrower.

 

11.8         Assignments.  (a)  Subject to clause (ii) of the second sentence of
Section 3.1(b), any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time and from time to time assign to any
affiliate of such Lender or, with the consent of IBM and the Administrative
Agent (which consent in each case shall not be unreasonably withheld or delayed,
and, in the case of IBM, shall be deemed to have been given unless IBM shall
object to such assignment by written notice to the Administrative Agent within
ten Business Days after having received notice thereof), to any other Lender or
to an additional bank, financial institution or other entity other than a
Borrower, an Affiliate of a Borrower or a natural person (each, a “Purchasing
Lender”) all or any part of its rights and obligations under this Agreement
pursuant to an Assignment and Assumption, substantially in the form of
Exhibit E, executed by such Purchasing Lender and such assigning Lender (and, in
the case of a Purchasing Lender that is not an affiliate of the relevant
assigning Lender, by IBM and the Administrative Agent) and delivered to the
Administrative Agent for its acceptance and recording in the Register, provided,
that except in the case of an assignment of all of a Lender’s rights and
obligations under this Agreement, the amount of the Revolving Credit Commitment
of the assigning Lender being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Assumption with respect to such
assignment) shall in no event be less than $10,000,000 or such lesser amount as
may be consented to by IBM and the Administrative Agent and provided, further,
that a Swing Line Lender may so assign all or a portion of such rights and
obligations to a Person that shall become a Swing Line Lender hereunder only if
notice of the designation of such new Swing Line Lender shall have been
delivered to the Administrative Agent prior to such assignment.  Upon such
execution, delivery, acceptance and recording, from and after the effective date
determined pursuant to such Assignment and Assumption, (x) the Purchasing Lender
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Assumption, have the rights and obligations of a Lender hereunder
with a Revolving Credit Commitment (and, if applicable, a Swing Line Commitment)
as set forth therein, and (y) the assigning Lender thereunder shall, to the
extent provided in such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all or the remaining portion of an assigning Lender’s rights
and obligations under this Agreement, such assigning Lender shall cease to be a
party hereto).

 

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(b)           Upon its receipt of an Assignment and Assumption executed by an
assigning Lender and a Purchasing Lender (and, in the case of a Purchasing
Lender that is not an affiliate of the relevant assigning Lender, by IBM and the
Administrative Agent) together with payment to the Administrative Agent of a
registration and processing fee of $3,500 (which shall not be payable by any
Borrower), the Administrative Agent shall (i) promptly accept such Assignment
and Assumption and (ii) on the effective date determined pursuant thereto record
the information contained therein in the Register and give notice of such
acceptance and recordation to the Lenders and IBM.

 

11.9         The Register; Disclosure; Pledges to Federal Reserve Banks.  (a) 
The Administrative Agent shall maintain at its address referred to in
Section 11.2 a copy of each Competitive Loan Assignment and Assignment and
Assumption delivered to it and a register (the “Register”) for the recordation
of (i) the names and addresses of the Lenders, the Revolving Credit Commitments
and Swing Line Commitments of the Lenders, and the principal amount of the US$
Loans owing to each Lender from time to time and (ii) with respect to each
Competitive Loan Assignment delivered to the Administrative Agent, the name and
address of the Competitive Loan Assignee and the principal amount of each
Competitive Loan owing to such Competitive Loan Assignee.  The entries in the
Register shall be conclusive, in the absence of clearly demonstrable error, and
the Borrowers, the Administrative Agent and the Lenders may treat each Person
whose name is recorded in the Register as the owner of the US$ Loan recorded
therein for all purposes of this Agreement.  The Register shall be available for
inspection by the Borrowers at any reasonable time and from time to time upon
reasonable prior notice.

 

(b)           Each Borrower authorizes each Lender to disclose to any
Participant, Competitive Loan Assignee or Purchasing Lender (each, a
“Transferee”) and any prospective Transferee, subject to the provisions of
Section 11.21 (whether or not, in the case of any Person that is a prospective
Transferee, such Person in fact becomes a Transferee), any and all financial
information in such Lender’s possession concerning the Borrowers and their
respective affiliates which has been delivered to such Lender by or on behalf of
any Borrower pursuant to this Agreement or which has been delivered to such
Lender by or on behalf of any Borrower in connection with such Lender’s credit
evaluation of the Borrowers and their respective affiliates prior to becoming a
party to this Agreement.

 

(c)           Nothing herein shall prohibit any Lender from pledging or
assigning all or any portion of its Loans to any Federal Reserve Bank or central
bank in accordance with applicable law, provided, that in the case of any such
pledge or assignment to a central bank, no Borrower will be responsible for the
payment of any fees, expenses, duties, imposts, taxes or other amounts in
connection therewith.  In order to facilitate such pledge or assignment, each
Borrower hereby agrees that, upon request of any Lender at any time and from
time to time after such Borrower has made its initial borrowing hereunder, such
Borrower shall provide to such Lender, at such Borrower’s own expense, a
promissory note, substantially in the form of Exhibit G-1 or G-2, as the case
may be, evidencing the Revolving Credit Loans, Swing Line Loans or Competitive
Loans, as the case may be, owing to such Lender.

 

11.10       Changing Designations of Swing Line Lenders and Competitive Loan
Lenders.  (a)  IBM shall have the right to change the designation of a Lender or
Swing Line Lender to (i) cause a Lender to become a Swing Line Lender,
(ii) change the Swing Line Commitment of a Swing Line Lender (so long as, after
giving effect thereto, (x) such Swing Line Commitment does not exceed such
Lender’s Revolving Credit Commitment and (y) the aggregate amount of the Swing
Line Commitments shall not exceed $2,000,000,000) or (iii) cause a Swing Line
Lender to cease to be a Swing Line Lender, provided that no such change shall
become effective unless (x) the Lender affected thereby shall in its sole
discretion have agreed in writing to such change and (y) prior written
notification thereof shall have been delivered to the Administrative Agent and,
in the case of clause (i) above, the Administrative Agent shall have approved of
such designation (which approval shall not be unreasonably withheld).

 

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(b)           IBM shall have the right to change the designation of a Lender or
Competitive Loan Lender to (i) cause a Lender to become a Competitive Loan
Lender or (ii) cause a Competitive Loan Lender to cease to be a Competitive Loan
Lender, provided that no such change shall become effective unless (x) the
Lender affected thereby shall in its sole discretion have agreed in writing to
such change and (y) prior written notification thereof shall have been delivered
to the Administrative Agent and, in the case of clause (i) above, the
Administrative Agent shall have approved of such designation (which approval
shall not be unreasonably withheld).

 

11.11       Replacement of Lenders under Certain Circumstances.  IBM shall be
permitted to replace any Lender which (a) requests reimbursement for amounts
owing pursuant to Section 2.17 or 2.18 (other than with respect to Index Rate
Competitive Loans), (b) is affected in the manner described in Section 2.16
(other than with respect to Index Rate Competitive Loans) and as a result
thereof any of the actions described in said Section is required to be taken,
(c) becomes a Defaulting Lender or (d) fails to consent to any proposed
amendment, modification, termination, waiver or consent with respect to any
provision hereof that requires the unanimous approval of all of the Lenders, the
approval of all of the Lenders affected thereby or the approval of a class of
Lenders, in each case in accordance with the terms of Section 11.1, so long as
the consent of the Required Lenders shall have been obtained with respect to
such amendment, modification, termination, waiver or consent, with a replacement
bank or other financial institution; provided that (i) such replacement does not
conflict with any Requirement of Law, (ii) no Event of Default shall have
occurred and be continuing at the time of such replacement, (iii) IBM shall
repay (or the replacement bank or institution shall purchase, at par) all Loans
and other amounts owing to such replaced Lender prior to the date of
replacement, (iv) IBM shall be liable to such replaced Lender under Section 2.19
if any Eurodollar Loan owing to such replaced Lender shall be prepaid (or
purchased) other than on the last day of the Interest Period relating thereto or
any Competitive Loan owing to such replaced Lender shall be paid other than on
the relevant Competitive Loan Maturity Date, (v) the replacement bank or
institution, if not already a Lender, and the terms and conditions of such
replacement, shall be reasonably satisfactory to the Administrative Agent,
(vi) the replaced Lender shall be obligated to make such replacement in
accordance with the provisions of Section 11.8 (provided that IBM shall be
obligated to pay the registration and processing fee referred to therein),
(vii) until such time as such replacement shall be consummated, IBM shall pay
all additional amounts (if any) required pursuant to Section 2.17 or 2.18, as
the case may be, and (viii) any such replacement shall not be deemed to be a
waiver of any rights which IBM, the Administrative Agent or any other Lender
shall have against the replaced Lender.

 

11.12       Adjustments; Set-off.  (a)  If any Lender (a “benefitted Lender”)
shall at any time receive any payment of all or part of its US$ Loans, or
interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Section 8(f) or (g), or otherwise), in a greater
proportion than any such payment to or collateral received by any other Lender,
if any, in respect of such other Lender’s US$ Loans that are then due and
payable, or interest thereon, such benefitted Lender shall purchase at par for
cash from the other Lenders a participating interest in such portion of each
such other Lender’s US$ Loan, or shall provide such other Lenders with the
benefits of any such collateral, or the proceeds thereof, as shall be necessary
to cause such benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; provided, however, that
if all or any portion of such excess payment or benefits is thereafter recovered
from such benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest.

 

(b)           In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to any Borrower, any
such notice being expressly waived by each Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by any Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to
set-off and

 

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appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or the
account of the relevant Borrower.  Each Lender agrees promptly to notify IBM and
the Administrative Agent after any such set-off and application made by such
Lender, provided that the failure to give such notice shall not affect the
validity of such set-off and application.

 

11.13       Counterparts.  This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
email or telecopy), and all of said counterparts taken together shall be deemed
to constitute one and the same instrument.  A set of the copies of this
Agreement signed by all the parties shall be lodged with IBM and the
Administrative Agent.

 

11.14       Severability.  Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

11.15       Integration.  This Agreement represents the agreement of the
Borrowers, the Administrative Agent and the Lenders with respect to the subject
matter hereof, and there are no promises, undertakings, representations or
warranties by the Administrative Agent or any Lender relative to subject matter
hereof not expressly set forth or referred to herein.

 

11.16       GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

11.17       Submission To Jurisdiction; Waivers.  Each Borrower hereby
irrevocably and unconditionally:

 

(a)           submits for itself and its property in any legal action or
proceeding relating to this Agreement, or for recognition and enforcement of any
judgment in respect thereof, to the exclusive general jurisdiction of the Courts
of the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;

 

(b)           consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;

 

(c)           in the case of each Subsidiary Borrower, designates and directs
IBM at its offices at One New Orchard Road, Armonk, New York, as its agent to
receive service of any and all process and documents on its behalf in any legal
action or proceeding referred to in paragraph (a) of this Section 11.17 in the
State of New York and agrees that service upon such agent shall constitute valid
and effective service upon such Subsidiary Borrower and that failure of IBM to
give any notice of such service to any such party shall not affect or impair in
any way the validity of such service or of any judgment rendered in any action
or proceeding based thereon;

 

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(d)           in the case of each Subsidiary Borrower, to the extent that such
Subsidiary Borrower has or hereafter may acquire any immunity (sovereign or
otherwise) from any legal action, suit or proceeding, from jurisdiction of any
court or from set-off or any legal process (whether service of notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise) with respect to itself or any of its
property or assets, waives and agrees not to plead or claim such immunity in
respect of its obligations under this Agreement (it being understood that the
waivers contained in this paragraph (d) shall have the fullest extent permitted
under the Foreign Sovereign Immunities Act of 1976, as amended, and are intended
to be irrevocable and not subject to withdrawal for the purposes of such Act);

 

(e)           agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to such Borrower at
its address referred to in Section 11.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;

 

(f)            agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to sue in any other jurisdiction; and

 

(g)           waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.

