EXHIBIT 10.3

Accelerated Share Repurchase
Schedule of Standard Terms and Conditions (this “Schedule”)

SECTION 1. Cover Letter.  Reference is hereby made to the Cover Letter for
Accelerated Share Repurchase to which this Schedule is attached as Annex I (the
“Cover Letter” and, together with this Schedule, the “Agreement”), between IBM
International Group B.V., a Netherlands limited liability company with its
corporate seat in Amsterdam (the “Company”) and the other party thereto
(“Seller”), dated May 25, 2007, pursuant to which Seller will sell to the
Company, and the Company will purchase from Seller for settlement on the
Purchase Date, the Initial Shares of capital stock (the “Common Stock”), par
value $0.20 per share, of International Business Machines Corporation, a New
York corporation (“IBM”) at the Purchase Price.

SECTION 2.  Definitions. 

As used in this Schedule, the following terms shall have the following meanings:

“Agreement” has the meaning specified in Section 1.

“Average Purchase Price” means the arithmetic average of the Daily Average
Prices for all Trading Days during the Averaging Period.

“Averaging Period” has the meaning specified in the Cover Letter.

“Calculation Agent” has the meaning specified in the Cover Letter.

“Common Stock” has the meaning specified in Section 1.

“Company” has the meaning specified in Section 1.

“Company Election Notice” has the meaning specified in Section 5(a).

“Cover Letter” has the meaning specified in Section 1.

“Daily Average Price” means, (i) for any Trading Day in the Averaging Period,
the Reported VWAP for such Trading Day minus the Discount to VWAP or (ii) for
any Trading Day in the Valuation Period, the Reported VWAP for such Trading Day.

“Designee” has the meaning specified in Section 14.

“Discount to VWAP” has the meaning specified in the Cover Letter.

“EDCP Swaps” means the swaps set forth in Appendix A hereto.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Extraordinary Dividend” has the meaning specified in Section 7(c).

“Federal Funds Rate” means, for any day, the rate on such day for Federal Funds,
as published by Bloomberg and found by pressing the following letters “FEDSOPEN”
followed by pressing the <Index> key and pressing the following letters “HP”
followed by pressing the <Go>

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key; provided that if any such day is not a New York Banking Day, the Federal
Funds Rate for such day shall be the Federal Funds Rate for the immediately
preceding New York Banking Day.

“IBM” has the meaning specified in Section 1.

“IBM Entity” means IBM, the Company and each other subsidiary of IBM.

“Initial Shares” has the meaning specified in the Cover Letter.

“Internal Equity Transaction” means any transaction between any IBM Entities
relating to the Common Stock, including without limitation derivatives such as
equity hedges; provided that such transaction does not include or result in,
directly or indirectly, the purchase or sale of Common Stock in the public
market.

“ISDA Definitions” means the 2002 ISDA Equity Derivatives Definitions, as
published by the International Swaps and Derivatives Association, Inc.  For
purposes of all references to the ISDA Definitions, the Issuer is IBM.

“Make-Whole Payment Shares” has the meaning specified in Section 5(c).

“Maximum Deliverable Number” means the number of Initial Shares, subject to
adjustment pursuant to Section 7(d).

“Merger Event” has the meaning specified in the ISDA Definitions.  For purposes
of the ISDA Definitions, the Shares are shares of Common Stock, the Issuer is
IBM, the Merger Date shall be deemed to be the Announcement Date and the final
Valuation Date (each as defined in the ISDA Definitions) shall be deemed to be
the scheduled last day of the Averaging Period.

“Moody’s” has the meaning specified in Section 9.

“New York Banking Day” means any day except for a Saturday, Sunday or a day on
which the Federal Reserve Bank of New York is closed.

“NYSE” means the New York Stock Exchange or any successor.

“Payment Shares” means Registered Payment Shares, Restricted Payment Shares or
Make-Whole Payment Shares.

“Potential Adjustment Event” has the meaning specified in the ISDA Definitions;
provided that clauses (iii) and (vii) of such definition are deleted.

“Private Placement Agreement” has the meaning specified in Section 6(b)(iii).

“Prospectus” has the meaning specified in Section 6(a)(i).

“Purchase Completion Date” means the last day of the Averaging Period.

“Purchase Date” has the meaning specified in the Cover Letter.

“Purchase Price” has the meaning specified in the Cover Letter.

“Refund Shares” has the meaning specified in Section 5(a)(i)(A).

“Registered Payment Shares” has the meaning specified in Section 5(a)(ii).

