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

and

CITIBANK, N.A.,
as Syndication Agent

Dated as of June 28, 2006

J.P. MORGAN SECURITIES INC. and CITIGROUP GLOBAL MARKETS INC.,
as Joint Lead Arrangers and Joint Bookrunners

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

TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SECTION 1. [a06-14264_2ex10d1.htm#Section1_Definitions_130402]

 

DEFINITIONS [a06-14264_2ex10d1.htm#Section1_Definitions_130402]

 

 

1

 

 

 

 

 

 

 

 

 

 

1.1 [a06-14264_2ex10d1.htm#a1_1DefinedTerms_162752]

 

Defined Terms [a06-14264_2ex10d1.htm#a1_1DefinedTerms_162752]

 

 

1

 

 

1.2 [a06-14264_2ex10d1.htm#a1_2OtherDefinitional_163005]

 

Other Definitional Provisions
[a06-14264_2ex10d1.htm#a1_2OtherDefinitional_163005]

 

 

18

 

 

 

 

 

 

 

 

 

 

SECTION 2. [a06-14264_2ex10d1.htm#Section2_AmountAndTermsOfUsFacili_131608]

 

AMOUNT AND TERMS OF US$FACILITIES
[a06-14264_2ex10d1.htm#Section2_AmountAndTermsOfUsFacili_131608]

 

 

18

 

 

 

 

 

 

 

 

 

 

2.1 [a06-14264_2ex10d1.htm#a2_1RevolvingCreditCommitments_163050]

 

Revolving Credit Commitments
[a06-14264_2ex10d1.htm#a2_1RevolvingCreditCommitments_163050]

 

 

18

 

 

2.2 [a06-14264_2ex10d1.htm#a2_2ProcedureForRevolvingCreditBo_163127]

 

Procedure for Revolving Credit Borrowing
[a06-14264_2ex10d1.htm#a2_2ProcedureForRevolvingCreditBo_163127]

 

 

19

 

 

2.3 [a06-14264_2ex10d1.htm#a2_3ConversionAndContinuationOpti_163137]

 

Conversion and Continuation Options for Revolving Credit Loans
[a06-14264_2ex10d1.htm#a2_3ConversionAndContinuationOpti_163137]

 

 

19

 

 

2.4 [a06-14264_2ex10d1.htm#a2_4MinimumAmountsAndMaximumNumbe_163146]

 

Minimum Amounts and Maximum Number of Eurodollar Tranches
[a06-14264_2ex10d1.htm#a2_4MinimumAmountsAndMaximumNumbe_163146]

 

 

20

 

 

2.5 [a06-14264_2ex10d1.htm#a2_5SwingLineLoans_163155]

 

Swing Line Loans [a06-14264_2ex10d1.htm#a2_5SwingLineLoans_163155]

 

 

20

 

 

2.6 [a06-14264_2ex10d1.htm#a2_6OptionalPrepaymentsOfRevolvin_163318]

 

Optional Prepayments of Revolving Credit Loans and Swing Line Loans
[a06-14264_2ex10d1.htm#a2_6OptionalPrepaymentsOfRevolvin_163318]

 

 

21

 

 

2.7 [a06-14264_2ex10d1.htm#a2_7TheCompetitive_163331]

 

The Competitive Loans [a06-14264_2ex10d1.htm#a2_7TheCompetitive_163331]

 

 

22

 

 

2.8 [a06-14264_2ex10d1.htm#a2_8ProcedureForCompetitive_163340]

 

Procedure for Competitive Loan Borrowing
[a06-14264_2ex10d1.htm#a2_8ProcedureForCompetitive_163340]

 

 

22

 

 

2.9 [a06-14264_2ex10d1.htm#a2_9RepaymentOfUsLoans_163357]

 

Repayment of US$Loans; Evidence of Debt
[a06-14264_2ex10d1.htm#a2_9RepaymentOfUsLoans_163357]

 

 

25

 

 

2.10 [a06-14264_2ex10d1.htm#a2_10InterestRatesAndPaymentDates_163407]

 

Interest Rates and Payment Dates
[a06-14264_2ex10d1.htm#a2_10InterestRatesAndPaymentDates_163407]

 

 

25

 

 

2.11 [a06-14264_2ex10d1.htm#a2_11Fees_163417]

 

Fees [a06-14264_2ex10d1.htm#a2_11Fees_163417]

 

 

26

 

 

2.12 [a06-14264_2ex10d1.htm#a2_12ComputationOfInterestAndFees_163426]

 

Computation of Interest and Fees
[a06-14264_2ex10d1.htm#a2_12ComputationOfInterestAndFees_163426]

 

 

26

 

 

2.13 [a06-14264_2ex10d1.htm#a2_13TerminationOrReductionOfRevo_163436]

 

Termination or Reduction of Revolving Credit Commitments
[a06-14264_2ex10d1.htm#a2_13TerminationOrReductionOfRevo_163436]

 

 

27

 

 

2.14 [a06-14264_2ex10d1.htm#a2_14InabilityToDetermineInterest_163443]

 

Inability to Determine Interest Rate
[a06-14264_2ex10d1.htm#a2_14InabilityToDetermineInterest_163443]

 

 

27

 

 

2.15 [a06-14264_2ex10d1.htm#a2_15ProRataTreatmentAndPayments_163450]

 

Pro Rata Treatment and Payments
[a06-14264_2ex10d1.htm#a2_15ProRataTreatmentAndPayments_163450]

 

 

27

 

 

2.16 [a06-14264_2ex10d1.htm#a2_16Illegality_163458]

 

Illegality [a06-14264_2ex10d1.htm#a2_16Illegality_163458]

 

 

28

 

 

2.17 [a06-14264_2ex10d1.htm#a2_17RequirementsOfLaw_163508]

 

Requirements of Law [a06-14264_2ex10d1.htm#a2_17RequirementsOfLaw_163508]

 

 

28

 

 

2.18 [a06-14264_2ex10d1.htm#a2_18Taxes_163933]

 

Taxes [a06-14264_2ex10d1.htm#a2_18Taxes_163933]

 

 

31

 

 

2.19 [a06-14264_2ex10d1.htm#a2_19Indemnity_163944]

 

Indemnity [a06-14264_2ex10d1.htm#a2_19Indemnity_163944]

 

 

33

 

 

2.20 [a06-14264_2ex10d1.htm#a2_20ChangeOfLendingOffice_163951]

 

Change of Lending Office
[a06-14264_2ex10d1.htm#a2_20ChangeOfLendingOffice_163951]

 

 

33

 

 

2.21 [a06-14264_2ex10d1.htm#a2_21ExtensionOfTerminationDate_163958]

 

Extension of Termination Date
[a06-14264_2ex10d1.htm#a2_21ExtensionOfTerminationDate_163958]

 

 

33

 

 

 

 

 

 

 

 

 

 

SECTION 3. [a06-14264_2ex10d1.htm#Section3_LocalCurrencyFacilities_134037]

 

LOCAL CURRENCY FACILITIES
[a06-14264_2ex10d1.htm#Section3_LocalCurrencyFacilities_134037]

 

 

35

 

 

 

 

 

 

 

 

 

 

3.1 [a06-14264_2ex10d1.htm#a3_1TermsOfLocalCurrencyFacilitie_164008]

 

Terms of Local Currency Facilities
[a06-14264_2ex10d1.htm#a3_1TermsOfLocalCurrencyFacilitie_164008]

 

 

35

 

 