 

11.18       Judgments Relating to Subsidiary Borrowers.  (a)  If, for the
purpose of obtaining judgment in any court, it is necessary to convert a sum
owing hereunder by any Subsidiary Borrower to any party hereto or any holder of
the obligations of such Subsidiary Borrower hereunder into another currency,
such Subsidiary Borrower agrees, to the fullest extent that it may effectively
do so, that the rate of exchange used shall be that at which in accordance with
normal banking procedures in the relevant jurisdiction such party or holder
could purchase Dollars with such other currency for Dollars on the Banking Day
immediately preceding the day on which final judgment is given.

 

(b)           The obligations of each Subsidiary Borrower in respect of any sum
due to any party hereto or any holder of the obligations owing hereunder (the
“Applicable Creditor”) shall, notwithstanding any judgment in a currency (the
“Judgment Currency”) other than Dollars, be discharged only to the extent that,
on the Banking Day following receipt by the Applicable Creditor of any sum
adjudged to be so due in the Judgment Currency, the Applicable Creditor may in
accordance with normal banking procedures in the relevant jurisdiction purchase
Dollars with the Judgment Currency; if the amount of Dollars so purchased is
less than the sum originally due to the Applicable Creditor in Dollars, such
Subsidiary Borrower agrees, as a separate obligation and notwithstanding any
such judgment, to indemnify the Applicable Creditor against such loss, provided,
that if the amount of Dollars so purchased exceeds the sum originally due to the
Applicable Creditor, the Applicable Creditor agrees to remit such excess to such
Subsidiary Borrower.  The obligations of the Subsidiary Borrowers contained in
this Section 11.18 shall survive the termination of this Agreement and the
payment of all other amounts owing hereunder.

 

11.19       Acknowledgements.  Each Borrower hereby acknowledges that:

 

(a)  it has been advised by counsel in the negotiation, execution and delivery
of this Agreement;

 

(b)  neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to any Borrower arising out of or in connection with
this

 

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Agreement, and the relationship between Administrative Agent and Lenders, on one
hand, and the Borrowers, on the other hand, in connection herewith or therewith
is solely that of debtor and creditor; and

 

(c)  no joint venture is created hereby or otherwise exists by virtue of the
transactions contemplated hereby among the Lenders or among the Borrowers and
the Lenders.

 

11.20       WAIVERS OF JURY TRIAL.  EACH OF THE BORROWERS, THE ADMINISTRATIVE
AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY AND FOR ANY COUNTERCLAIM THEREIN.

 

11.21       Confidentiality.  Each Lender agrees to keep confidential any
written or oral information (a) provided to it by or on behalf of any Borrower
or any of the Subsidiaries pursuant to or in connection with this Agreement or
(b) obtained by such Lender based on a review of the books and records of any
Borrower or any of the Subsidiaries; provided that nothing herein shall prevent
any Lender from disclosing any such information (i) to the Administrative Agent
or any other Lender, (ii) to any Transferee or prospective Transferee or any
swap counterparty so long as delivery of such information is made subject to the
requirement that such information be kept confidential in the manner
contemplated by this Section 11.21, (iii) to its employees or affiliates
involved in the administration of this Agreement or any Local Currency Facility,
directors, agents, attorneys, accountants and other professional advisors (each
of which shall be instructed to hold the same in confidence), (iv) upon the
request or demand of any Governmental Authority having jurisdiction over such
Lender, (v) in response to any order of any court or other Governmental
Authority or as may otherwise be required pursuant to any Requirement of Law,
(vi) which has been publicly disclosed other than in breach of this Agreement,
(vii) in connection with the exercise of any remedy hereunder or under any Local
Currency Facility, (viii) to any credit insurance provider relating to any
Borrower and its obligations or any rating agency when required by it, provided
that, prior to any disclosure, such credit insurance provider or rating agency
shall agree in writing to preserve the confidentiality of any confidential
information relating to the Borrowers received by it, (ix) to the CUSIP Service
Bureau or any similar agency in connection with the issuance and monitoring of
CUSIP numbers with respect to the Loans, provided that, prior to any disclosure,
the CUSIP Service Bureau or such similar agency shall agree in writing to
preserve the confidentiality of any confidential information relating to the
Borrowers received by it, or (x) if IBM has consented to such disclosure in
writing in its sole discretion.  It is understood and agreed that IBM, its
Subsidiaries and their respective affiliates may rely upon this Section 11.21
for any purpose, including without limitation to comply with Regulation FD
promulgated by the SEC.

 

11.22       Binding Effect; Successors and Assigns.  (a)  This Agreement shall
become effective on the date (the “Effective Date”) on which (i) it shall have
been executed and delivered by a duly authorized officer of each of IBM and the
Administrative Agent and (ii) the Administrative Agent shall have received an
executed Lender Addendum (or a copy thereof by facsimile transmission) from each
Person listed on Schedule 1.1, provided, that, notwithstanding the foregoing, in
the event that a Lender Addendum has not been duly executed and delivered by
each Person listed on Schedule 1.1 on the date (which shall be no earlier than
the date hereof) on which this Agreement shall have been executed and delivered
by each of IBM and the Administrative Agent, this Agreement shall nevertheless
become effective on such date with respect to those Persons which have executed
and delivered a Lender Addendum on or before such date if IBM shall (after
consultation with the Administrative Agent) have designated one or more Persons
(the “Designated Lenders”) to assume, in the aggregate, all of the Revolving
Credit Commitments which would have been held by the Persons listed on Schedule
1.1 (the

 

70

--------------------------------------------------------------------------------

 

“Non-Executing Persons”) which have not so executed a Lender Addendum (subject
to each such Designated Lender’s prior written consent in its sole discretion). 
Schedule 1.1 shall automatically be deemed to be amended to reflect the
respective Revolving Credit Commitments of the Designated Lenders and the
omission of the Non-Executing Persons as Lenders hereunder.  The Administrative
Agent shall notify the Lenders of the Effective Date promptly after the
occurrence thereof, which notice shall be accompanied, if applicable, with a
copy of Schedule 1.1 revised to give effect to any deemed amendments thereto
made pursuant to this Section 11.22(a).  IBM agrees on behalf of each existing
Subsidiary Borrower that the provisions of this Agreement shall apply to each
such Subsidiary Borrower whether or not such Subsidiary Borrower has executed a
Subsidiary Borrower Addendum, provided, that IBM agrees to deliver to the
Administrative Agent an executed Subsidiary Borrower Addendum for each such
Subsidiary Borrower as promptly as practicable after the Effective Date.

 

(b)           This Agreement shall be binding upon and inure to the benefit of
the Borrowers, the Lenders, the Administrative Agent, all future permitted
holders of the obligations hereunder and their respective successors and
permitted assigns, except that no Borrower may assign or transfer any of its
rights or obligations under this Agreement without the prior written consent of
each Lender.  Each reference herein to any Lender shall, to the extent
applicable, be deemed to be a reference to any affiliate, branch or agency of
any Lender which is a Local Currency Lender.

 

11.23       Incremental Revolving Credit Commitments.  (a)  IBM and any one or
more Lenders (including New Lenders) may from time to time agree that such
Lenders shall provide incremental Revolving Credit Commitments by executing and
delivering to the Administrative Agent one or more Incremental Commitment
Supplements or, in the case of New Lenders, New Lender Supplements.

 

(b)           Any additional bank, financial institution or other entity which
is not already a Lender, with the consent of IBM and the Administrative Agent
(which consent, in the case of the Administrative Agent, shall not be
unreasonably withheld), can elect to become a party to this Agreement and obtain
a Revolving Credit Commitment; such party shall execute a New Lender Supplement
(each, a “New Lender Supplement”) with IBM and the Administrative Agent,
substantially in the form of Exhibit I-1, whereupon such bank, financial
institution or other entity (herein called a “New Lender”) shall become a Lender
for all purposes and to the same extent as if originally a party hereto and
shall be bound by and entitled to the benefits of this Agreement.

 

(c)           Any Lender (other than any New Lender) which agrees to provide an
incremental Revolving Credit Commitment pursuant to this Section 11.23 shall
execute an Incremental Commitment Supplement (each, an “Incremental Commitment
Supplement”) with IBM and the Administrative Agent, substantially in the form of
Exhibit I-2, whereupon such Lender shall be bound by and entitled to the
benefits of this Agreement with respect to the incremental Revolving Credit
Commitment specified therein, and Schedule 1.1 shall be deemed to be amended to
reflect such incremental Revolving Credit Commitment.

 

(d)           If, on the date upon which any Lender (including any New Lender)
provides an incremental Revolving Credit Commitment pursuant to this
Section 11.23, there is an unpaid principal amount of Revolving Credit
Loans, IBM shall borrow Revolving Credit Loans from such Lender in an amount
determined by reference to the amount of each Type of Revolving Credit Loan
(and, in the case of Eurodollar Loans, of each Eurodollar Tranche) which would
then have been outstanding from such Lender if (i) each such Type or Eurodollar
Tranche had been borrowed on the date such Lender’s incremental Revolving Credit
Commitment was provided, in each case after giving effect thereto and (ii) the
aggregate amount of each such Type or Eurodollar Tranche requested to be so
borrowed had been increased to the extent necessary to give effect, with respect
to such Lender, to the borrowing allocation

 

71

--------------------------------------------------------------------------------

 

provisions of Section 2.2.  Any Eurodollar Loan borrowed pursuant to the
preceding sentence shall bear interest at a rate equal to the respective
interest rates then applicable to the Eurodollar Loans of the other Lenders in
the same Eurodollar Tranche.

 

(e)           Notwithstanding anything to the contrary in this Section 11.23,
(i) the aggregate amount of incremental Revolving Credit Commitments provided
pursuant to this Section 11.23 shall not exceed $2,000,000,000 and (ii) no
Lender shall have any obligation to provide an incremental Revolving Credit
Commitment unless it agrees to do so in its sole discretion.

 

11.24       USA PATRIOT Act.  Each Lender hereby notifies the Borrowers that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the “Act”), it is required to obtain,
verify and record information that identifies the Borrowers, which information
includes the name and address of the Borrowers and other information that will
allow such Lender to identify the Borrowers in accordance with the Act.

 

11.25       No Fiduciary Duty, etc.

 

.  (a)  Each Borrower acknowledges and agrees that (i) no fiduciary, advisory or
agency relationship between any Borrower and the Lender Parties is intended to
be or has been created in respect of any of the transactions contemplated by
this Agreement, irrespective of whether the Lender Parties have advised or are
advising any Borrower on other matters, and each Borrower waives, to the fullest
extent permitted by law, any claims it may have against the Lender Parties for
breach of fiduciary duty or alleged breach of fiduciary duty in respect of any
of the transactions contemplated by this Agreement, and agrees that the Lender
Parties will have no liability (whether direct or indirect) to any Borrower in
respect of such a fiduciary duty claim in respect of any of the transactions
contemplated by this Agreement, (ii) the Lender Parties, on the one hand, and
each Borrower, on the other hand, have an arm’s length business relationship
that does not directly or indirectly give rise to, nor does any Borrower rely
on, any fiduciary duty to any Borrower or its affiliates on the part of the
Lender Parties, (iii) each Borrower is capable of evaluating and understanding,
and it understands and accepts, the terms, risks and conditions of the
transactions contemplated by this Agreement, (iv) each Borrower has been advised
that the Lender Parties are engaged in a broad range of transactions that may
involve interests that differ from any Borrower’s interests and that the Lender
Parties have no obligation to disclose such interests and transactions to any
Borrower, (v) each Borrower has  consulted its own legal, accounting, regulatory
and tax advisors to the extent it has deemed appropriate, (vi) each Lender Party
has been, is, and will be acting solely as a principal and, except as otherwise
expressly agreed in writing by it and the relevant parties, has not been, is
not, and will not be acting as an advisor, agent or fiduciary for any Borrower,
any of its affiliates or any other Person or entity and (vii) none of the Lender
Parties has any obligation to any Borrower or its affiliates with respect to the
transactions contemplated hereby except those obligations expressly set forth
herein or in any other express writing executed and delivered by such Lender
Party and such Borrower or any such affiliate.