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“Registered Share Daily Average Price” means, for any Trading Day, the New York
dollar volume weighted average price per share of Common Stock for that Trading
Day as reported on Bloomberg Page “IBM.N <Equity> AQR” (or any successor
thereto), or, in the event such price is not so reported on such Trading Day for
any reason, as reasonably determined by the Calculation Agent; provided that, in
the event the Calculation Agent determines pursuant to “Trading Day” below that
a Trading Day during the Valuation Period is a Trading Day only in part, the
Calculation Agent shall determine the Registered Share Daily Average Price for
such partial Trading Day based on transactions in the Common Stock on such
partial Trading Day effected from the opening of trading on the NYSE until the
occurrence of the relevant disruption pursuant to (ii) or (iii) of the
definition of “Trading Day” and during the period from the end of the relevant
disruption to the scheduled close of trading on the NYSE, and shall adjust any
Valuation Fraction correspondingly.

“Registration Statement” has the meaning specified in Section 6(a)(i).

“Regulation M” means Regulation M under the Exchange Act.

“Remaining Scheduled Days” means the scheduled number of Trading Days remaining
in the Averaging Period or the Valuation Period as of the time of any suspension
of the Averaging Period or the Valuation Period, as the case may be.

“Reported VWAP” means, for any Trading Day, the New York Rule 10b-18 dollar
volume weighted average price per share of Common Stock for that Trading Day as
reported on Bloomberg Page “IBM.N <Equity> AQR SEC” (or any successor thereto),
or, in the event such price is not so reported on such Trading Day for any
reason, as reasonably determined by the Calculation Agent; provided that, in the
event the Calculation Agent determines pursuant to “Trading Day” below that a
Trading Day during the Averaging Period or Valuation Period is a Trading Day
only in part, the Calculation Agent shall determine the Reported VWAP for such
partial Trading Day based on Rule 10b-18 eligible transactions in the Common
Stock on such partial Trading Day effected from the opening of trading on the
NYSE until the occurrence of the relevant disruption pursuant to (ii) or (iii)
of the definition of “Trading Day” and during the period from the end of the
relevant disruption to, but excluding, the last ten minutes prior to the
scheduled close of trading on the NYSE, and, if such partial Trading Day is
during the Averaging Period, shall base the Average Purchase Price on an
appropriately weighted average instead of the arithmetic average or, if such
partial Trading Day is during the Valuation Period, shall adjust any Valuation
Fraction correspondingly.

“Repurchase Cost” means the product of (i) the Average Purchase Price multiplied
by (ii) the number of Initial Shares.

“Requirements” has the meaning specified in Section 3(c).

“Restricted Contact Personnel” has the meaning specified in the Cover Letter.

“Restricted Payment Shares” has the meaning specified in Section 5(a)(ii).

“Restricted Share Amount” means the quotient of (i) the absolute value of the
Settlement Amount divided by (ii) the Restricted Share Value of a Restricted
Payment Share.

“Restricted Share Value” means, with respect to any Restricted Payment Shares or
Make-Whole Payment Shares, 95% of the value thereof per share to the Seller,
determined by the Calculation Agent by commercially reasonable means.

“Rule 10b-18” means Rule 10b-18 under the Exchange Act.

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“S&P” has the meaning specified in Section 9.

“Securities Act” means the Securities Act of 1933, as amended.

“Seller” has the meaning specified in Section 1.

“Seller’s Broker-Dealer Entity” means the entity, if any, specified as such in
the Cover Letter.

“Settlement Amount” means an amount equal to the Purchase Price minus the
Repurchase Cost.

“Settlement Balance” has the meaning specified in Section 5(c).

“Settlement Day” means any day that is not a Saturday, a Sunday or a day on
which banking institutions or trust companies in The City of New York are
authorized or obligated by law or executive order to close.  A Settlement Day
“corresponds” to a Trading Day (including, without limitation, the Purchase
Completion Date) if it is the day for settlement of regular way transactions for
equity securities entered into on the NYSE on that Trading Day.

“Share Amount” means, for any Trading Day, the quotient of (i) the product of
(A) the Valuation Fraction multiplied by (B) the absolute value of the
Settlement Amount, divided by (ii) 100% of the Daily Average Price for that
Trading Day, in the case of Refund Shares pursuant to Section 5(a)(i)(A), or 97%
of the Registered Share Daily Average Price for that Trading Day, in the case of
Registered Payment Shares pursuant to Section 5(a)(ii)(A).