3.2 [a06-14264_2ex10d1.htm#a3_2CurrencyFluctuationsEtc_164029]

 

Currency Fluctuations, etc.
[a06-14264_2ex10d1.htm#a3_2CurrencyFluctuationsEtc_164029]

 

 

37

 

 

3.3 [a06-14264_2ex10d1.htm#a3_3RefundingOfLocalCurrencyLoans_164038]

 

Refunding of Local Currency Loans
[a06-14264_2ex10d1.htm#a3_3RefundingOfLocalCurrencyLoans_164038]

 

 

38

 

 

3.4 [a06-14264_2ex10d1.htm#a3_4ExistingLocalCurrencyFaciliti_164049]

 

Existing Local Currency Facilities, etc.
[a06-14264_2ex10d1.htm#a3_4ExistingLocalCurrencyFaciliti_164049]

 

 

40

 

 

 

 

 

 

 

 

 

 

SECTION 4. [a06-14264_2ex10d1.htm#Section4_RepresentationsAndWarran_134316]

 

REPRESENTATIONS AND WARRANTIES
[a06-14264_2ex10d1.htm#Section4_RepresentationsAndWarran_134316]

 

 

40

 

 

 

 

 

 

 

 

 

 

4.1 [a06-14264_2ex10d1.htm#a4_1OrganizationPowers__164058]

 

Organization; Powers [a06-14264_2ex10d1.htm#a4_1OrganizationPowers__164058]

 

 

40

 

 

4.2 [a06-14264_2ex10d1.htm#a4_2Authorization_164103]

 

Authorization [a06-14264_2ex10d1.htm#a4_2Authorization_164103]

 

 

40

 

 

4.3 [a06-14264_2ex10d1.htm#a4_3Enforceability_164108]

 

Enforceability [a06-14264_2ex10d1.htm#a4_3Enforceability_164108]

 

 

40

 

 

4.4 [a06-14264_2ex10d1.htm#a4_4GovernmentalApprovals_164248]

 

Governmental Approvals [a06-14264_2ex10d1.htm#a4_4GovernmentalApprovals_164248]

 

 

41

 

 

4.5 [a06-14264_2ex10d1.htm#a4_5FinancialStatements_164253]

 

Financial Statements [a06-14264_2ex10d1.htm#a4_5FinancialStatements_164253]

 

 

41

 

 

4.6 [a06-14264_2ex10d1.htm#a4_6NoMaterialAdverseChange_164258]

 

No Material Adverse Change
[a06-14264_2ex10d1.htm#a4_6NoMaterialAdverseChange_164258]

 

 

41

 

 

 

 

i

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.7 [a06-14264_2ex10d1.htm#a4_7NoMaterialLitigationEtc_164303]

 

No Material Litigation, etc.
[a06-14264_2ex10d1.htm#a4_7NoMaterialLitigationEtc_164303]

 

 

41

 

 

4.8 [a06-14264_2ex10d1.htm#a4_8FederalReserveRegulations_164311]

 

Federal Reserve Regulations
[a06-14264_2ex10d1.htm#a4_8FederalReserveRegulations_164311]

 

 

41

 

 

4.9 [a06-14264_2ex10d1.htm#a4_9InvestmentCompanyActEtc_164317]

 

Investment Company Act, etc.
[a06-14264_2ex10d1.htm#a4_9InvestmentCompanyActEtc_164317]

 

 

42

 

 

4.10 [a06-14264_2ex10d1.htm#a4_10TaxReturns_164323]

 

Tax Returns [a06-14264_2ex10d1.htm#a4_10TaxReturns_164323]

 

 

42

 

 

4.11 [a06-14264_2ex10d1.htm#a4_11NoMaterialMisstatements_164330]

 

No Material Misstatements
[a06-14264_2ex10d1.htm#a4_11NoMaterialMisstatements_164330]

 

 

42

 

 

4.12 [a06-14264_2ex10d1.htm#a4_12Erisa_164335]

 

ERISA [a06-14264_2ex10d1.htm#a4_12Erisa_164335]

 

 

42

 

 

4.13 [a06-14264_2ex10d1.htm#a4_13UseOfProceeds_164340]

 

Use of Proceeds [a06-14264_2ex10d1.htm#a4_13UseOfProceeds_164340]

 

 

42

 

 

 

 

 

 

 

 

 

 

SECTION 5. [a06-14264_2ex10d1.htm#Section5_ConditionsPrecedent_134632]

 

CONDITIONS PRECEDENT [a06-14264_2ex10d1.htm#Section5_ConditionsPrecedent_134632]

 

 

42

 

 

 

 

 

 

 

 

 

 

5.1 [a06-14264_2ex10d1.htm#a5_1ConditionsToInitialUsLoans_164346]

 

Conditions to Initial US$Loans
[a06-14264_2ex10d1.htm#a5_1ConditionsToInitialUsLoans_164346]

 

 

42

 

 

5.2 [a06-14264_2ex10d1.htm#a5_2ConditionsToEachUsLoan_164353]

 

Conditions to Each US$Loan
[a06-14264_2ex10d1.htm#a5_2ConditionsToEachUsLoan_164353]

 

 

43

 

 

 

 

 

 

 

 

 

 

SECTION 6. [a06-14264_2ex10d1.htm#Section6_AffirmativeCovenants_134712]

 

AFFIRMATIVE COVENANTS
[a06-14264_2ex10d1.htm#Section6_AffirmativeCovenants_134712]

 

 

44

 

 

 

 

 

 

 

 

 

 

6.1 [a06-14264_2ex10d1.htm#a6_1ExistenceBusinessAndPropertie_164408]

 

Existence; Business and Properties
[a06-14264_2ex10d1.htm#a6_1ExistenceBusinessAndPropertie_164408]

 

 

44

 

 

6.2 [a06-14264_2ex10d1.htm#a6_2FinancialStatementsReportsEtc_164420]

 

Financial Statements, Reports, etc.
[a06-14264_2ex10d1.htm#a6_2FinancialStatementsReportsEtc_164420]

 

 

45

 

 

6.3 [a06-14264_2ex10d1.htm#a6_3Notices_164427]

 

Notices [a06-14264_2ex10d1.htm#a6_3Notices_164427]

 

 

46

 

 

 

 

 

 

 

 

 

 

SECTION 7. [a06-14264_2ex10d1.htm#Section7_NegativeCovenants_134837]

 

NEGATIVE COVENANTS [a06-14264_2ex10d1.htm#Section7_NegativeCovenants_134837]

 

 

46

 

 

 

 

 

 

 

 

 

 

7.1 [a06-14264_2ex10d1.htm#a7_1LimitationOnSecuredDebtAndSal_164435]

 

Limitation on Secured Debt and Sale and Leaseback Transactions
[a06-14264_2ex10d1.htm#a7_1LimitationOnSecuredDebtAndSal_164435]

 

 

46

 

 

7.2 [a06-14264_2ex10d1.htm#a7_2MergersConsolidationsAndSales_164443]

 

Mergers, Consolidations and Sales of Assets
[a06-14264_2ex10d1.htm#a7_2MergersConsolidationsAndSales_164443]

 

 

47

 

 

7.3 [a06-14264_2ex10d1.htm#a7_3MarginRegulations_164448]

 

Margin Regulations [a06-14264_2ex10d1.htm#a7_3MarginRegulations_164448]

 

 

47

 

 

7.4 [a06-14264_2ex10d1.htm#a7_4ConsolidatedNetInterestExpens_164453]

 

Consolidated Net Interest Expense Ratio
[a06-14264_2ex10d1.htm#a7_4ConsolidatedNetInterestExpens_164453]

 

 

47

 

 

 

 

 

 

 

 

 

 

SECTION 8. [a06-14264_2ex10d1.htm#Section8_EventsOfDefault_134926]

 

EVENTS OF DEFAULT [a06-14264_2ex10d1.htm#Section8_EventsOfDefault_134926]

 

 

47

 

 

 

 

 

 

 

 

 

 

SECTION 9.