 

(b)           None of the Lender Parties shall have or be deemed to have a
fiduciary relationship with any other Lender Party.  The Lender Parties are not
partners or co-venturers, and no Lender Party shall be liable for the acts or
omissions of, or (except as otherwise set forth herein in the case of the
Administrative Agent) authorized to act for, any other Lender Party.

 

72

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.

 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

 

 

 

By:

/s/ Robert Del Bene

 

 

Title: Vice President and Treasurer

 

 

 

 

 

JPMORGAN CHASE BANK, N.A., as Administrative Agent

 

 

 

By:

/s/ John Kowalczuk

 

 

Title: Executive Director

 

 

 

 

 

BARCLAYS BANK PLC, as Syndication Agent

 

 

 

By:

/s/ Ritam Bhalla

 

 

Title: Vice President

 

 

 

 

 

BNP PARIBAS, as Syndication Agent

 

 

 

By:

/s/ N. Rabier

 

 

Title: Director

 

 

 

By:

/s/ M. Kowalczuk

 

 

Title: Director

 

 

 

 

 

CITIBANK, N.A., as Syndication Agent

 

 

 

By:

/s/ Susan Olsen

 

 

Title: Vice President

 

 

 

 

 

DEUTSCHE BANK SECURITIES INC., as Documentation Agent

 

 

 

By:

/s/ Hans-Josef Thiele

 

 

Title: Director

 

 

 

 

By:

/s/ Ming K. Chu

 

 

Title: Vice President

 

 

 

 

 

HSBC BANK USA, NATIONAL ASSOCIATION, as Documentation Agent

 

 

 

By:

/s/ David Wagstaff

 

 

Title: Managing Director

 

--------------------------------------------------------------------------------

 

 

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., as Documentation Agent

 

 

 

By:

/s/ Lillian Kim

 

 

Title: Director

 

 

 

MITSUBISHI UFJ TRUST AND BANKING CORPORATION, NEW YORK BRANCH, as Documentation
Agent

 

 

 

By:

/s/ Tomoyuki Nagano

 

 

Title: Senior Vice President

 

 

 

MIZUHO CORPORATE BANK, LTD., as Documentation Agent

 

 

 

By:

/s/ Bertram H. Tang

 

 

Title: Authorized Signatory

 

 

 

 

 

ROYAL BANK OF CANADA, as Documentation Agent

 

 

 

By:

/s/ Mark S. Gronich

 

 

Title: Authorized Signatory

 

 

 

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Documentation Agent

 

 

 

By:

/s/ Eric Frandson

 

 

Title: Director

 

--------------------------------------------------------------------------------

 

SCHEDULE 1.1 TO
5-YEAR CREDIT AGREEMENT

 

 

 

Revolving Credit
Commitment

 

Swing Line
Commitment

 

JPMorgan Chase Bank, N.A.

 

$

575,000,000

 

$

300,000,000

 

Barclays Bank PLC

 

$

575,000,000

 

$

300,000,000

 

BNP Paribas

 

$

575,000,000

 

$

300,000,000

 

Citibank, N.A.

 

$

575,000,000

 

$

300,000,000

 

Deutsche Bank AG New York Branch

 

$

450,000,000

 

$

200,000,000

 

HSBC Bank N.A.

 

$

450,000,000

 

 

 

Mizuho Corporate Bank, Ltd.

 

$

450,000,000

 

 

 

Royal Bank of Canada

 

$

450,000,000

 

$

200,000,000

 

Wells Fargo Bank National Association

 

$

450,000,000

 

$

200,000,000

 

Bank of America, N.A.

 

$

300,000,000

 

 

 

Credit Suisse, Cayman Islands Branch

 

$

300,000,000

 

 

 

Goldman Sachs Bank USA

 

$

300,000,000

 

 

 

Morgan Stanley Bank, N.A.

 

$

300,000,000

 

 

 

Sovereign Bank

 

$

300,000,000

 

 

 

The Royal Bank of Scotland plc

 

$

300,000,000

 

 

 

UBS Loan Finance LLC

 

$

300,000,000

 

 

 

UniCredit Bank AG, New York Branch

 

$

300,000,000

 

 

 

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

 

$

270,000,000

 

$

120,000,000

 

Intesa Sanpaolo S.p.A., New York Branch

 

$

200,000,000

 

 

 

PNC Bank, National Association

 

$

200,000,000

 

 

 

Standard Chartered Bank

 

$

200,000,000

 

 

 

Sumitomo Mitsui Banking Corporation

 

$

200,000,000

 

 

 

The Bank of New York Mellon

 

$

200,000,000

 

 

 

U.S. Bank National Association

 

$

200,000,000

 

 

 

Mitsubishi UFJ Trust and Banking Corporation, New York Branch

 

$

180,000,000

 

$

80,000,000

 

Australia and New Zealand Banking Group Limited

 

$

100,000,000

 

 

 

Banco Bilbao Vizcaya Argentaria, S.A.

 

$

100,000,000

 

 

 

Bank of Montreal

 

$

100,000,000

 

 

 

CIBC Inc.

 

$

100,000,000

 

 

 

Crédit Agricole Corporate & Investment Bank

 

$

100,000,000

 

 

 

Danske Bank A/S

 

$

100,000,000

 

 

 

Industrial and Commercial Bank of China Limited New York Branch

 

$

100,000,000

 

 

 

ING Bank N.V., Dublin Branch

 

$

100,000,000

 

 

 

Lloyds TSB Bank plc

 

$

100,000,000

 

 

 

Societe Generale

 

$

100,000,000

 

 

 

 

--------------------------------------------------------------------------------

 

 

 

Revolving Credit
Commitment

 

Swing Line
Commitment

 

State Street Bank and Trust Company

 

$

100,000,000

 

 

 

Toronto Dominion (New York) LLC

 

$

100,000,000

 

 

 

The Northern Trust Company

 

$

100,000,000

 

 

 

Westpac Banking Corp.

 

$

100,000,000

 

 

 

 

2

--------------------------------------------------------------------------------

 

SCHEDULE 3.4 TO
5-YEAR CREDIT AGREEMENT

 

None

 

--------------------------------------------------------------------------------

 

SCHEDULE 6.2(c) TO
5-YEAR CREDIT AGREEMENT

 

[FORM OF COMPLIANCE CERTIFICATE]

 

COMPLIANCE CERTIFICATE

 

[For the Fiscal Quarter ending                 , 20    ]

 

[For the Fiscal Year ending                 , 20    ]

 

Pursuant to Section 6.2(c) of the 5-Year Credit Agreement, dated as of
November 10, 2011 (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”; terms defined therein being used herein as therein
defined unless otherwise defined herein), among International Business Machines
Corporation (“IBM”), the Subsidiary Borrowers parties thereto, the Lenders
parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the
Syndication Agents and Documentation Agents named therein, the undersigned, the
duly elected, qualified and acting Responsible Officer of IBM, hereby certifies
that:

 

(a)           During the period of four consecutive fiscal quarters ended on
                         , 20    , such Responsible Officer has obtained no
knowledge of any Default or Event of Default except as follows: 
                                        .

 

[The financial statements referred to in Section 6.2(b) of the Credit Agreement
which are delivered concurrently with the delivery of this Compliance
Certificate fairly present the financial position, results of operations, cash
flows and changes in stockholders’ equity of IBM and the Subsidiaries, in
accordance with GAAP, subject to normal year-end audit adjustments which are not
expected to be material in amount.]*

 

(b)           The covenant calculation set forth below is based on IBM’s
[unaudited] [audited] balance sheet and statements of earnings, cash flows and
stockholders’ equity for the fiscal [quarter] [year] ended                 
    , 20    , a copy of which is attached hereto.

 

--------------------------------------------------------------------------------

*                                         Insert only in Compliance Certificates
accompanying financial statements delivered pursuant to Section 6.2(b) of the
Credit Agreement.

 

--------------------------------------------------------------------------------

 

1.             Consolidated Net Interest Expense Ratio (Section 7.4)

 

The ratio of

 

1.               the difference between

 

A.    the sum of

 

(1)

earnings before income taxes of IBM and its consolidated Subsidiaries for the
period of four consecutive fiscal quarters ended on the date referred to in
paragraph (b) above, excluding gains or losses from the divestiture or sale of a
business

 

$

(2)

Consolidated Net Interest Expense (to the extent deducted in arriving at
earnings before income taxes)

 

$

(3)

depreciation expense (to the extent deducted in arriving at earnings before
income taxes)

 

$

(4)

amortization expense (to the extent deducted in arriving at earnings before
income taxes)

 

$

(5)

restructuring charges made after the Effective Date (to the extent deducted in
arriving at earnings before income taxes)

 

$

 

 

 

 

Total of (1), (2), (3), (4) and (5) above

$

 

 

 

 

and

 

B.    the sum of

 

(1)

cash payments made during such period in respect of restructuring charges made
after the Effective Date

 

$

(2)

payments made during such period for plant, rental machines and other property
excluding acquisitions of businesses (net of proceeds received during such
period from dispositions of plant, rental machines and other property investment
excluding divestitures or sales of businesses)

 

$

(3)

investment in software for such period

 

$

 

5

--------------------------------------------------------------------------------

 

 

Total of (1), (2) and (3) above

 

$

 

equals

 

C.

Consolidated Adjusted Cash Flow

 

 

 

 

(A. minus B.)

 

$

 

to

 

(ii)           the difference between

 

A.

total interest cost of IBM and the Subsidiaries for such period

 

$

 

 

 

 

and

 

 

 

 

 

 

 

B.

interest income of IBM and the Subsidiaries for such period

 

$

 

 

 

 

equals

 

 

 

 

 

 

 

C.

Consolidated Net Interest Expense

 

$

 

(iii)          the Consolidated Net Interest Expense Ratio

(Ratio of Consolidated Adjusted Cash Flow (i)(C.) to Consolidated Net Interest
Expense (ii)(C.))

 

$

 

IN WITNESS WHEREOF, the undersigned has hereto set his name.

 

Dated:                        , 20    

 

 

 

 

Title:

[Responsible Officer of IBM]

 

6

--------------------------------------------------------------------------------

 

EXHIBIT A-1 TO
5-YEAR CREDIT AGREEMENT

 

[FORM OF COMPETITIVE LOAN CONFIRMATION]

 

 

                   , 20      

 

JPMorgan Chase Bank, N.A., as Administrative Agent
270 Park Avenue
New York, New York 10017

 

Reference is made to the 5-Year Credit Agreement, dated as of November 10, 2011,
among International Business Machines Corporation, the Subsidiary Borrowers
parties thereto, the Lenders parties thereto, JPMorgan Chase Bank, N.A., as
Administrative Agent, and the Syndication Agents and Documentation Agents named
therein (as the same may be amended, supplemented or otherwise modified from
time to time, the “Credit Agreement”).  Terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.

 

In accordance with Section 2.8(d) of the Credit Agreement, the undersigned
accepts and confirms the offers by Competitive Loan Lender(s) to make
Competitive Loans to the undersigned on                       , 20    
[Competitive Loan Borrowing Date] under Section 2.8(b) [index rate] or
2.8(c) [fixed rate] in the (respective) amount(s) set forth on the attached list
of Competitive Loans offered.