“Share Settlement” means any settlement pursuant to Section 5(a)(i)(A), Section
5(a)(ii)(A) or Section 5(a)(ii)(B).

“Tender Offer” has the meaning specified in the ISDA Definitions; provided,
however, that the reference to “10%” in the definition of such term is replaced
by “50%”.

“Trading Day” means any day (i) other than a Saturday, a Sunday or a day on
which the NYSE is not open for business, (ii) during which trading of any equity
securities of IBM on the NYSE has not been suspended and (iii) during which
there has not been, in the Calculation Agent’s judgment, a material limitation
in the trading of Common Stock; provided that, notwithstanding anything to the
contrary in the Agreement, if any of the events enumerated in (ii) or (iii)
above occurs during the Averaging Period or the Valuation Period, the
Calculation Agent shall, if appropriate in light of the time or times during the
regular trading day that such event occurred and was continuing, either
determine that such date is a Trading Day only in part, in which case the
Calculation Agent shall make such adjustments as provided for under “Reported
VWAP” or “Registered Share Daily Average Price” above, or determine that such
date is not a Trading Day.  If the Calculation Agent determines that such date
is not a Trading Day and (a) such date falls during the Averaging Period and (x)
the Calculation Agent has determined that two or more previously scheduled
Trading Days during the Averaging Period were not Trading Days or (y) such date
falls after the 10th scheduled Trading Day prior to the scheduled end of the
Averaging Period or (b) such date falls during the Valuation Period, then the
Calculation Agent shall extend the Averaging Period or Valuation Period, as the
case may be, by one additional Trading Day.  The Seller shall notify the Company
of any such extension as soon as reasonably practicable, but in no event later
than the date that would have been the scheduled last Trading Day of the
Averaging Period or Valuation Period, as applicable, prior to such extension. 
For the avoidance of doubt, if the Seller suspends the Averaging Period or the
Valuation Period for an entire day pursuant to Section 3(c), such day shall not
be considered a Trading Day.

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“Transfer Agreement” has the meaning specified in Section 6(a)(iv).

“Valuation Fraction” means a fraction, the numerator of which is one and the
denominator of which is the number of Trading Days in the Valuation Period.

“Valuation Period” means, in the case of any Share Settlement, the period
commencing on the Trading Day immediately following the Purchase Completion Date
and ending on the 11th  Trading Day following, but excluding, the Purchase
Completion Date; provided that, without limiting the generality of Section 3(c),
in the case of settlement pursuant to Section 5(a)(i)(A), if the Share Amount
for any Trading Day would exceed the number of shares of Common Stock that IBM
could have purchased on such Trading Day in compliance with the conditions set
forth in Rule 10b-18, then the Calculation Agent may extend the Valuation Period
in a manner intended to result in adjusted Share Amounts that do not exceed such
Rule 10b-18 compliant number of shares of Common Stock, and adjust any Share
Amounts as appropriate to reflect such extension. The Seller shall notify the
Company of any such extension as soon as reasonably practicable, but in no event
later than the date that would have been the last Trading Day of the Valuation
Period prior to such extension.  For the avoidance of doubt, if the Company
elects either to receive a cash payment pursuant to Section 5(a)(i)(B) or make a
cash payment pursuant to Section 5(a)(ii)(C), there will be no Valuation Period.

SECTION 3.  Seller Purchases. 

(a)        The Initial Shares may be sold short to the Company.  It is
understood that during the Averaging Period the Seller may purchase shares of
Common Stock in connection with the Agreement, which shares may be used to cover
all or a portion of such short sale, and if the Settlement Amount is greater
than zero, during the Valuation Period the Seller will purchase shares of Common
Stock to fulfill its obligations to deliver Refund Shares to the Company
pursuant to Section 5 in the event of a Share Settlement.  Such purchases will
be conducted independently of the Company. The timing of such purchases by the
Seller, the number of shares purchased by the Seller on any day, the price paid
per share of Common Stock pursuant to such purchases and the manner in which
such purchases are made, including without limitation whether such purchases are
made on any securities exchange or privately, shall be within the absolute
discretion of the Seller; provided, however, that the Seller may only conduct
purchases pursuant to this Section 3(a) during the Averaging Period and the
Valuation Period, respectively.  The Seller shall (i) use good faith efforts to
effect such purchases of Common Stock in a manner that would, if the Seller were
IBM or an affiliated purchaser of IBM, be subject to the safe harbor provided by
Rule 10b-18(b) (including, without limitation, the once-a-week block exception
contained in Rule 10b-18(b)(4)) or (ii) otherwise effect such purchases in a
manner that the Seller, in its discretion, believes is in compliance with
applicable requirements; it being understood that the Seller shall not be
responsible for reporting errors of the NYSE or third party reporting systems or
other circumstances beyond the Seller’s control.  