 

THE ADMINISTRATIVE AGENT

 

 

49

 

 

 

 

 

 

 

 

 

 

9.1 [a06-14264_2ex10d1.htm#a9_1Appointment_164513]

 

Appointment [a06-14264_2ex10d1.htm#a9_1Appointment_164513]

 

 

49

 

 

9.2 [a06-14264_2ex10d1.htm#a9_2DelegationOfDuties_164518]

 

Delegation of Duties [a06-14264_2ex10d1.htm#a9_2DelegationOfDuties_164518]

 

 

50

 

 

9.3 [a06-14264_2ex10d1.htm#a9_3ExculpatoryProvisions_164522]

 

Exculpatory Provisions [a06-14264_2ex10d1.htm#a9_3ExculpatoryProvisions_164522]

 

 

50

 

 

9.4 [a06-14264_2ex10d1.htm#a9_4RelianceByAdministrativeAgent_164531]

 

Reliance by Administrative Agent
[a06-14264_2ex10d1.htm#a9_4RelianceByAdministrativeAgent_164531]

 

 

50

 

 

9.5 [a06-14264_2ex10d1.htm#a9_5NoticeOfDefault_164537]

 

Notice of Default [a06-14264_2ex10d1.htm#a9_5NoticeOfDefault_164537]

 

 

50

 

 

9.6 [a06-14264_2ex10d1.htm#a9_6NonrelianceOnAdministrativeAg_164543]

 

Non-Reliance on Administrative Agent and Other Lenders
[a06-14264_2ex10d1.htm#a9_6NonrelianceOnAdministrativeAg_164543]

 

 

50

 

 

9.7 [a06-14264_2ex10d1.htm#a9_7Indemnification_164849]

 

Indemnification [a06-14264_2ex10d1.htm#a9_7Indemnification_164849]

 

 

51

 

 

9.8 [a06-14264_2ex10d1.htm#a9_8AdministrativeAgentInItsIndiv_164854]

 

Administrative Agent in Its Individual Capacity
[a06-14264_2ex10d1.htm#a9_8AdministrativeAgentInItsIndiv_164854]

 

 

51

 

 

9.9 [a06-14264_2ex10d1.htm#a9_9SuccessorAdministrativeAgent_164900]

 

Successor Administrative Agent
[a06-14264_2ex10d1.htm#a9_9SuccessorAdministrativeAgent_164900]

 

 

51

 

 

9.10 [a06-14264_2ex10d1.htm#a9_10SyndicationAgent_164906]

 

Syndication Agent [a06-14264_2ex10d1.htm#a9_10SyndicationAgent_164906]

 

 

52

 

 

 

 

 

 

 

 

 

 

SECTION 10. [a06-14264_2ex10d1.htm#Section10_Guarantee_135919]

 

GUARANTEE [a06-14264_2ex10d1.htm#Section10_Guarantee_135919]

 

 

52

 

 

 

 

 

 

 

 

 

 

10.1 [a06-14264_2ex10d1.htm#a10_1Guarantee_164909]

 

Guarantee [a06-14264_2ex10d1.htm#a10_1Guarantee_164909]

 

 

52

 

 

10.2 [a06-14264_2ex10d1.htm#a10_2NoSubrogation_164916]

 

No Subrogation [a06-14264_2ex10d1.htm#a10_2NoSubrogation_164916]

 

 

52

 

 

10.3 [a06-14264_2ex10d1.htm#a10_3AmendmentsEtc_WithRespectToT_164922]

 

Amendments, etc. with respect to the Subsidiary Borrower Obligations
[a06-14264_2ex10d1.htm#a10_3AmendmentsEtc_WithRespectToT_164922]

 

 

53

 

 

10.4 [a06-14264_2ex10d1.htm#a10_4GuaranteeAbsoluteAndUncondit_164927]

 

Guarantee Absolute and Unconditional
[a06-14264_2ex10d1.htm#a10_4GuaranteeAbsoluteAndUncondit_164927]

 

 

53

 

 

10.5 [a06-14264_2ex10d1.htm#a10_5Reinstatement_164933]

 

Reinstatement [a06-14264_2ex10d1.htm#a10_5Reinstatement_164933]

 

 

54

 

 

 

ii

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.6 [a06-14264_2ex10d1.htm#a10_6Payments_164938]

 

Payments [a06-14264_2ex10d1.htm#a10_6Payments_164938]

 

 

54

 

 

10.7 [a06-14264_2ex10d1.htm#a10_7JudgmentsRelatingToGuarantee_164946]

 

Judgments Relating to Guarantee
[a06-14264_2ex10d1.htm#a10_7JudgmentsRelatingToGuarantee_164946]

 

 

54

 

 

10.8 [a06-14264_2ex10d1.htm#a10_8IndependentObligations_164951]

 

Independent Obligations
[a06-14264_2ex10d1.htm#a10_8IndependentObligations_164951]

 

 

55

 

 

 

 

 

 

 

 

 

 

SECTION 11. [a06-14264_2ex10d1.htm#Section11_Miscellaneous_140106]

 

MISCELLANEOUS [a06-14264_2ex10d1.htm#Section11_Miscellaneous_140106]

 

 

55

 

 

 

 

 

 

 

 

 

 

11.1 [a06-14264_2ex10d1.htm#a11_1AmendmentsAndWaivers_165001]

 

Amendments and Waivers [a06-14264_2ex10d1.htm#a11_1AmendmentsAndWaivers_165001]

 

 

55

 

 

11.2 [a06-14264_2ex10d1.htm#a11_2Notices_165006]

 

Notices [a06-14264_2ex10d1.htm#a11_2Notices_165006]

 

 

56

 

 

11.3 [a06-14264_2ex10d1.htm#a11_3NoWaiverCumulativeRemedies_165019]

 

No Waiver; Cumulative Remedies
[a06-14264_2ex10d1.htm#a11_3NoWaiverCumulativeRemedies_165019]

 

 

56

 

 

11.4 [a06-14264_2ex10d1.htm#a11_4SurvivalOfRepresentationsAnd_165025]

 

Survival of Representations and Warranties
[a06-14264_2ex10d1.htm#a11_4SurvivalOfRepresentationsAnd_165025]

 

 

57

 

 

11.5 [a06-14264_2ex10d1.htm#a11_5PaymentOfExpenses_165030]

 

Payment of Expenses [a06-14264_2ex10d1.htm#a11_5PaymentOfExpenses_165030]

 

 

57

 

 

11.6 [a06-14264_2ex10d1.htm#a11_6Participations_165035]

 

Participations [a06-14264_2ex10d1.htm#a11_6Participations_165035]

 

 

57

 

 

11.7 [a06-14264_2ex10d1.htm#a11_7TransfersOfCompetitiveLoans_165041]

 

Transfers of Competitive Loans
[a06-14264_2ex10d1.htm#a11_7TransfersOfCompetitiveLoans_165041]