 

 

Very truly yours,

 

 

 

[Name of Borrower]

 

 

 

By:

 

 

 

Title:

 

 

 

[Borrower must attach Competitive Loan offer list prepared by Administrative
Agent with accepted amount entered by the Borrower to right of each Competitive
Loan offer].

 

--------------------------------------------------------------------------------

 

EXHIBIT A-2 TO
5-YEAR CREDIT AGREEMENT

 

[FORM OF COMPETITIVE LOAN OFFER]

 

JPMorgan Chase Bank, N.A., as Administrative Agent

           , 20     

270 Park Avenue

 

New York, New York 10017

 

 

Reference is made to the 5-Year Credit Agreement, dated as of November 10, 2011,
among International Business Machines Corporation, the Subsidiary Borrowers
parties thereto, the Lenders parties thereto, JPMorgan Chase Bank, N.A., as
Administrative Agent, and the Syndication Agents and Documentation Agents named
therein (as the same may be amended, supplemented or otherwise modified from
time to time, the “Credit Agreement”).  Terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement. 
In accordance with Section 2.8(b) [index rate] or 2.8(c) [fixed rate] of the
Credit Agreement, the undersigned Competitive Loan Lender offers to make
Competitive Loans thereunder in the following amounts with the following
maturity dates:

 

Competitive

Loan Date:                     , 20     

 

Aggregate Maximum Amount: $                     

 

 

 

Maturity Date 1:

                     , 20     

 

Maximum Amount: $                     

$                offered at               *

$                offered at               *

 

 

 

Maturity Date 2:

                     , 20     

 

Maximum Amount: $                     

$                offered at               *

$                offered at               *

 

 

 

Maturity Date 3:

                     , 20     

 

Maximum Amount: $                     

$                offered at               *

$                offered at               *

 

 

Very truly yours,

 

 

 

[NAME OF COMPETITIVE LOAN LENDER]

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Telephone No.:

 

 

Fax No.:

 

 

--------------------------------------------------------------------------------

*

Insert the interest rate offered for the specified loan amount.  In the case of
Index Rate Competitive Loans, insert a margin bid.  In the case of Fixed Rate
Competitive Loans, insert a fixed rate bid.

 

--------------------------------------------------------------------------------

 

EXHIBIT A-3 TO
5-YEAR CREDIT AGREEMENT

 

[FORM OF COMPETITIVE LOAN REQUEST]

 

 

                   , 20      

 

JPMorgan Chase Bank, N.A., as Administrative Agent
270 Park Avenue
New York, New York 10017

 

Reference is made to the 5-Year Credit Agreement, dated as of November 10, 2011,
among International Business Machines Corporation, the undersigned, the
Subsidiary Borrowers parties thereto, the Lenders parties thereto, JPMorgan
Chase Bank, N.A., as Administrative Agent, and the Syndication Agents and
Documentation Agents named therein (as the same may be amended, supplemented or
otherwise modified from time to time, the “Credit Agreement”).  Terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement.

 

This is [an Index Rate] [a Fixed Rate] Competitive Loan Request** pursuant to
Section 2.8(a) of the Credit Agreement requesting quotes for the following
Competitive Loans:

 

 

 

Loan 1

 

Loan 2

 

Loan 3

 

Aggregate Principal Amount

 

$

 

 

$

 

 

$

 

 

Borrowing Date

 

 

 

 

 

 

 

Interest Period***

 

 

 

 

 

 

 

Maturity Date****

 

 

 

 

 

 

 

Interest Payment Dates*****

 

 

 

 

 

 

 

 

 

Very truly yours,

 

 

 

[Name of Borrower]

 

 

 

By:

 

 

 

 

Title:

 

--------------------------------------------------------------------------------

**

Pursuant to the Credit Agreement, a Competitive Loan Request may be transmitted
in writing or by facsimile transmission, or by telephone, immediately confirmed
by facsimile transmission. In any case, a Competitive Loan Request shall contain
the information specified in the second paragraph of this form.

 

 

***

Insert only in an Index Rate Competitive Loan Request.

 

 

****

In an Index Rate Competitive Loan Request, insert last day of Interest Period.

 

 

*****

Insert only in a Fixed Rate Competitive Loan Request.

 

--------------------------------------------------------------------------------

 

EXHIBIT B-1 TO
5-YEAR CREDIT AGREEMENT

 

[FORM OF SUBSIDIARY BORROWER NOTICE AND DESIGNATION]

 

SUBSIDIARY BORROWER NOTICE AND DESIGNATION

 

To:

JPMorgan Chase Bank, N.A., as Administrative Agent

 

 

From:

International Business Machines Corporation

 

1.             This Subsidiary Borrower Notice and Designation is being
delivered to you pursuant to Section 5.2(d) of the 5-Year Credit Agreement,
dated as of November 10, 2011, among International Business Machines
Corporation, the Subsidiary Borrowers parties thereto, the Lenders parties
thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the Syndication
Agents and Documentation Agents named therein (as the same may be amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”). 
Terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.

 

2.             The effective date of this Subsidiary Borrower Notice and
Designation will be                            , 20    .

 

3.             [Please be advised that the following Subsidiary or Controlled
Person is hereby designated as a Subsidiary Borrower [and a Swing Line Borrower]
and such Subsidiary or Controlled Person is authorized to use the credit
facilities provided for under Sections 2.1[, 2.5] and 2.7 of the Credit
Agreement up to the aggregate amount set forth opposite its name below:

 

Name and Address
of Subsidiary Borrower

 

Maximum Subsidiary
Borrowing Amount*]

 

 

 

 

 

 

 

 

 

 

[3.          Please be advised that the designation of the following Subsidiary
or Controlled Person as a Subsidiary Borrower is terminated effective on the
date referred to in paragraph 2 above.]

 

 

INTERNATIONAL BUSINESS

 

MACHINES CORPORATION

 

 

 

By:

 

 

--------------------------------------------------------------------------------

*

If desired, IBM may specify separate Maximum Subsidiary Borrowing Amounts for
US$ Loans and Local Currency Loans (US$ Equivalent), which, in either case, may
be $0.

 

--------------------------------------------------------------------------------

 

 

Title:

 

 

 

 

 

[Name of Subsidiary Borrower]**

 

 

 

By:

 

 

Title:

 

Accepted and Acknowledged:

 

 

 

JPMORGAN CHASE BANK, N.A., as

 

Administrative Agent

 

 

 

By:

 

 

Title:

 

 

--------------------------------------------------------------------------------

**

Subsidiary Borrower signature necessary only in the case of termination of
designation or any change in the Maximum Subsidiary Borrowing Amount.

 

2

--------------------------------------------------------------------------------

 

EXHIBIT B-2 TO
5-YEAR CREDIT AGREEMENT

 

[FORM OF SUBSIDIARY BORROWER REQUEST]

 

SUBSIDIARY BORROWER REQUEST

 

To:

JPMorgan Chase Bank, N.A., as Administrative Agent

 

 

From:

[Name of Subsidiary Borrower]

 

1.             This Subsidiary Borrower Request is being delivered to you
pursuant to Section 5.2(d) of the 5-Year Credit Agreement, dated as of
November 10, 2011, among International Business Machines Corporation (“IBM”),
the Subsidiary Borrowers parties thereto, the Lenders parties thereto, JPMorgan
Chase Bank, N.A., as Administrative Agent, and the Syndication Agents and
Documentation Agents named therein (as the same may be amended, supplemented or
otherwise modified from time to time, the “Credit Agreement”).  Terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement.

 

2.             The undersigned refers to the Subsidiary Borrower Notice and
Designation effective                              , 20     (the “Effective
Date”) delivered by IBM to you in which the undersigned is designated a
Subsidiary Borrower and hereby confirms that by its execution of this Subsidiary
Borrower Request, the undersigned acknowledges that it has received a copy of
the Credit Agreement, confirms that the representations and warranties contained
in Section 4 of the Credit Agreement (except the representations and warranties
contained in Sections 4.6 and 4.7) are true and correct as to the undersigned as
of the Effective Date hereof and agrees that, from and after the Effective Date,
it shall be a party to the Credit Agreement and shall to be bound, as a
“Borrower”, by all of the provisions thereof.

 

 

[NAME OF SUBSIDIARY BORROWER]

 

 

 

By:

 

 

Title:

 

--------------------------------------------------------------------------------

 

EXHIBIT C TO
5-YEAR CREDIT AGREEMENT

 

[FORM OF CLOSING CERTIFICATE]

 

Pursuant to Section 5.1(b) of the 5-Year Credit Agreement, dated as of
November 10, 2011  (the “Credit Agreement”; unless otherwise defined herein,
terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement), among International Business Machines
Corporation, a New York corporation (“IBM”), the Subsidiary Borrowers parties
thereto, the Lenders parties thereto, JPMorgan Chase Bank, N.A., as
Administrative Agent, and the Syndication Agents and Documentation Agents named
therein, the undersigned [                        ] of IBM hereby certifies as
follows:

 

1.             The representations and warranties of IBM contained in the Credit
Agreement or in any certificate, document or financial or other statement
furnished by or on behalf of IBM pursuant to or in connection with the Credit
Agreement are true and correct in all material respects on and as of the date
hereof with the same effect as if made on the date hereof except for
representations and warranties stated to relate to a specific earlier date, in
which case such representations and warranties were true and correct in all
material respects as of such earlier date;

 

2.             No Default or Event of Default has occurred and is continuing as
of the date hereof or after giving effect to any Loans to be made on the date
hereof;

 

3.                                              is and at all times since
                                           20    , has been the duly elected and
qualified [Assistant] Secretary of IBM and the signature set forth on the
signature line for such officer below is such officer’s true and genuine
signature;

 

and the undersigned [Assistant] Secretary of IBM hereby certifies as follows:

 

4.             There are no liquidation or dissolution proceedings pending or to
my knowledge threatened against IBM, nor to my knowledge has any other event
occurred affecting or threatening the corporate existence of IBM;

 

5.             IBM is a corporation duly organized, validly existing and in good
standing under the laws of [                        ];

 

6.             Attached hereto as Exhibit A is a complete and correct copy of
resolutions duly adopted by the Board of Directors (or a duly authorized
committee thereof) of IBM on                   , 20    ; such resolutions have
not in any way been amended, modified, revoked or rescinded and have been in
full force and effect since their adoption to and including the date hereof and
are now in full force and effect; such resolutions are the only corporate
proceedings of IBM now in force relating to or affecting the matters referred to
therein;

 

--------------------------------------------------------------------------------

 

7.             Attached hereto as Exhibit B is a complete and correct copy of
the by-laws of IBM as in effect at all times since
                                  , 20     to and including the date hereof; and
attached hereto as Exhibit C is a true and complete copy of the certificate of
incorporation of IBM as in effect at all times since
                                      , 20     to and including the date hereof;
and

 

8.             The following persons are now duly elected and qualified officers
of IBM holding the offices indicated next to their respective names below, and
such officers have held such offices with IBM at all times since
                                , 20     to and including the date hereof, and
the signatures appearing opposite their respective names below are the true and
genuine signatures of such officers, and each of such officers is duly
authorized to execute and deliver on behalf of IBM the Credit Agreement and any
certificate or other document to be delivered by IBM pursuant to the Credit
Agreement:

 

Name

 

Office

 

Signature

 

 

 

 

 

                                               

 

[                  ]

 

                                               

 

 

 

 

 

                                               

 

[Assistant] Secretary

 

                                               

 

 

IN WITNESS WHEREOF, the undersigned have hereto set our names

 

 

                                               

 

                                          

 

 

 

 

 

 

 

Title:  [                      ]

 

Title:  [Assistant] Secretary

 

 

 

 

 

 

 

Date:                              , 20    

 

 

 

 

 

2

--------------------------------------------------------------------------------

 

EXHIBIT D-1 TO THE

5-YEAR CREDIT AGREEMENT

 

[FORM OF OPINION OF SIMPSON THACHER & BARTLETT LLP]

 

 

 

November 10, 2011

 

To:

 

JPMorgan Chase Bank, N.A., as

 

 

Administrative Agent under the

 

 

Credit Agreement referred to below

 

270 Park Avenue

 

New York, New York 10017

 

 

 

The Lenders listed on Schedule I hereto

 

Re:

 

The 5-Year Credit Agreement, dated as of November 10, 2011 (the “Credit
Agreement”), among International Business Machines Corporation, a New York
corporation (“IBM”),the Subsidiary Borrowers parties thereto, the Lenders
parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the
Syndication Agents and Documentation Agents named therein.