(b)        It is the intent of the parties that this transaction comply with the
requirements of Rule 10b5-1(c)(1)(i)(B) of the Exchange Act, and the parties
agree that the Agreement shall be interpreted to comply with the requirements of
Rule 10b5-1(c), and neither the Seller nor the Company shall take any action
that results in this transaction not so complying with such requirements;
provided, however, that nothing herein shall be interpreted as making Seller
responsible for any failure by the Company to comply with the requirements of
Rule 10b5-1(c).  Without limiting the generality of the preceding sentence, the
Company acknowledges and agrees that (A) the Company does not have, and shall
not attempt to exercise, any influence over how, when or whether the Seller
effects any purchases of Common Stock in connection with the Agreement, (B) from
and including the date of the Agreement to and including the last Settlement Day
under the Agreement, neither the Company nor its officers or employees shall,
directly or indirectly, communicate any material nonpublic information regarding
IBM or the Common Stock

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to, or otherwise influence the trading decisions of, any Restricted Contact
Personnel, (C) the Company is entering into the Agreement and the transactions
contemplated by the Agreement in good faith and not as part of a plan or scheme
to evade compliance with federal securities laws including, without limitation,
Rule 10b-5 promulgated under the Exchange Act and (D) the Company will not alter
or deviate from the Agreement or enter into or alter a corresponding hedging
transaction with respect to the Common Stock and will otherwise comply with Rule
10b5-1(c)(1)(i)(C).

(c)        In the event that the Seller, in its discretion, determines that it
is appropriate with regard to any legal, regulatory or self-regulatory
requirements or related policies and procedures (whether or not such
requirements, policies or procedures are imposed by law or have been voluntarily
adopted by the Seller, and including without limitation Rule 10b-18, Rule 10b-5,
Regulation 13D-G and Regulation 14E under the Exchange Act, and Regulation M,
collectively, the “Requirements”), for the Seller to refrain from purchasing
Common Stock or to purchase fewer than the number of shares of Common Stock that
the Seller would otherwise purchase on any Trading Day during the Averaging
Period or, if the Settlement Amount is greater than zero, the Valuation Period,
then the Seller may, in its discretion, elect that the Averaging Period or the
Valuation Period, as the case may be, be extended or suspended and extended as
appropriate with regard to any Requirements.  If the Seller extends the
Averaging Period or the Valuation Period without suspending such period, the
Seller shall as soon as reasonably practicable, and in no event later than 4:30
p.m., New York City time, on the scheduled Trading Day immediately preceding the
date that would have been the last Trading Day of the Averaging Period or
Valuation Period without extension, notify the Company of such extension and of
the new scheduled last Trading Day of the Averaging Period or Valuation Period,
as applicable.  If the Seller suspends the Averaging Period or the Valuation
Period, the Seller shall notify the Company no later than 4:30 p.m., New York
City time, on the date of such suspension.  At the end of such suspension the
Seller shall determine the number of Trading Days remaining in the Averaging
Period or the Valuation Period, as the case may be, which number shall not
exceed the Remaining Scheduled Days as of the time of such suspension. The
Seller shall notify the Company as soon as reasonably practicable, but in no
event later than the Trading Date immediately following the end of such
suspension, of the new scheduled last Trading Day of the Averaging Period or
Valuation Period, as applicable.

(d)        The Company agrees that neither the Company nor any of its affiliates
or agents shall take any action that would cause Regulation M to be applicable
to any purchases of Common Stock, or any security for which the Common Stock is
a reference security (as defined in Regulation M), by IBM or any of its
affiliated purchasers (as defined in Regulation M) during the Averaging Period
or, if the Settlement Amount is greater than zero, the Valuation Period, unless
the Company or its affiliate has provided written notice to Seller of a planned
“distribution” (as defined in Regulation M) of Common Stock or any security for
which Common Stock is a reference security not later than the opening of trading
on the first day of the relevant “restricted period” (as defined in Regulation
M).  The Company acknowledges that any such notice may cause the Averaging
Period or the Valuation Period, as the case may be, to be suspended pursuant to
Section 3(c).  Accordingly, the Company acknowledges that its or such
affiliate’s actions in relation to any such announcement or transaction must
comply with the standards set forth in Section 3(b) and represents that it will
not be aware of material non-public information at the time it provides such
notice to Seller.