 

 

58

 

 

11.8 [a06-14264_2ex10d1.htm#a11_8Assignments_165047]

 

Assignments [a06-14264_2ex10d1.htm#a11_8Assignments_165047]

 

 

59

 

 

11.9 [a06-14264_2ex10d1.htm#a11_9TheRegisterDisclosurePledges_165055]

 

The Register; Disclosure; Pledges to Federal Reserve Banks
[a06-14264_2ex10d1.htm#a11_9TheRegisterDisclosurePledges_165055]

 

 

60

 

 

11.10 [a06-14264_2ex10d1.htm#a11_10ChangingDesignationsOfSwing_165102]

 

Changing Designations of Swing Line Lenders and Competitive Loan Lenders
[a06-14264_2ex10d1.htm#a11_10ChangingDesignationsOfSwing_165102]

 

 

60

 

 

11.11 [a06-14264_2ex10d1.htm#a11_11ReplacementOfLendersUnderCe_165328]

 

Replacement of Lenders under Certain Circumstances
[a06-14264_2ex10d1.htm#a11_11ReplacementOfLendersUnderCe_165328]

 

 

61

 

 

11.12 [a06-14264_2ex10d1.htm#a11_12AdjustmentsSetoff__165334]

 

Adjustments; Set-off [a06-14264_2ex10d1.htm#a11_12AdjustmentsSetoff__165334]

 

 

61

 

 

11.13 [a06-14264_2ex10d1.htm#a11_13Counterparts_165339]

 

Counterparts [a06-14264_2ex10d1.htm#a11_13Counterparts_165339]

 

 

62

 

 

11.14 [a06-14264_2ex10d1.htm#a11_14Severability_165344]

 

Severability [a06-14264_2ex10d1.htm#a11_14Severability_165344]

 

 

62

 

 

11.15 [a06-14264_2ex10d1.htm#a11_15Integration_165349]

 

Integration [a06-14264_2ex10d1.htm#a11_15Integration_165349]

 

 

62

 

 

11.16 [a06-14264_2ex10d1.htm#a11_16GoverningLaw_165354]

 

GOVERNING LAW [a06-14264_2ex10d1.htm#a11_16GoverningLaw_165354]

 

 

62

 

 

11.17 [a06-14264_2ex10d1.htm#a11_17SubmissionToJurisdictionWai_165400]

 

Submission To Jurisdiction; Waivers
[a06-14264_2ex10d1.htm#a11_17SubmissionToJurisdictionWai_165400]

 

 

62

 

 

11.18 [a06-14264_2ex10d1.htm#a11_18JudgmentsRelatingToSubsidia_165408]

 

Judgments Relating to Subsidiary Borrowers
[a06-14264_2ex10d1.htm#a11_18JudgmentsRelatingToSubsidia_165408]

 

 

63

 

 

11.19 [a06-14264_2ex10d1.htm#a11_19Acknowledgements_165414]

 

Acknowledgements [a06-14264_2ex10d1.htm#a11_19Acknowledgements_165414]

 

 

63

 

 

11.20 [a06-14264_2ex10d1.htm#a11_20WaiversOfJuryTrial_165420]

 

WAIVERS OF JURY TRIAL [a06-14264_2ex10d1.htm#a11_20WaiversOfJuryTrial_165420]

 

 

64

 

 

11.21 [a06-14264_2ex10d1.htm#a11_21Confidentiality_165426]

 

Confidentiality [a06-14264_2ex10d1.htm#a11_21Confidentiality_165426]

 

 

64

 

 

11.22 [a06-14264_2ex10d1.htm#a11_22BindingEffectSuccessorsAndA_165431]

 

Binding Effect; Successors and Assigns
[a06-14264_2ex10d1.htm#a11_22BindingEffectSuccessorsAndA_165431]

 

 

64

 

 

11.23 [a06-14264_2ex10d1.htm#a11_23IncrementalRevolvingCreditC_165437]

 

Incremental Revolving Credit Commitments
[a06-14264_2ex10d1.htm#a11_23IncrementalRevolvingCreditC_165437]

 

 

65

 

 

11.24 [a06-14264_2ex10d1.htm#a11_24UsaPatriotAct__165443]

 

USA PATRIOT Act [a06-14264_2ex10d1.htm#a11_24UsaPatriotAct__165443]

 

 

65

 

 

 

iii

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

 

SCHEDULES

 

 

 

 

 

 

 

 

 

 

SCHEDULE 1.1 [a06-14264_2ex10d1.htm#Schedule1_1_165624]

 

Revolving Credit Commitments and Swing Line Commitments of Lenders
[a06-14264_2ex10d1.htm#Schedule1_1_165624]

 

 

SCHEDULE 6.2(c) [a06-14264_2ex10d1.htm#Schedule6_2c_165651]

 

Compliance Certificate [a06-14264_2ex10d1.htm#Schedule6_2c_165651]

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBITS

 

 

 

 

 

 

 

 

 

 

EXHIBIT A-1 [a06-14264_2ex10d1.htm#ExhibitA1_165711]

 

Form of Competitive Loan Confirmation [a06-14264_2ex10d1.htm#ExhibitA1_165711]

 

 

EXHIBIT A-2 [a06-14264_2ex10d1.htm#ExhibitA2To_165732]

 

Form of Competitive Loan Offer [a06-14264_2ex10d1.htm#ExhibitA2To_165732]

 

 

EXHIBIT A-3 [a06-14264_2ex10d1.htm#ExhibitA3To_165754]

 

Form of Competitive Loan Request [a06-14264_2ex10d1.htm#ExhibitA3To_165754]

 

 

EXHIBIT B-1 [a06-14264_2ex10d1.htm#ExhibitB1To_165816]

 

Form of Subsidiary Borrower Notice and Designation
[a06-14264_2ex10d1.htm#ExhibitB1To_165816]

 

 

EXHIBIT B-2 [a06-14264_2ex10d1.htm#ExhibitB2To_165840]

 

Form of Subsidiary Borrower Request [a06-14264_2ex10d1.htm#ExhibitB2To_165840]

 

 

EXHIBIT C [a06-14264_2ex10d1.htm#ExhibitCTo_165908]

 

Form of Closing Certificate [a06-14264_2ex10d1.htm#ExhibitCTo_165908]

 

 

EXHIBIT D-1 [a06-14264_2ex10d1.htm#ExhibitD1_170803]

 

Form of Opinion of Simpson Thacher & Bartlett LLP
[a06-14264_2ex10d1.htm#ExhibitD1_170803]

 

 

EXHIBIT D-2 [a06-14264_2ex10d1.htm#ExhibitD2_170853]

 

Form of Opinion of Assistant General Counsel of IBM
[a06-14264_2ex10d1.htm#ExhibitD2_170853]

 

 

EXHIBIT E [a06-14264_2ex10d1.htm#ExhibitETo_170924]

 

Form of Assignment and Acceptance [a06-14264_2ex10d1.htm#ExhibitETo_170924]

 

 

EXHIBIT F [a06-14264_2ex10d1.htm#ExhibitFTo_170958]

 

Form of Local Currency Facility Addendum
[a06-14264_2ex10d1.htm#ExhibitFTo_170958]

 

 

EXHIBIT G-1 [a06-14264_2ex10d1.htm#ExhibitG1To_171026]

 

Form of Revolving Credit Loan Promissory Note
[a06-14264_2ex10d1.htm#ExhibitG1To_171026]

 

 