 

Ladies and Gentlemen:

 

We have acted as special counsel to the Administrative Agent in connection with
the execution and delivery of the Credit Agreement.

 

This opinion is delivered to you pursuant to Section 5.1(d)(i) of the Credit
Agreement.  Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement.

 

In arriving at the opinion expressed below, we have examined (a) a counterpart
of the Credit Agreement, signed by IBM and the Administrative Agent and (b) such
documents as we have deemed necessary or appropriate for the purposes of this
opinion.

 

In such examination, we have assumed the genuineness of all signatures, the
authenticity, regularity and completeness of all documents submitted to us as
originals, the completeness of all documents submitted to us as duplicates or as
certified or conformed copies and the conformity of such documents to the
original documents.

 

--------------------------------------------------------------------------------

 

We have also assumed that the Credit Agreement has been duly executed and
delivered by IBM, that IBM is duly incorporated and validly existing under the
laws of its jurisdiction of incorporation and has the corporate power and
authority to execute, deliver and perform its obligations under the Credit
Agreement, that IBM is not an “investment company” within the meaning of the
Investment Company Act of 1940, as amended, that the execution, delivery and
performance by IBM of the Credit Agreement have been duly authorized by all
necessary corporate action on the part of IBM, do not contravene its certificate
of incorporation or by-laws or similar organizational documents or violate, or
require any consent not obtained under, any applicable law or regulation or any
order, writ, injunction or decree of any court or other Governmental Authority
binding upon IBM and do not violate, or require any consent not obtained under,
any contractual obligation applicable to or binding upon IBM, and that the
Credit Agreement constitutes a valid and legally binding obligation of the
Administrative Agent, the Lenders and each Subsidiary Borrower.

 

Based upon the foregoing, and subject to the qualifications and comments set
forth below, we are of the opinion that, insofar as the law of the State of New
York is concerned, the Credit Agreement (including the guarantee contained in
Section 10 thereof) constitutes a valid and legally binding obligation of IBM,
enforceable against IBM in accordance with its terms, except as affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors’ rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing, except that we express
no opinion as to (a) Section 11.17(b) of the Credit Agreement insofar as it
relates to an action brought in the United States District Court for the
Southern District of New York and note that such matters may be raised by such
court; (b) any indemnification obligations of IBM under the Credit Agreement to
the extent such obligations might be deemed to be inconsistent with public
policy; (c) the provisions of Section 11.6 of the Credit Agreement purporting to
grant to Participants a right to set-off; (d) any provision of the Credit
Agreement that purports to establish an evidentiary standard for determinations
by the Lenders or the Administrative Agent; (e) Section 11.12(b) of the Credit
Agreement to the extent that it provides for (i) a right of set-off in respect
of participating interests purchased pursuant to Section 11.12(a) of the Credit
Agreement, (ii) a right of set-off in respect of claims, credits or other
obligations that are contingent or (iii) a right of set-off in respect of
Borrower Obligations against deposits, indebtedness or other obligations of any
entity other than the entity to which such Borrower Obligations are payable;
(f) Section 10.7 or Section 11.17(d) of the Credit Agreement; or (g) any Local
Currency Facility.

 

With respect to our opinion as to the guarantee contained in Section 10 of the
Credit Agreement, we note that (i) a New York statute provides that with respect
to a foreign currency obligation, a court of the State of New York shall render
a judgment or decree in such foreign currency and such judgment or decree shall
be converted into currency of the United States at the

 

4

--------------------------------------------------------------------------------

 

rate of exchange prevailing on the date of entry of such judgment or decree and
(ii) with respect to a foreign currency obligation, a United States Federal
court in New York may award judgment in United States dollars, provided that we
express no opinion as to the rate of exchange such court would apply.

 

We do not express any opinion herein concerning any law other than the law of
the State of New York.

 

This opinion has been rendered solely for your benefit in connection with the
Credit Agreement and the transactions contemplated thereby and may not be relied
upon by you for any other purpose, or relied upon by or furnished to any other
Person, firm or corporation without our prior written consent.

 

 

Very truly yours,

 

 

 

 

 

SIMPSON THACHER & BARTLETT LLP

 

5

--------------------------------------------------------------------------------

 

SCHEDULE I

 

THE LENDERS

 

--------------------------------------------------------------------------------

 

EXHIBIT D-2 TO

5-YEAR CREDIT AGREEMENT

 

FORM OF OPINION OF ASSISTANT GENERAL COUNSEL OF IBM

 

 

November 10, 2011

 

International Business Machines Corporation

$10,000,000,000 5-Year Credit Agreement

dated as of November 10, 2011

 

Ladies and Gentlemen:

 

I am Andrew Bonzani, Vice President and Assistant General Counsel of
International Business Machines Corporation, a New York corporation (“IBM”), and
have advised IBM in connection with the $10,000,000,000 5-Year Credit Agreement
dated as of November 10, 2011 (the “Credit Agreement”), among IBM, each
Subsidiary Borrower (as defined therein), the several banks and other financial
institutions from time to time party thereto (the “Lenders”), JPMorgan Chase
Bank, N.A., as Administrative Agent, and the Syndication Agents and
Documentation Agents named therein.  Capitalized terms not otherwise defined
herein shall have the meanings assigned to them in the Credit Agreement.

 

In connection with this opinion, I have investigated such questions of law,
received such information from officers and representatives of IBM and the
Subsidiary Borrowers and examined such certificates of public officials,
corporate documents and records of IBM and the Subsidiary Borrowers and other
documents as I have deemed necessary or appropriate for the purposes of this
opinion.  I have relied, with respect to certain factual matters not
constituting conclusions of law, on the representations and warranties of IBM
and the Subsidiary Borrowers contained in the Credit Agreement and assume
compliance on the part of each such corporation with its covenants and
agreements under the Credit Agreement.

 

In rendering my opinion, I have assumed (i) the due authorization, execution and
delivery of the Credit Agreement by all parties thereto (other than IBM),
(ii) the authenticity of all documents submitted to me as originals and
(iii) the conformity to original documents of all documents submitted to me as
copies.

 

Based upon the foregoing, I am of opinion that:

 

1.             IBM has been duly incorporated and is validly existing and in
good standing under the laws of the State of New York and is duly qualified as a
foreign corporation and in good standing under the laws of each jurisdiction
where the failure to so qualify would have a Material Adverse Effect.  IBM has
the requisite corporate power and authority to own its properties and assets and
to carry on its business in all material respects as now conducted.  Each
Significant Subsidiary has been duly incorporated and is validly existing and in
good standing

 

--------------------------------------------------------------------------------

 

under the laws of the jurisdiction of its incorporation and is duly qualified as
a foreign corporation and in good standing under the laws of each jurisdiction
where the failure to so qualify would have a Material Adverse Effect.  Each
Significant Subsidiary has the requisite corporate power and authority to lease
the property it operates under lease and to carry on its business in all
material respects as now conducted.

 

2

--------------------------------------------------------------------------------

 

2.             The execution, delivery and performance by IBM of the Credit
Agreement (including, without limitation, Section 10 thereof) and the
Transactions (a) are within the corporate power of IBM; (b) have been duly
authorized by all requisite corporate action; (c) do not (i) violate (A) any
provisions of law, statute, material rule or material regulation of the United
States or the State of New York, or of the certificate or articles of
incorporation or other constitutive documents or by-laws of IBM or any
Significant Subsidiary, (B) to the best of my knowledge, any material order of
any United States Federal or New York Governmental Authority or (C) any
provision of any material indenture or other material agreement or material
instrument known to me to which IBM or any Significant Subsidiary is a party or
by which any of them or any of their property is or may be bound, (ii) conflict
with, or result in a breach of or constitute (alone or with notice or lapse of
time or both) a default under any such material indenture or other material
agreement or material instrument or (iii) except as contemplated by Section 7.1
of the Credit Agreement, result in the creation or imposition of any Lien upon
or with respect to any property or assets now owned or hereafter acquired by IBM
or any Significant Subsidiary; and (d) do not require the consent or approval
of, or any registration or filing with, or any other action by, any United
States Federal or New York Governmental Authority or any other person party to
those agreements described above other than (i) those that have been made or
obtained and are in full force and effect or as to which the failure to be made
or obtained or to be in full force and effect would not result, individually or
in the aggregate, in a Material Adverse Effect, (ii) such periodic and current
reports, if any, as are required to be filed with the SEC to disclose the Credit
Agreement or the Transactions contemplated thereunder and (iii) such filings as
may hereafter be required pursuant to the provisions of Section 7.1 of the
Credit Agreement to perfect security interests securing the Borrower
Obligations.

 

3.             The Credit Agreement (including, without limitation, Section 10
thereof) has been duly executed and delivered by IBM.

 

4.             The Credit Agreement constitutes the legal, valid and binding
obligation of IBM, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors’ rights and by general principles of equity (including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing) regardless of whether considered in a proceeding in equity or at law,
and except that (a) insofar as provisions of the Credit Agreement provide for
indemnification, the enforcement thereof may be limited by public policy
considerations, (b) I express no opinion as to (i) Section 11.12(b) of the
Credit Agreement to the extent that it provides for (A) a right of set-off in
respect of participating interests purchased pursuant to Section 11.12(a) of the
Credit Agreement, (B) a right of set-off in respect of claims, credits or other
obligations that are contingent or (C) a right of set-off in respect of Borrower
Obligations against deposits, indebtedness or other obligations of any entity
other than the entity to which such Borrower Obligations are payable, or
(ii) the fourth sentence of Section 11.6 of the Credit Agreement, (c) I express
no opinion as to (i) whether a United States Federal court or a court of the
State of New York would render a money judgment in a currency other than United
States Dollars or enforce a judgment expressed in a foreign currency in a
currency other than United States Dollars and (ii) the rate of exchange a United
States Federal court or a court of the State of New York would apply, (d) I
express no

 

--------------------------------------------------------------------------------

 

opinion as to (i) Section 11.17(b) of the Credit Agreement insofar as it relates
to an action brought in the United States District Court for the Southern
District of New York and note that such matters may be raised by such court or
(ii) Section 11.17(d) of the Credit Agreement and (e) I express no opinion as to
Section 10.7 of the Credit Agreement.

 

5.             IBM is not an “investment company” as defined in, or subject to
regulation under, the Investment Company Act of 1940.

 

6.             The use of proceeds of any Loan under the Credit Agreement, in
the manner contemplated in the Credit Agreement, will not entail a violation of
any of the provisions of Regulation T, U or X of the Board of Governors of the
Federal Reserve System.