EXHIBIT G-2 [a06-14264_2ex10d1.htm#ExhibitG2_171057]

 

Form of Competitive Loan Promissory Note
[a06-14264_2ex10d1.htm#ExhibitG2_171057]

 

 

EXHIBIT H-1 [a06-14264_2ex10d1.htm#ExhibitH1To_171128]

 

Form of Lender Addendum [a06-14264_2ex10d1.htm#ExhibitH1To_171128]

 

 

EXHIBIT H-2 [a06-14264_2ex10d1.htm#ExhibitH2To_171149]

 

Form of Subsidiary Borrower Addendum [a06-14264_2ex10d1.htm#ExhibitH2To_171149]

 

 

EXHIBIT I-1 [a06-14264_2ex10d1.htm#ExhibitI1To_171211]

 

Form of New Lender Supplement [a06-14264_2ex10d1.htm#ExhibitI1To_171211]

 

 

EXHIBIT I-2 [a06-14264_2ex10d1.htm#ExhibitI2To_171236]

 

Form of Incremental Commitment Supplement
[a06-14264_2ex10d1.htm#ExhibitI2To_171236]

 

 

EXHIBIT J [a06-14264_2ex10d1.htm#ExhibitJTo_171259]

 

Form of Extension Request [a06-14264_2ex10d1.htm#ExhibitJTo_171259]

 

 

 

 

iv

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

CREDIT AGREEMENT, dated as of June 28, 2006, 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”), and CITIBANK, N.A., as syndication agent (in such
capacity, the “Syndication Agent”).

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 Base CD Rate in effect on such day plus 1% and (c) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. 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); “Base CD Rate” shall mean the sum of
(a) the product of (i) the Three-Month Secondary CD Rate and (ii) a fraction,
the numerator of which is one and the denominator of which is one minus the CD
Reserve Percentage and (b) the CD Assessment Rate; “Three-Month Secondary CD
Rate” shall mean, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such day (or, if such day
shall not be a Business Day, the next preceding Business Day) by the Board
through the public information telephone line of the Federal Reserve Bank of New
York (which rate will, under the current practices of the Board, be published in
Federal Reserve Statistical Release H.15(519) during the week following such
day), or, if such rate shall not be so reported on such day or such next
preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 A.M., New York City time, on such day (or, if
such day shall not be a Business Day, on the next preceding Business Day) by the
Administrative Agent from three New York City negotiable certificate of deposit
dealers of recognized standing selected by it; “CD Reserve Percentage” shall
mean, for any day, that percentage (expressed as a decimal) which is in effect
on such day, as prescribed by the Board, for determining the maximum reserve
requirement for a Depositary Institution (as defined in Regulation D of the
Board) in respect of new non-personal time deposits in Dollars having a maturity
of 30 days or more; and “CD Assessment Rate” shall mean, for any day, the annual
assessment rate in effect on such day which is payable by a member of the Bank
Insurance Fund classified as “well-capitalized” and within supervisory subgroup
“A” (or a comparable successor assessment risk classification) within the
meaning of 12 C.F.R. § 327.3(e) (or any successor provision) to the Federal
Deposit Insurance Corporation (or any successor) for such Corporation’s (or such
successor’s) insuring time deposits at offices of such institution in the United
States. 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 Base CD Rate or the Federal Funds Effective Rate, or both, 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) or (c), or both, of the first sentence
of this definition, as appropriate, 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 Three-Month
Secondary CD Rate, the CD Reserve Percentage, the CD Assessment Rate or the
Federal Funds Effective Rate shall be effective on the effective day of such
change in the Prime Rate, the Three-Month Secondary CD Rate, the CD Reserve
Percentage, the CD Assessment Rate or the Federal Funds Effective Rate,
respectively.

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

“Act”:  as defined in Section 11.24.

“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 and Local Currency Loans (US$ Equivalent) 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 and Swing
Line Loans made by such Lender then outstanding.

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

“Applicable Eurodollar Margin”:  with respect to each Eurodollar Loan at any
date, the applicable percentage per annum set forth below based on the Status on
such date:

 

Level I
Status

 

Level II
Status

 

Level III
Status

 

Level IV
Status

 

Level V
Status

0.1100%

 

0.1000%

 

0.1900%

 

0.5000%

 

0.7000%

 

 

 

 

 

 

 

 

 

 

“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 Page 3750 of the Telerate screen 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 Page 3750 of the Telerate Screen (or otherwise on such service),
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.

“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

2

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

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.

“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.

“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 Telerate 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.

3

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

“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.

“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 then outstanding constitutes of the
aggregate principal amount of the Loans 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.

4

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

“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.

“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.

5

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

“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.

“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.

“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 Page 3750 of
the Telerate screen 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 Page 3750 of the Telerate Screen (or otherwise on such service), 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

6

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

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 May 27, 2004,
among IBM, the subsidiary borrowers parties thereto, the lenders parties
thereto, JPMorgan Chase Bank, as administrative agent and, Citibank, N.A., as
syndication agent.

“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:

 

Level I
Status

 

Level II
Status

 

Level III
Status

 

Level IV
Status

 

Level V
Status

 

 

 

 

 

 

 

 

 

0.0400%

 

0.0500%

 

0.0600%

 

0.1250%

 

0.1750%

 

“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.

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“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 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

8

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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 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.

“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.

“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 Aa3 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 A+ or better by
S&P or A1 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 A3 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 BBB- or better by S&P or Baa3 or better by Moody’s.

 

9

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“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.

“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.

“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).

 

10

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“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.

“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).

 “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.

“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

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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, Citibank, N.A. and Credit Suisse
First Boston.

“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.

“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 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

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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.

“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.

13

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“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 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;

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(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.

“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).

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“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.

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

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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 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).

“Termination Date”:  June 28, 2011.

“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.

“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.

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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.

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 and Local Currency Loans (US$ Equivalent) made by any
Lender then outstanding would exceed such Lender’s Revolving Credit Commitment.

(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.

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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) 11:00 A.M.,
New York City time, one Business Day prior to 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 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

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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.

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

 

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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 AND IF BY SUCH TIME ON SUCH
SEVENTH BUSINESS DAY 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 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

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$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 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

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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:

(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

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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 (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.

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(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 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 Eurodollar Margin. 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.

(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.

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(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).

(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 (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

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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 and Local
Currency Loans (US$ Equivalent) 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,

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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 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.

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 TO ANY TAX OF ANY KIND WHATSOEVER WITH RESPECT TO
THIS AGREEMENT OR ANY EURODOLLAR LOAN OR INDEX RATE COMPETITIVE LOAN MADE BY IT,
OR CHANGE THE

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BASIS OF TAXATION OF PAYMENTS TO SUCH LENDER IN RESPECT THEREOF (EXCEPT FOR
TAXES COVERED BY SECTION 2.18 AND NET INCOME TAXES AND FRANCHISE TAXES IMPOSED
IN LIEU OF INCOME TAXES);

(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,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or Index Rate Competitive Loans, or
to reduce any amount receivable hereunder in respect thereof, then, in any such
case, the relevant Borrower shall promptly pay such Lender, upon its demand, any
additional amounts necessary to compensate such Lender for such increased cost
or reduced amount receivable. If any Lender 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 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 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 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)           EACH BORROWER AGREES TO PAY TO EACH LENDER WHICH REQUESTS
COMPENSATION UNDER THIS SECTION 2.17(C) (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 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:

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(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(c) 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(c) 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.