 

7.             To the best of my knowledge after due inquiry, except as set
forth in the Form 10-K of IBM for its fiscal year ended December 31, 2010 or the
Form 10-Q of IBM for the fiscal quarter ended September 30, 2011, there are no
actions, suits or proceedings at law or in equity or by or before any arbitrator
or Governmental Authority now pending or threatened by or against IBM or any of
the Significant Subsidiaries or against any of its or their respective
properties or revenues as of the date hereof (i) which involve the Credit
Agreement or any of the actions contemplated thereby or (ii) as to which there
is a probable risk of an adverse decision which would materially restrict the
ability of IBM to comply with its obligations under the Credit Agreement.

 

I express no opinion herein as to (i) any Local Currency Facility or (i) the
creation, perfection, priority or enforceability of any lien or security
interest that may hereafter be granted to secure the Borrower Obligations
pursuant to the provisions of Section 7.1 of the Credit Agreement.  In rendering
the opinions expressed in paragraphs 2 and 4 above, I have assumed with your
permission that no Lender and no assignee or transferee of any Loan or
participation therein will be a “broker” or “dealer” (as defined in Sections
3(a)(4) and 3(a)(5) of the Securities Exchange Act of 1934) or any other person
which is a “creditor” as defined in Regulation T.

 

I am admitted to practice in the State of New York and express no opinion as to
matters governed by any laws other than the laws of the State of New York and
the Federal laws of the United States of America.

 

 

Very truly yours,

 

 

 

 

 

Andrew Bonzani

 

Each of the Lenders Party to the

Credit Agreement Referred to Above

In care of JPMorgan Chase Bank, N.A. as Administrative Agent

270 Park Avenue

New York, NY 10017

 

2

--------------------------------------------------------------------------------

 

EXHIBIT E TO
5-YEAR CREDIT AGREEMENT

 

[FORM OF ASSIGNMENT AND ASSUMPTION]

 

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into between the Assignor
named below (the “Assignor”) and the Assignee named below (the “Assignee”). 
Capitalized terms used but not defined herein shall have the meanings given to
them in the Credit Agreement identified below (as amended, the “Credit
Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. 
The Standard Terms and Conditions set forth in Annex 1 attached hereto are
hereby agreed to and incorporated herein by reference and made a part of this
Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent below (i) all of the Assignor’s rights and obligations in
its capacity as a Lender under the Credit Agreement and any other documents or
instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and
obligations of the Assignor under the respective facilities identified below
(including any guarantees and Swing Line Loans included in such facilities) and
(ii) to the extent permitted to be assigned under applicable law, all claims,
suits, causes of action and any other right of the Assignor (in its capacity as
a Lender) against any Person, whether known or unknown, arising under or in
connection with the Credit Agreement, any other documents or instruments
delivered pursuant thereto or the loan transactions governed thereby or in any
way based on or related to any of the foregoing, including contract claims, tort
claims, malpractice claims, statutory claims and all other claims at law or in
equity related to the rights and obligations sold and assigned pursuant to
clause (i) above (the rights and obligations sold and assigned pursuant to
clauses (i) and (ii) above being referred to herein collectively as the
“Assigned Interest”).  Such sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment and Assumption,
without representation or warranty by the Assignor.

 

1.

Assignor:

 

 

 

 

2.

Assignee:

 

 

 

[and is an Affiliate/Approved Fund of [identify Lender](1)]

 

 

 

3.

Borrower(s):

 

 

 

 

--------------------------------------------------------------------------------

(1) Select as applicable.

 

--------------------------------------------------------------------------------

 

4.

Administrative Agent:

JPMorgan Chase Bank, N.A., as administrative agent under the Credit Agreement

 

 

 

5.

Credit Agreement:

5-Year Credit Agreement, dated as of November 10, 2011, among International
Business Machines Corporation, a New York corporation, the Subsidiary Borrowers
parties thereto, the Lenders parties thereto, JPMorgan Chase Bank, N.A., as
Administrative Agent, and the Syndication Agents and Documentation Agents named
therein

 

2

--------------------------------------------------------------------------------

 

6.

Assigned Interest:

 

 

Facility Assigned(2)

 

Aggregate Amount of
Commitment/Loans
for all Lenders

 

Amount of
Commitment/Loans
Assigned

 

Percentage Assigned
of
Commitment/Loans(3)

 

 

 

$

 

 

$

 

 

 

%

 

 

$

 

 

$

 

 

 

%

 

 

$

 

 

$

 

 

 

%

 

Effective Date:                               , 20     [TO BE INSERTED BY
ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF
TRANSFER IN THE REGISTER THEREFOR.]

 

The Assignee agrees to deliver to the Administrative Agent a completed
administrative questionnaire in which the Assignee designates one or more credit
contacts to whom all syndicate-level information (which may contain material
non-public information about the Borrowers and their affiliates or their
respective securities) will be made available and who may receive such
information in accordance with the Assignee’s compliance procedures and
applicable laws, including Federal and state securities laws.

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

 

ASSIGNOR

 

 

 

 

 

NAME OF ASSIGNOR

 

 

 

 

 

By:

 

 

Title:

 

 

 

 

 

ASSIGNEE

 

 

 

 

 

 

 

NAME OF ASSIGNEE

 

 

 

 

 

By:

 

 

Title:

 

--------------------------------------------------------------------------------

(2) Fill in the appropriate terminology for the types of facilities under the
Credit Agreement that are being assigned under this Assignment (e.g. “Revolving
Credit Commitment,”).

 

(3) Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans
of all Lenders.

 

3

--------------------------------------------------------------------------------

 

 

 

Consented To:

 

 

 

 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

JPMORGAN CHASE BANK, N.A., as Administrative Agent

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

[Consents required only to the extent expressly provided for in Section 11.8 of
the Credit Agreement.]

 

 

 

 

 

 

Accepted for Recordation in the Register:

 

 

 

 

 

 

 

 

JPMORGAN CHASE BANK, N.A., as Administrative Agent

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

4

--------------------------------------------------------------------------------

 

ANNEX 1

 

5-Year Credit Agreement, dated as of November 10, 2011, among International
Business Machines Corporation, a New York corporation, the Subsidiary Borrowers
parties thereto, the Lenders parties thereto, JPMorgan Chase Bank, N.A., as
Administrative Agent, and the Syndication Agents and Documentation Agents named
therein

 

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

 

1.  Representations and Warranties.

 

1.1   Assignor.  The Assignor (a) represents and warrants that (i) it is the
legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest
is free and clear of any lien, encumbrance or other adverse claim and (iii) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement (iii) the financial
condition of the Borrowers, any of their Subsidiaries or affiliates or any other
Person obligated in respect of the Credit Agreement or (iv) the performance or
observance by the Borrowers, any of their Subsidiaries or affiliates or any
other Person of any of their respective obligations under the Credit Agreement.

 

1.2.  Assignee.  The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the
requirements, if any, specified in the Credit Agreement that are required to be
satisfied by it in order to acquire the Assigned Interest and become a Lender,
(iii) from and after the Effective Date, it shall be bound by the provisions of
the Credit Agreement as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it has
received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 4.5 thereof, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Assumption and to
purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on the Administrative Agent or
any other Lender and (v) if it is a Non-U.S. Lender, attached to the Assignment
and Assumption is any documentation required to be delivered by it pursuant to
the terms of the Credit Agreement, duly completed and executed by the Assignee
and (b) agrees that (i) it will, independently and without reliance on the
Administrative Agent, the Assignor or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender.

 

2.   Payments.    From and after the Effective Date, the Administrative Agent
shall make all payments in respect of the Assigned Interest (including payments
of principal, interest, fees and other amounts) to the Assignor for amounts
which have accrued to but excluding the Effective Date and to the Assignee for
amounts which have accrued from and after the Effective Date.

 

--------------------------------------------------------------------------------

 

3.  General Provisions. This Assignment and Assumption shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and assigns.  This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument.  Delivery of an
executed counterpart of a signature page of this Assignment and Assumption by
email or telecopy shall be effective as delivery of a manually executed
counterpart of this Assignment and Assumption.  This Assignment and Assumption
shall be governed by, and construed in accordance with, the law of the State of
New York.

 

2

--------------------------------------------------------------------------------

 

EXHIBIT F TO
5-YEAR CREDIT AGREEMENT

 

[FORM OF LOCAL CURRENCY FACILITY ADDENDUM]

 

LOCAL CURRENCY FACILITY ADDENDUM

 

To:

JPMorgan Chase Bank, N.A., as Administrative Agent

 

 

From:

International Business Machines Corporation

 

1.             This Local Currency Facility Addendum is being delivered to you
pursuant to Section 3.1(a) of the 5-Year Credit Agreement, dated as of
November 10, 2011, among International Business Machines Corporation, the
Subsidiary Borrowers parties thereto, the Lenders parties thereto, JPMorgan
Chase Bank, N.A., as Administrative Agent, and the Syndication Agents and
Documentation Agents named therein (as the same may be amended, supplemented or
otherwise modified from time to time, the “Credit Agreement”).  Terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement.

 

2.             The effective date (the “Effective Date”) of this Local Currency
Facility Addendum will be                                                  ,
20    .

 

3.             Please be advised that, as of the Effective Date, the credit
facility described below is hereby designated as a “Local Currency Facility” for
the purposes of the Credit Agreement.

 

Type of Facility:(1)

 

 

 

 

 

 

 

 

 

Local Currenc(y)(ies):

 

 

 

 

 

 

 

 

 

Local Currency Facility

 

 

 

 

Stated Maximum Borrowing Amount:

 

 

 

$

 

 

 

 

 

Local Currency

 

 

 

Local Currency Lender Stated

Facility Lenders:

 

Name of Lender

 

Maximum Borrowing Amount

 

 

 

 

 

 

 

 

 

$

 

 

 

 

 

List of Documentation Governing

 

 

 

 

Local Currency Facility

 

 

 

 

(the “Documentation”):(2)

 

 

 

 

 

--------------------------------------------------------------------------------

(1)                                  Insert short description of terms of Local
Currency Facility.

 

--------------------------------------------------------------------------------

 

4.             IBM hereby represents and warrants that (i) as of the Effective
Date, an Exchange Rate with respect to each Local Currency covered by such Local
Currency Facility is determinable by reference to the Reuters currency pages (or
comparable publicly available screen), (ii) the Documentation complies in all
respects with the requirements of Section 3 of the Credit Agreement and
(iii)                              of                             (3) contains
an express acknowledgement that such Local Currency Facility shall be subject to
the provisions of Section 3 of the Credit Agreement.

 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

 

 

 

 

 

By:

 

 

 

Title:

 

 

Accepted and Acknowledged:

 

 

 

 

 

JPMORGAN CHASE BANK, N.A., as Administrative Agent

 

 

 

 

 

By:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

(2)                                  Copies of the Documentation must accompany
the Local Currency Facility Addendum, together with, if applicable, an English
translation thereof (provided, that IBM may instead furnish a summary term sheet
in English so long as an English translation of the Documentation is furnished
to the Administrative Agent or its counsel within 90 days after the date of
delivery of the Local Currency Facility Addendum).

 

(3)                                  Provide citation to relevant provision from
the Documentation.

 

2

--------------------------------------------------------------------------------

 

EXHIBIT G-1 TO
5-YEAR CREDIT AGREEMENT

 

[FORM OF REVOLVING CREDIT LOAN PROMISSORY NOTE](1)

 

REVOLVING CREDIT LOAN PROMISSORY NOTE

 

$        

 

New York, New York

 

 

                     , 20     

 

FOR VALUE RECEIVED, the undersigned, [NAME OF BORROWER], a
                         corporation (the “Borrower”), hereby unconditionally
promises to pay to the order of [NAME OF LENDER] (the “Lender”) at the office of
JPMorgan Chase Bank, N.A. (together with its successors in such capacity, the
“Administrative Agent”), located at 270 Park Avenue, New York, New York 10017,
in lawful money of the United States of America and in immediately available
funds, on the Termination Date the principal amount of (a) [AMOUNT IN WORDS]
DOLLARS ($          ), or, if less, (b) the aggregate unpaid principal amount of
all Revolving Credit Loans made by the Lender to the Borrower pursuant to
Section 2.1 of the Credit Agreement, as hereinafter defined.  The Borrower
further agrees to pay interest in like money at such office on the unpaid
principal amount hereof from time to time outstanding at the rates and on the
dates specified in Section 2.10 of such Credit Agreement.