(D)           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(C)) 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 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.

(E)           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

 

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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 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, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, excluding net income taxes
and franchise taxes (imposed in lieu of net income taxes) imposed on the
Administrative Agent, any Lender or any Transferee as a result of a present or
former connection between the Administrative Agent or such Lender (or
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 or such Lender
(or Transferee) having executed, delivered or performed its obligations or
received a payment under, or enforced, this Agreement). If any such non-excluded
taxes, levies, imposts, duties, charges, fees deductions or withholdings
(“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 to the Administrative Agent or such Lender (or Transferee) 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; provided, however, that no Borrower shall be required to
increase any such amounts payable to any Lender (or Transferee) that is not
organized under the laws of the United States of America or a state thereof if
such Lender (or Transferee) fails to comply with the requirements of
Section 2.18(b); and provided further, however, that no Transferee shall be
entitled to receive any greater payment under this paragraph (a) than the
transferor would have been entitled to receive with respect to the right
assigned, participated or otherwise transferred. 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)           EACH LENDER (OR TRANSFEREE) THAT IS NOT INCORPORATED UNDER THE
LAWS OF THE UNITED STATES OF AMERICA OR A STATE THEREOF SHALL:

(I)            ON THE DATE IT BECOMES A LENDER OR TRANSFEREE, DELIVER TO IBM AND
THE ADMINISTRATIVE AGENT (A) TWO DULY COMPLETED COPIES OF UNITED STATES INTERNAL
REVENUE SERVICE FORM W-8BEN OR W-8ECI, OR SUCCESSOR APPLICABLE FORM, AS THE CASE
MAY BE, AND SHALL CERTIFY THAT IT IS ENTITLED TO RECEIVE PAYMENTS UNDER THIS
AGREEMENT WITHOUT DEDUCTION OR WITHHOLDING (OR AT A REDUCED RATE OF DEDUCTION OR
WITHHOLDING) OF ANY UNITED STATES FEDERAL INCOME TAXES AND (B) AN INTERNAL
REVENUE SERVICE FORM W-8BEN OR W-9, OR SUCCESSOR APPLICABLE FORM, AS THE CASE
MAY BE AND SHALL CERTIFY THAT IT IS ENTITLED TO AN EXEMPTION FROM UNITED STATES
BACKUP WITHHOLDING TAX;

(II)           DELIVER TO IBM AND THE ADMINISTRATIVE AGENT TWO FURTHER COPIES 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 IBM; AND

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(III)          OBTAIN SUCH EXTENSIONS OF TIME FOR FILING AND COMPLETE SUCH FORMS
OR CERTIFICATIONS AS MAY REASONABLY BE REQUESTED BY IBM OR THE ADMINISTRATIVE
AGENT;

except that the forms and certificates described in clauses (ii) and (iii) 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 IBM and the Administrative Agent. If the form
provided by a Lender at the time such Lender first becomes a party to this
Agreement indicates a United States federal withholding tax rate on any payments
under this Agreement in excess of zero, then withholding tax at such rate or any
subsequent lower rate shall not be treated as a “Non-Excluded Tax” as defined in
Section 2.18(a) at such time or any time thereafter with respect to such Lender
or any Transferee of such Lender and the relevant Borrower or the Administrative
Agent shall withhold such tax from payments to such Lender or Transferee, as the
case may be, at the applicable rate.

(C)           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.

(D)           IF ANY LENDER (OR TRANSFEREE) OR THE ADMINISTRATIVE AGENT SHALL
BECOME AWARE THAT IT IS ENTITLED TO RECEIVE A REFUND OR CREDIT (SUCH CREDIT TO
INCLUDE ANY INCREASE IN ANY FOREIGN TAX CREDIT) AS A RESULT OF NON-EXCLUDED
TAXES (INCLUDING ANY PENALTIES OR INTEREST WITH RESPECT THERETO) AS TO WHICH IT
HAS BEEN INDEMNIFIED BY ANY BORROWER PURSUANT TO THIS SECTION 2.18, IT SHALL
PROMPTLY NOTIFY SUCH BORROWER OF THE AVAILABILITY OF SUCH REFUND OR CREDIT AND
SHALL, WITHIN 30 DAYS AFTER RECEIPT OF A REQUEST BY SUCH BORROWER, APPLY FOR
SUCH REFUND OR CREDIT AT SUCH BORROWER’S EXPENSE, AND IN THE CASE OF ANY
APPLICATION FOR SUCH REFUND OR CREDIT BY SUCH BORROWER, SHALL, IF LEGALLY ABLE
TO DO SO, DELIVER TO SUCH BORROWER SUCH CERTIFICATES, FORMS OR OTHER
DOCUMENTATION AS MAY BE REASONABLY NECESSARY TO ASSIST SUCH BORROWER IN SUCH
APPLICATION. IF ANY LENDER (OR TRANSFEREE) OR THE ADMINISTRATIVE AGENT RECEIVES
A REFUND OR CREDIT (SUCH CREDIT TO INCLUDE ANY INCREASE IN ANY FOREIGN TAX
CREDIT) IN RESPECT TO 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 OR CREDIT AND SHALL, WITHIN 30 DAYS AFTER RECEIPT OF
SUCH REFUND OR THE BENEFIT OF SUCH CREDIT (SUCH BENEFIT TO INCLUDE ANY REDUCTION
OF THE TAXES FOR WHICH ANY LENDER (OR TRANSFEREE) OR THE ADMINISTRATIVE AGENT
WOULD OTHERWISE BE LIABLE DUE TO ANY INCREASE IN ANY FOREIGN TAX CREDIT
AVAILABLE TO SUCH LENDER (OR TRANSFEREE) OR THE ADMINISTRATIVE AGENT), REPAY THE
AMOUNT OF SUCH REFUND OR BENEFIT OF SUCH CREDIT (WITH RESPECT TO THE CREDIT, AS
DETERMINED BY THE LENDER, TRANSFEREE OR ADMINISTRATIVE AGENT IN ITS SOLE,
REASONABLE JUDGMENT) 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 OR CREDIT), PLUS ANY INTEREST RECEIVED WITH RESPECT
THERETO, 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 OR CREDIT); 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 OR BENEFIT
OF SUCH CREDIT (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 OR BENEFIT
OF SUCH CREDIT TO THE RELEVANT TAXING AUTHORITY OR OTHER GOVERNMENTAL AUTHORITY.

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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 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

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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

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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 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).

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 AND LOCAL CURRENCY
LOANS (US$ EQUIVALENT) MADE BY ANY LENDER THEN OUTSTANDING WOULD EXCEED SUCH
LENDER’S REVOLVING CREDIT COMMITMENT.

(D)           THE RELEVANT LOCAL CURRENCY LENDERS, OR, IF SO SPECIFIED IN THE
RELEVANT LOCAL CURRENCY FACILITY, AN AGENT ACTING ON THEIR BEHALF, SHALL FURNISH
TO THE ADMINISTRATIVE AGENT, IMMEDIATELY UPON ITS REQUEST, A STATEMENT SETTING
FORTH THE OUTSTANDING LOCAL CURRENCY LOANS MADE UNDER SUCH LOCAL CURRENCY
FACILITY AND THE AMOUNT AND TERMS OF ANY PENDING PREPAYMENT NOTICES OR BORROWING
REQUESTS RECEIVED BY SUCH LENDERS OR AGENT THROUGH THE DATE OF THE
ADMINISTRATIVE AGENT’S REQUEST.