 

The holder of this promissory note is authorized to endorse on the schedules
annexed hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof the date, Type and amount of each
Revolving Credit Loan made pursuant to the Credit Agreement and the date and
amount of each payment or prepayment of principal thereof, each continuation
thereof, each conversion of all or a portion thereof to another Type and, in the
case of Eurodollar Loans, the length of each Interest Period with respect
thereto.  Each such endorsement shall constitute prima facie evidence of the
accuracy of the information endorsed. The failure to make any such endorsement
or any error in such endorsement shall not affect the obligations of the
Borrower in respect of any Revolving Credit Loan.

 

This promissory note (a) has been issued pursuant to Section 11.9(c) of the
5-Year Credit Agreement, dated as of November 10, 2011 (as amended, supplemented
or otherwise modified from time to time, the “Credit Agreement”), among
International Business Machines Corporation (“IBM”), the Subsidiary Borrowers
parties thereto, the Lenders parties thereto, JPMorgan Chase Bank, N.A., as
Administrative Agent, and the Syndication Agents and Documentation Agents named
therein, (b) is subject to the provisions of the Credit Agreement and (c) is
subject to prepayment in whole or in part as provided in the Credit Agreement.

 

--------------------------------------------------------------------------------

(1)                                  With appropriate modifications, this form
may be used to evidence Swing Line Loans.

 

--------------------------------------------------------------------------------

 

Upon the occurrence of any one or more of the Events of Default specified in the
Credit Agreement, all amounts then remaining unpaid on this promissory note
shall become, or may be declared to be, immediately due and payable, all as
provided in the Credit Agreement.

 

All parties now and hereafter liable with respect to this promissory note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

 

[NAME OF BORROWER]

 

 

 

 

 

By:

 

 

 

Title:

 

2

--------------------------------------------------------------------------------

 

Schedule A
to Revolving Credit Note

 

LOANS, CONVERSIONS AND REPAYMENTS OF ABR LOANS

 

Date

 

Amount of ABR Loans

 

Amount
Converted to
ABR Loans

 

Amount of Principal of
ABR Loans Repaid

 

Amount of ABR Loans
Converted to
Eurodollar Loans

 

Unpaid Principal
Balance of ABR
Loans

 

Notation Made By

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

Schedule B
to Revolving Credit Note

 

LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS

 

Date

 

Amount of
Eurodollar Loans

 

Amount
Converted to
Eurodollar Loans

 

Interest Period and
Eurodollar Rate with
Respect Thereto

 

Amount of
Principal of
Eurodollar Loans
Repaid

 

Amount of
Eurodollar Loans
Converted to
ABR Loans

 

Unpaid Principal
Balance of
Eurodollar Loans

 

Notation
Made By

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT G-2 TO
5-YEAR CREDIT AGREEMENT

 

[FORM OF COMPETITIVE LOAN PROMISSORY NOTE]

 

COMPETITIVE LOAN PROMISSORY NOTE

 

$                            

 

New York, New York

 

 

 

 

 

                     , 20    

 

FOR VALUE RECEIVED, the undersigned, [NAME OF BORROWER], a
                             corporation (the “Borrower”), hereby
unconditionally promises to pay to the order of [NAME OF LENDER]  (the
“Competitive Loan Lender”) at the office of JPMorgan Chase Bank, N.A. (together
with its successors in such capacity, the “Administrative Agent”), located at
270 Park Avenue, New York, New York 10017, in lawful money of the United States
of America and in immediately available funds, the principal amount of
(a) [AMOUNT IN WORDS]   DOLLARS ($        ), or, if less, (b) the aggregate
unpaid principal amount of each Competitive Loan which is made by the
Competitive Loan Lender to the Borrower pursuant to Section 2.7 of the Credit
Agreement, as hereinafter defined.  The principal amount of each Competitive
Loan evidenced hereby shall be payable on the maturity date therefor set forth
on the schedule annexed hereto and made a part hereof or on a continuation of
such schedule which shall be attached hereto and made a part hereof (the
“Grid”).  The Borrower further agrees to pay interest in like money at such
office on the unpaid principal amount of each Competitive Loan evidenced hereby,
at the rate per annum set forth in respect of such Competitive Loan on the Grid,
calculated on the basis of a year of 360 days and actual days elapsed from the
date of such Competitive Loan until the due date thereof (whether at the stated
maturity, by acceleration or otherwise), except as otherwise provided in
Section 2.10 of the Credit Agreement.  Interest on each Competitive Loan
evidenced hereby shall be payable on the date or dates set forth in respect of
such Competitive Loan on the Grid.  Competitive Loans evidenced by this
promissory note may not be prepaid.

 

The holder of this promissory note is authorized to endorse on the Grid the
date, amount, interest rate, interest payment dates and maturity date in respect
of each Competitive Loan made pursuant to Section 2.7 of the Credit Agreement,
and each payment of principal with respect thereto.  Each such endorsement shall
constitute prima facie evidence of the accuracy of the information endorsed. 
The failure to make any such endorsement or any error in such endorsement shall
not affect the obligations of the Borrower in respect of such Competitive Loan.

 

This promissory note has been issued pursuant to Section 11.9(c) of the 5-Year
Credit Agreement, dated as of November 10, 2011 (as amended, supplemented or
otherwise modified from time to time, the “Credit Agreement”), among
International Business Machines Corporation (“IBM”), the Subsidiary Borrowers
parties thereto, the Lenders parties thereto,

 

--------------------------------------------------------------------------------

 

JPMorgan Chase Bank, N.A., as Administrative Agent, and the Syndication Agents
and Documentation Agents named therein, and is subject to the provisions of the
Credit Agreement.

 

Upon the occurrence of any one or more of the Events of Default, all amounts
then remaining unpaid on this promissory note shall become, or may be declared
to be, immediately due and payable, all as provided in the Credit Agreement.

 

All parties now and hereafter liable with respect to this promissory note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

 

[NAME OF BORROWER]

 

 

 

 

 

By:

 

 

 

Title:

 

2

--------------------------------------------------------------------------------

 

SCHEDULE OF COMPETITIVE LOANS
[NAME OF BORROWER], as Borrower
5-Year Credit Agreement dated as of November 10, 2011

 

Date of Loan

 

Amount of Loan

 

Interest Rate

 

Interest
Payment Dates

 

Maturity Date

 

Payment Date

 

Authorization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT H-1 TO
5-YEAR CREDIT AGREEMENT

 

[FORM OF LENDER ADDENDUM]

 

LENDER ADDENDUM

 

5-YEAR CREDIT AGREEMENT

 

The undersigned (i) agrees to all of the provisions of the 5-Year Credit
Agreement, dated as of November 10, 2011, among International Business Machines
Corporation, the Subsidiary Borrowers parties thereto, the Lenders parties
thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and certain other
parties (as the same may be amended, supplemented or otherwise modified from
time to time, the “Credit Agreement”), (ii) becomes a party thereto, as a
Lender, with an obligation (A) to make Revolving Credit Loans to the Borrowers
in an aggregate principal amount not to exceed the amount of its Revolving
Credit Commitment as set forth opposite the undersigned Lender’s name in
Schedule 1.1 to the Credit Agreement, as such amount may be changed from time to
time as provided in the Credit Agreement, and (B) if so indicated on Schedule
1.1, to make Swing Line Loans to the Swing Line Borrowers pursuant to
Section 2.5 of the Credit Agreement in an aggregate principal amount not to
exceed the amount of its Swing Line Commitment as set forth opposite the
undersigned Lender’s name in Schedule 1.1 to the Credit Agreement, as such
amount may be changed from time to time as provided in the Credit Agreement, and
(iii) confirms that it has received the financial statements referred to in
Section 4.5 of the Credit Agreement.  Capitalized terms defined in the Credit
Agreement shall have their respective defined meanings herein.

 

 

 

Name of Lender:

 

 

 

 

By:

 

 

 

 

Title:

 

 

 

Dated as of November 10, 2011

 

--------------------------------------------------------------------------------

 

EXHIBIT H-2 TO
5-YEAR CREDIT AGREEMENT

 

[FORM OF SUBSIDIARY BORROWER ADDENDUM]

 

SUBSIDIARY BORROWER ADDENDUM

 

The undersigned hereby (i) agrees to all of the provisions of the 5-Year Credit
Agreement, dated as of November 10, 2011 (as amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”), among International
Business Machines Corporation, the Subsidiary Borrowers parties thereto, the
Lenders parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and
the Syndication Agents and Documentation Agents named therein, (ii) becomes a
party thereto, as a “Subsidiary Borrower” and a “Borrower”, and agrees that it
shall be bound, as a “Subsidiary Borrower” and a “Borrower”, by all of the
provisions thereof, and (iii) confirms that the representations and warranties
(to the extent they are specifically applicable to the undersigned) contained in
Section 4 of the Credit Agreement (except the representations and warranties
contained in Sections 4.6 and 4.7) are true and correct as to the undersigned as
of the date hereof.  Capitalized terms defined in the Credit Agreement shall
have their respective defined meanings herein.

 

 

 

Name of Subsidiary Borrower:

 

 

 

 

By:

 

 

Title:

 

 

 

Dated as of November 10, 2011

 

--------------------------------------------------------------------------------

 

EXHIBIT I-1 TO
5-YEAR CREDIT AGREEMENT

 

[FORM OF NEW LENDER SUPPLEMENT]

 

SUPPLEMENT, dated                         , 20    , to the 5-Year Credit
Agreement, dated as of November 10, 2011 (as amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”), among International
Business Machines Corporation (“IBM”), the Subsidiary Borrowers parties thereto,
the Lenders parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent,
and the Syndication Agents and Documentation Agents named therein.

 

W I T N E S S E T H :

 

WHEREAS, the Credit Agreement provides in Section 11.23(b) thereof that any
bank, financial institution or other entity, although not originally a party
thereto, may become a party to the Credit Agreement with the consent of IBM and
the Administrative Agent (which consent, in the case of the Administrative
Agent, shall not be unreasonably withheld) by executing and delivering to IBM
and the Administrative Agent a supplement to the Credit Agreement in
substantially the form of this Supplement; and

 

WHEREAS, the undersigned was not an original party to the Credit Agreement but
now desires to become a party thereto;

 

NOW, THEREFORE, the undersigned hereby agrees as follows:

 

1.     The undersigned agrees to be bound by the provisions of the Credit
Agreement, and agrees that it shall, on the date this Supplement is accepted by
IBM and the Administrative Agent, become a Lender for all purposes of the Credit
Agreement to the same extent as if originally a party thereto, with a Revolving
Credit Commitment of $                                    .

 

2.     The undersigned (a) represents and warrants that it is legally authorized
to enter into this Supplement; (b) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements delivered
pursuant to Section 4.5 thereof and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Supplement; (c) agrees that it has made and will, independently and
without reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement or any instrument or document furnished pursuant hereto or
thereto; (d) appoints and authorizes the Administrative Agent to take such
action as administrative agent on its behalf and to exercise such powers and
discretion under the Credit Agreement or any instrument or document furnished
pursuant hereto or thereto as are delegated to the Administrative Agent by the
terms thereof, together with such powers as are incidental thereto; and
(e) agrees that it will be bound by the

 

--------------------------------------------------------------------------------

 

provisions of the Credit Agreement and will perform in accordance with its terms
all the obligations which by the terms of the Credit Agreement are required to
be performed by it as a Lender including, without limitation, if it is organized
under the laws of a jurisdiction outside the United States, its obligation
pursuant to Section 2.18(d) of the Credit Agreement.