(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 AND
THE LENDERS (THROUGH 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

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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 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

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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 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

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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 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

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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.

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 SHALL,
EFFECTIVE ON THE EFFECTIVE DATE, AUTOMATICALLY CONSTITUTE A LOCAL CURRENCY
FACILITY HEREUNDER, (C) WITHOUT LIMITING THE GENERALITY OF CLAUSE (B) ABOVE (AND
NOTWITHSTANDING THE TERMINATION OF THE “COMMITMENTS” UNDER THE EXISTING CREDIT
AGREEMENT), ALL “LOCAL CURRENCY LOANS” OUTSTANDING PURSUANT TO THE EXISTING
CREDIT AGREEMENT ON THE EFFECTIVE DATE 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 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

 

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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, 2005, 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,
2005 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, 2005 or the Form 10-Q of
IBM for the fiscal quarter ended March 31, 2006, 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 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

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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.

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).

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(D)           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.

(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 TWO 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

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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.

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.

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(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 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;

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(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, 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 EURODOLLAR
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 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

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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 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 June 30, 2006), 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:

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(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

(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 $400,000,000 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

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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 $400,000,000 (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,
PROVIDED HOWEVER, THAT ANY JUDGMENT OR OTHER ACTION IN COOPER ET AL VS. THE IBM
PERSONAL PENSION PLAN AND IBM CORPORATION SHALL BE EXEMPT FROM THE APPLICATION
OF THIS SECTION 8(H) UNTIL SUCH JUDGMENT IS A FINAL JUDGMENT NOT SUBJECT TO ANY
FURTHER APPEALS, AND IBM OR ANY SIGNIFICANT SUBSIDIARY FAILS TO PAY SUCH
JUDGMENT DUE AND PAYABLE BY IBM OR ANY SIGNIFICANT SUBSIDIARY WITHIN 60 DAYS
AFTER THE DATE MANDATED BY THE COURT FOR THE PAYMENT OF 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;

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.

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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 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

 

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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 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

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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 Agent. The Syndication Agent shall not have any duties
or responsibilities hereunder in its capacity as such.

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

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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 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

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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.

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

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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.

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, or (iv) 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.

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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

The Administrative Agent:

 

JPMORGAN LOAN AND AGENCY SERVICES GROUP
Loan & Agency Services - Account Manager
Shadia Aminu
1111 Fannin St., 10th Floor, Houston TX 77002
Phone: 713-750-7933
Fax: 713-750-2358
E-mail: shadia.O.aminu@jpmchase.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

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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 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, 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 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. 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

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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, 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.

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 SHALL
HAVE BEEN DELIVERED TO THE ADMINISTRATIVE AGENT FOR ITS ACCEPTANCE AND RECORDING
IN THE REGISTER IN

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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), to any
other Lender or to an additional bank, financial institution or other entity
(each, a “Purchasing Lender”) all or any part of its rights and obligations
under this Agreement pursuant to an Assignment and Acceptance, 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 Acceptance 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 Acceptance, (x) the Purchasing
Lender thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, 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 Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance 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).

(B)           UPON ITS RECEIPT OF AN ASSIGNMENT AND ACCEPTANCE 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

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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 ACCEPTANCE 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
Acceptance 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 IN
ACCORDANCE WITH APPLICABLE LAW. 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).

(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

 

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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) defaults in its obligation to make Revolving Credit Loans or Swing Line
Loans hereunder 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 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

61

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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
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 NON-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;

(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

62

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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 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.

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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,
or (vii) in connection with the exercise of any remedy hereunder or under any
Local Currency Facility. 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 “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

64

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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 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.

65

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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/ Jesse J. Greene, Jr.

 

 

Title: Vice President and Treasurer

 

 

 

 

 

 

 

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

 

 

 

 

By:

/s/ John Kowalczuk

 

 

Title: Vice President

 

 

 

 

CITIBANK, N.A., as Syndication Agent

 

 

 

 

By:

/s/ Anish Shah

 

 

Title: Vice President

 

 

 

 

66

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SCHEDULE 1.1
TO 5-YEAR CREDIT AGREEMENT

 

 

Revolving Credit
Commitment

 

Swing Line
Commitment

 

JPMorgan Chase Bank, N.A.

 

$

515,000,000

 

$

400,000,000

 

Citibank, N.A.

 

$

515,000,000

 

$

400,000,000

 

Barclays Bank PLC

 

$

460,000,000

 

$

200,000,000

 

The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch

 

$

276,000,000

 

$

60,000,000

 

Mitsubishi UFJ Trust and Banking Corporation

 

$

184,000,000

 

$

40,000,000

 

BNP Paribas

 

$

460,000,000

 

$

200,000,000

 

Deutsche Bank AG New York Branch

 

$

460,000,000

 

$

200,000,000

 

HSBC Bank USA, National Association

 

$

460,000,000

 

 

 

Mizuho Corporate Bank, Ltd.

 

$

460,000,000

 

$

200,000,000

 

Banca Intesa SpA

 

$

310,000,000

 

 

 

Banco Bilbao Vizcaya Argentaria S.A.

 

$

310,000,000

 

 

 

Sanpaolo IMI SpA

 

$

310,000,000

 

 

 

UBS Loan Finance LLC

 

$

310,000,000

 

 

 

ABN AMRO Bank, N.V.

 

$

250,000,000

 

 

 

Banco Santander Central Hispano S.A. New York Branch

 

$

250,000,000

 

 

 

Bank of America, N.A.

 

$

250,000,000

 

$

200,000,000

 

Credit Suisse, Cayman Islands Branch

 

$

250,000,000

 

 

 

Lehman Commercial Paper Inc.

 

$

250,000,000

 

 

 

Morgan Stanley Bank

 

$

250,000,000

 

 

 

Sumitomo Mitsui Banking Corporation

 

$

250,000,000

 

 

 

William Street Commitment Corporation

 

$

250,000,000

 

 

 

Bayerische Hypo-Und Vereinsbank, AG, New York Branch

 

$

150,000,000

 

 

 

Calyon New York Branch

 

$

150,000,000

 

 

 

Fortis Capital Corporation

 

$

150,000,000

 

 

 

PNC Bank, National Association

 

$

150,000,000

 

$

100,000,000

 

Royal Bank of Canada

 

$

150,000,000

 

 

 

The Royal Bank of Scotland plc

 

$

150,000,000

 

 

 

Standard Chartered Bank

 

$

150,000,000

 

 

 

Banca Monte dei Paschi di Siena S.p.A.

 

$

120,000,000

 

 

 

Banca Popolare di Milano

 

$

120,000,000

 

 

 

Bank of Montreal

 

$

120,000,000

 

 

 

Banca di Roma – New York Branch

 

$

120,000,000

 

 

 

Societe Generale

 

$

120,000,000

 

 

 

Nordea Bank of Finland PLC, New York

 

$

120,000,000

 

 

 

Bank of China, New York Branch

 

$

100,000,000

 

 

 

The Bank of New York

 

$

100,000,000

 

 

 

CIBC Inc.

 

$

100,000,000

 

 

 

Mellon Bank, N.A.

 

$

100,000,000

 

 

 

The Northern Trust Company

 

$

100,000,000

 

 

 

Raiffeisen Zentralbank Osterreich AG

 

$

100,000,000

 

 

 

State Street Bank and Trust Company

 

$

100,000,000

 

 

 

Svenska Handelsbanken AB

 

$

100,000,000

 

 

 

Toronto Dominion (Texas) LLC

 

$

100,000,000

 

 

 

U.S. Bank, N.A.

 

$

100,000,000

 

 

 

Wells Fargo Bank, NA

 

$

100,000,000

 

 

 

WestPac Banking Corporation

 

$

100,000,000

 

 

 

 

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

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 June 28,
2006 (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
Citibank, N.A., as Syndication Agent, 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

 

$_____________

 

2

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

 

 

 

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]

 

 

3

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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 June 28, 2006,
among International Business Machines Corporation, the Subsidiary Borrowers
parties thereto, the Lenders parties thereto, JPMorgan Chase Bank, N.A., as
Administrative Agent, and Citibank, N.A., as Syndication Agent (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 June 28, 2006,
among International Business Machines Corporation, the Subsidiary Borrowers
parties thereto, the Lenders parties thereto, JPMorgan Chase Bank, N.A., as
Administrative Agent, and Citibank, N.A., as Syndication Agent (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 June 28, 2006,
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 Citibank, N.A., as Syndication
Agent (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 June 28, 2006, among International Business Machines Corporation,
the Subsidiary Borrowers parties thereto, the Lenders parties thereto, JPMorgan
Chase Bank, N.A., as Administrative Agent, and Citibank, N.A., as Syndication
Agent (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: __________________________

Title:

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

*                    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.

 

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

 

[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 June 28,
2006, among International Business Machines Corporation (“IBM”), the Subsidiary
Borrowers parties thereto, the Lenders parties thereto, JPMorgan Chase Bank,
N.A., as Administrative Agent, and Citibank, N.A., as Syndication Agent (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 June 28,
2006  (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
Citibank, N.A., as Syndication Agent, 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: [___________]

 

Date: ______________, 20__

 

Title: [Assistant] Secretary

 

 

 

 

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

EXHIBIT D-1 TO THE
5-YEAR CREDIT AGREEMENT

[FORM OF OPINION OF SIMPSON THACHER & BARTLETT LLP]

June 28, 2006

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 June 28,
2006 (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 Citibank, N.A., as Syndication Agent.

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 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

2

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

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

 

3

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

SCHEDULE I

THE LENDERS

 

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

EXHIBIT D-2 TO
5-YEAR CREDIT AGREEMENT

FORM OF OPINION OF ASSISTANT GENERAL COUNSEL OF IBM

June 28, 2006          

International Business Machines Corporation
$10,000,000,000 5-Year Credit Agreement
dated as of June 28, 2006

Ladies and Gentlemen:

I am Andrew Bonzani, 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 June 28,
2006 (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 Citibank, N.A., as Syndication Agent. 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

1

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

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.           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)

2

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

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, 2005 or the
Form 10-Q of IBM for the fiscal quarter ended March 31, 2006, 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

3

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

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

 

4

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

EXHIBIT E TO
5-YEAR CREDIT AGREEMENT

FORM OF ASSIGNMENT AND ACCEPTANCE

Reference is made to the 5-Year Credit Agreement, dated as of June 28, 2006 (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 Citibank, N.A., as Syndication
Agent. Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.

The Assignor identified on Schedule 1 (the “Assignor”) and the Assignee
identified on Schedule 1 (the “Assignee”) agree as follows:

1.             The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), an interest (the “Assigned Interest”)
specified on SCHEDULE 1 in and to the Assignor’s rights and obligations under
the Credit Agreement with respect to those credit facilities contained in the
Credit Agreement as are set forth on SCHEDULE 1 (individually, an “Assigned
Facility”; collectively, the “Assigned Facilities”), in a principal amount for
each Assigned Facility as set forth on SCHEDULE 1.

2.             The Assignor (a) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement, or any instrument or document furnished pursuant thereto, other than
that it has not created any adverse claim upon the interest being assigned by it
hereunder and that such interest is free and clear of any such adverse claim,
and (b) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of IBM, any of its Subsidiaries or any other
obligor or the performance or observance by IBM, any of its Subsidiaries or any
other obligor of any of their respective obligations under the Credit Agreement
or any instrument or document furnished pursuant hereto or thereto.

3.             The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (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 Assignment and Acceptance; (c) agrees
that it has made and will, independently and without reliance upon the Assignor,
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

1

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

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, if it
is organized under the laws of a jurisdiction outside the United States, its
obligation pursuant to Section 2.18(b) of the Credit Agreement.

4.             The effective date of this Assignment and Acceptance shall be as
specified on SCHEDULE 1 (the “Effective Date”). Following the execution of this
Assignment and Acceptance, it will be delivered to the Administrative Agent for
acceptance by it and recording by the Administrative Agent pursuant to
Section 11.9 of the Credit Agreement, effective as of the Effective Date (which
shall not, unless otherwise agreed to by the Administrative Agent, be earlier
than five Business Days after the date of such acceptance and recording by the
Administrative Agent).

5.             Upon such acceptance and recording, 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 Assignee whether such amounts have accrued prior to the
Effective Date or accrue subsequent to the Effective Date. The Assignor and the
Assignee shall make all appropriate adjustments in payments by the
Administrative Agent for periods prior to the Effective Date or with respect to
the making of this assignment directly between themselves.

6.             From and after the Effective Date, (a) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and shall be
bound by the provisions thereof and (b) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.

7.             THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule 1 hereto.

 

2

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

SCHEDULE 1
TO ASSIGNMENT AND ACCEPTANCE
RELATING TO THE 5-YEAR CREDIT AGREEMENT, DATED AS OF JUNE 28, 2006,
AMONG INTERNATIONAL BUSINESS MACHINES CORPORATION, THE SUBSIDIARY BORROWERS
PARTIES THERETO, THE LENDERS PARTIES THERETO,
JPMORGAN CHASE BANK, N.A., AS ADMINISTRATIVE AGENT, AND
CITIBANK, N.A., AS SYNDICATION AGENT

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

 

Name of Assignor:

Name of Assignee:

Effective Date of Assignment:

Principal Amount Assigned:  $                                

 

 

 

 

 

 

 

 

 

[Name of Assignee]

 

[Name of Assignor]

 

 

 

By:

 

 

By:

 

Name:

 

Name:

Title:

 

Title:

 

1

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

 

 

 

 

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:

 

 

 

 

 

 

 

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 June 28,
2006, among International Business Machines Corporation, the Subsidiary
Borrowers parties thereto, the Lenders parties thereto, JPMorgan Chase Bank,
N.A., as Administrative Agent, and Citibank, N.A., as Syndication Agent (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.

(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).

 

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

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:

 

 

 

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

(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 June 28, 2006 (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 Citibank, N.A., as Syndication Agent, (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.

 

1

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

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 June 28, 2006 (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 Citibank, N.A., as
Syndication Agent, 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 June 28, 2006

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 June 28, 2006, 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 June 28, 2006

 

 

1

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

                                                                                                                                                                                                               

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 June 28, 2006 (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
Citibank, N.A., as Syndication Agent, (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 respecti  ve
defined meanings herein.

Name of Subsidiary Borrower:

 

 

 

 

 

By:

 

 

 

Title:

 

 

Dated as of June 28, 2006

 

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

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 June 28, 2006 (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 Citibank, N.A., as
Syndication Agent.

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(b) 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 June 28, 2006 (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 Citibank, N.A., as Syndication Agent.

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.

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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

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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 June 28, 2006 (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 Citibank, N.A., as Syndication
Agent. 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 June       , 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:

 

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

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