 

3.     The undersigned’s address for notices for the purposes of the Credit
Agreement is as follows:

 

4.     Terms defined in the Credit Agreement shall have their defined meanings
when used herein.

 

IN WITNESS WHEREOF, the undersigned has caused this Supplement to be executed
and delivered by a duly authorized officer on the date first above written.

 

 

[INSERT NAME OF LENDER]

 

 

 

 

 

 

 

By:

 

 

 

Title:

 

 

Accepted this            day of

 

                            , 20    .

 

 

 

 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

 

 

 

 

 

By:

 

 

 

Title:

 

 

 

 

 

Accepted this          day of

 

                            , 20    .

 

 

 

 

 

JPMORGAN CHASE BANK, N.A., as Administrative Agent

 

 

 

 

 

By:

 

 

 

Title:

 

 

2

--------------------------------------------------------------------------------

 

EXHIBIT I-2 TO
5-YEAR CREDIT AGREEMENT

 

[FORM OF INCREMENTAL COMMITMENT SUPPLEMENT]

 

SUPPLEMENT, dated                                   , to the 5-Year Credit
Agreement, dated as of November 10, 2011 (as amended from time to time, the
“Credit Agreement”), among International Business Machines Corporation (“IBM”),
the Subsidiary Borrowers parties thereto, the Lenders parties thereto, JPMorgan
Chase Bank, N.A., as Administrative Agent, and the Syndication Agents and
Documentation Agents named therein.

 

W I T N E S S E T H :

 

WHEREAS, the Credit Agreement provides in Section 11.23(c) thereof that any
Lender may increase the amount of its Revolving Credit Commitment by executing
and delivering to IBM and the Administrative Agent a supplement to the Credit
Agreement in substantially the form of this Supplement; and

 

WHEREAS, the undersigned now desires to increase the amount of its Revolving
Credit Commitment under the Credit Agreement;

 

NOW THEREFORE, the undersigned hereby agrees as follows:

 

1.     The undersigned agrees, subject to the terms and conditions of the Credit
Agreement, that on the date this Supplement is accepted by IBM and the
Administrative Agent it shall have its Revolving Credit Commitment increased by
$                            , thereby making the amount of its Revolving Credit
Commitment $                            .

 

2.     Terms defined in the Credit Agreement shall have their defined meanings
when used herein.

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned has caused this Supplement to be executed
and delivered by a duly authorized officer on the date first above written.

 

 

[INSERT NAME OF LENDER]

 

 

 

 

 

 

 

By:

 

 

 

Title:

 

 

Accepted this            day of

 

                            , 20    .

 

 

 

 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

 

 

 

 

 

By:

 

 

 

Title:

 

 

 

 

 

Accepted this          day of

 

                            , 20    .

 

 

 

 

 

JPMORGAN CHASE BANK, N.A., as Administrative Agent

 

 

 

 

 

By:

 

 

 

Title:

 

 

2

--------------------------------------------------------------------------------

 

EXHIBIT J TO
5-YEAR CREDIT AGREEMENT

 

[FORM OF EXTENSION REQUEST]

 

 

                  , 20   

 

JPMorgan Chase Bank, N.A., as Administrative Agent
270 Park Avenue
New York, New York 10017

 

Reference is made to the 5-Year Credit Agreement, dated as of November 10, 2011
(as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among International Business Machines Corporation (“IBM”), the
Subsidiary Borrowers parties thereto, the Lenders parties thereto, JPMorgan
Chase Bank, N.A., as Administrative Agent, and the Syndication Agents and
Documentation Agents named therein. Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given to
them in the Credit Agreement.

 

Pursuant to Section 2.21(a) of the Credit Agreement, we hereby request that the
Lenders extend the Termination Date now in effect by a period of one year, to
the date November     , 20    .  The Extension Request Deadline related to this
Extension Request shall be                       , 20    .(1)

 

The undersigned represents that as of the date of this Extension Request (i) the
representations and warranties of IBM contained in the Credit Agreement are true
and correct in all material respects with the same effect as if made on the date
hereof (except to the extent such representations and warranties expressly
relate to an earlier date) and (ii) no Default or Event of Default has occurred
and is continuing.

 

 

Very truly yours,

 

 

 

INTERNATIONAL BUSINESS MACHINES CORPORATION

 

 

 

 

 

By:

 

 

 

 

 

 

Title:

 

--------------------------------------------------------------------------------

(1)

The Extension Request Deadline shall be no later than 30 days after delivery of
this Extension Request to the Administrative Agent.

 

--------------------------------------------------------------------------------

 

EXHIBIT K-1 TO
5-YEAR CREDIT AGREEMENT

 

[FORM OF U.S. TAX COMPLIANCE CERTIFICATE]

(For Non-U.S. Lenders That Are Not Partnerships For U.S. Federal Income Tax
Purposes)

 

Reference is made to the 5-Year Credit Agreement, dated as of November 10, 2011
(as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among International Business Machines Corporation (“IBM”), the
Subsidiary Borrowers parties thereto, the Lenders parties thereto, JPMorgan
Chase Bank, N.A., as Administrative Agent, and the Syndication Agents and
Documentation Agents named therein.

 

Pursuant to the provisions of Section 2.18 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of
which it is providing this certificate, (ii) it is not a bank within the meaning
of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder
of any Borrower within the meaning of Section 871(h)(3)(B) of the Code and
(iv) it is not a controlled foreign corporation related to any Borrower as
described in Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished the Administrative Agent, IBM and any Borrower
with a certificate of its Non-U.S. Lender status on IRS Form W-8BEN.  By
executing this certificate, the undersigned agrees that (1) if the information
provided on this certificate changes, the undersigned shall promptly so inform
any Borrower, IBM and the Administrative Agent, and (2) the undersigned shall
have at all times furnished any Borrower, IBM and the Administrative Agent with
a properly completed and currently effective certificate in either the calendar
year in which each payment is to be made to the undersigned, or in either of the
two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

 

[NAME OF LENDER]

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

Date:                      , 20[  ]

 

--------------------------------------------------------------------------------

 

EXHIBIT K-2 TO
5-YEAR CREDIT AGREEMENT

 

[FORM OF U.S. TAX COMPLIANCE CERTIFICATE]

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax
Purposes)

 

Reference is made to the 5-Year Credit Agreement, dated as of November 10, 2011
(as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among International Business Machines Corporation (“IBM”), the
Subsidiary Borrowers parties thereto, the Lenders parties thereto, JPMorgan
Chase Bank, N.A., as Administrative Agent, and the Syndication Agents and
Documentation Agents named therein.

 

Pursuant to the provisions of Section 2.18 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record and beneficial owner
of the participation in respect of which it is providing this certificate,
(ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code,
(iii) it is not a ten percent shareholder of any Borrower within the meaning of
Section 871(h)(3)(B) of the Code, and (iv) it is not a controlled foreign
corporation related to any Borrower as described in Section 881(c)(3)(C) of the
Code.

 

The undersigned has furnished its participating Lender with a certificate of its
Non-U.S. Lender status on IRS Form W-8BEN.  By executing this certificate, the
undersigned agrees that (1) if the information provided on this certificate
changes, the undersigned shall promptly so inform such Lender in writing, and
(2) the undersigned shall have at all times furnished such Lender with a
properly completed and currently effective certificate in either the calendar
year in which each payment is to be made to the undersigned, or in either of the
two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

 

[NAME OF PARTICIPANT]

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

Date:                      , 20[  ]

 

--------------------------------------------------------------------------------

 

EXHIBIT K-3 TO
5-YEAR CREDIT AGREEMENT

 

[FORM OF U.S. TAX COMPLIANCE CERTIFICATE]

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax
Purposes)

 

Reference is made to the 5-Year Credit Agreement, dated as of November 10, 2011
(as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among International Business Machines Corporation (“IBM”), the
Subsidiary Borrowers parties thereto, the Lenders parties thereto, JPMorgan
Chase Bank, N.A., as Administrative Agent, and the Syndication Agents and
Documentation Agents named therein.

 

Pursuant to the provisions of Section 2.18 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the
participation in respect of which it is providing this certificate, (ii) its
direct or indirect partners/members are the sole beneficial owners of such
participation, (iii) with respect such participation, neither the undersigned
nor any of its direct or indirect partners/members is a bank extending credit
pursuant to a loan agreement entered into in the ordinary course of its trade or
business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of
its direct or indirect partners/members is a ten percent shareholder of any
Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of
its direct or indirect partners/members is a controlled foreign corporation
related to any Borrower as described in Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished its participating Lender with IRS Form W-8IMY
accompanied by one of the following forms from each of its partners/members that
is claiming the portfolio interest exemption: (i) a certificate of Non-U.S.
Lender status on IRS Form W-8BEN or (ii) an IRS Form W-8IMY accompanied by a
certificate of Non-U.S. Lender status on IRS Form W-8BEN from each of such
partner’s/member’s beneficial owners that is claiming the portfolio interest
exemption.  By executing this certificate, the undersigned agrees that (1) if
the information provided on this certificate changes, the undersigned shall
promptly so inform such Lender and (2) the undersigned shall have at all times
furnished such Lender with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

 

[NAME OF PARTICIPANT]

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

Date:                      , 20[  ]

 

--------------------------------------------------------------------------------

 

EXHIBIT K-4 TO
5-YEAR CREDIT AGREEMENT

 

[FORM OF U.S. TAX COMPLIANCE CERTIFICATE]

(For Non-U.S. Lenders That Are Partnerships For U.S. Federal Income Tax
Purposes)

 

Reference is made to the 5-Year Credit Agreement, dated as of November 10, 2011
(as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among International Business Machines Corporation (“IBM”), the
Subsidiary Borrowers parties thereto, the Lenders parties thereto, JPMorgan
Chase Bank, N.A., as Administrative Agent, and the Syndication Agents and
Documentation Agents named therein.

 

Pursuant to the provisions of Section 2.18 of the Credit Agreement, the
undersigned hereby certifies that (i) it is the sole record owner of the
Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it
is providing this certificate, (ii) its direct or indirect partners/members are
the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing
such Loan(s)), (iii) with respect to the extension of credit pursuant to this
Credit Agreement or any other Loan Document, neither the undersigned nor any of
its direct or indirect partners/members is a bank extending credit pursuant to a
loan agreement entered into in the ordinary course of its trade or business
within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct
or indirect partners/members is a ten percent shareholder of any Borrower within
the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or
indirect partners/members is a controlled foreign corporation related to any
Borrower as described in Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished the Administrative Agent, IBM and any Borrower
with IRS Form W-8IMY accompanied by one of the following forms from each of its
partners/members that is claiming the portfolio interest exemption: (i) a
certificate of Non-U.S. Lender status on IRS Form W-8BEN or (ii) an IRS
Form W-8IMY accompanied by a certificate of Non-U.S. Lender Status on IRS
Form W-8BEN from each of such partner’s/member’s beneficial owners that is
claiming the portfolio interest exemption.  By executing this certificate, the
undersigned agrees that (1) if the information provided on this certificate
changes, the undersigned shall promptly so inform any Borrower, IBM and the
Administrative Agent, and (2) the undersigned shall have at all times furnished
any Borrower, IBM and the Administrative Agent with a properly completed and
currently effective certificate in either the calendar year in which each
payment is to be made to the undersigned, or in either of the two calendar years
preceding such payments.

 

Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.

 

 

[NAME OF LENDER]

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

Date:                      , 20[  ]

 

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