(e)        The Company acknowledges that any public announcement (as defined in
Rule 165(f) under the Securities Act) of any merger, acquisition, or similar
transaction involving a recapitalization relating to IBM (other than any such
transaction in which the consideration consists solely of cash and there is no
valuation period) may cause the Averaging Period or the Valuation Period, as the
case may be, to be suspended pursuant to Section 3(c).  Accordingly, the Company
acknowledges that its or any affiliate’s actions in relation to any such
announcement or

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transaction must comply with the standards set forth in Section 3(b) and
represents that it will not be aware of material non-public information on the
date of any such announcement. 

SECTION 4.  Company Purchases. 

On any Trading Day prior to the last Settlement Day under the Agreement on which
the Seller is permitted to purchase shares of Common Stock pursuant to the
Agreement, without the prior written consent of the Seller, the Company shall
not directly or indirectly (including, without limitation, by means of a
cash-settled or other derivative instrument) purchase, offer to purchase, place
any bid or limit order that would effect a purchase of, or commence any tender
offer relating to, any shares of Common Stock (or an equivalent interest,
including a unit of beneficial interest in a trust or limited partnership or a
depository share) or any security convertible into or exchangeable for shares of
Common Stock except as contemplated in Section 17 below.  For purposes of
clarification, Seller acknowledges and agrees that purchases effected for an
issuer “plan” by an “agent independent of the issuer” (each as defined in Rule
10b-18) shall not be prohibited by the Agreement.

SECTION 5.  Settlement. 

(a)        After the Purchase Completion Date,

(i)                  if the Settlement Amount is greater than zero and the
Company has elected for the Seller to:

(A)               deliver Refund Shares, the Seller shall transfer to the
Company, for no additional consideration, a number of shares of Common Stock
equal to the sum of the Share Amounts for each of the Trading Days in the
Valuation Period (the “Refund Shares”) in the manner provided in Section 5(b),
or

(B)                make a cash payment, the Seller shall make a cash payment to
the Company in immediately available funds in an amount equal to the Settlement
Amount on the third Trading Day following the Purchase Completion Date, and

(ii)                 if the Settlement Amount is less than zero and the Company
has elected to:

(A)               deliver Registered Payment Shares, the Company shall transfer
to the Seller, for no additional consideration, a number of shares of Common
Stock, which will be registered for resale in the manner set forth in Section
6(a), equal to the sum of the Share Amounts for each of the Trading Days in the
Valuation Period (the “Registered Payment Shares”) in the manner provided in
Section 5(b),

(B)                deliver Restricted Payment Shares, the Company shall transfer
to the Seller, for no additional consideration, a number of shares of Common
Stock, which will not be registered for resale, equal to the Restricted Share
Amount (the “Restricted Payment Shares”) on the Settlement Day corresponding to
the Purchase Completion Date in the manner provided in Section 5(b), and any
Make-Whole Payment Shares as provided in Section 5(c), or

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(C)                make a cash payment, the Company shall make a cash payment to
the Seller in immediately available funds in an amount equal to the absolute
value of the Settlement Amount on the third Trading Day following the Purchase
Completion Date.

No later than 8:00 p.m. New York City time on the last day of the Averaging
Period, the Company shall specify in a notice to Seller substantially in the
form set forth in Appendix B hereto (the “Company Election Notice”) the
Company’s election, if the Settlement Amount is greater than zero, for the
Seller to deliver Refund Shares or make a cash payment or, if the Settlement
Amount is less than zero, for the Company to deliver Registered Payment Shares,
to deliver Restricted Payment Shares or to make a cash payment.  Once made, such
election will be irrevocable.  If the Company fails to make such an election by
the election deadline, the Company shall have been deemed to have elected to
receive or deliver, as the case may be, a cash payment.  If the Company elects
to deliver Registered Payment Shares or Restricted Payment Shares pursuant to
this Section 5(a)(ii), the Calculation Agent shall have the right to adjust the
Settlement Amount to compensate the Seller for its cost of funds at the Federal
Funds Rate during the Valuation Period.

(b)      Delivery of Refund Shares, Registered Payment Shares or Restricted
Payment Shares shall be made as follows:

(i)                  if Refund Shares are to be transferred to the Company, the
Seller shall deliver the shares to the Company on the third Trading Day
following the last day of the Valuation Period,

(ii)                 if Registered Payment Shares are to be transferred to the
Seller, on each Settlement Day corresponding to each Trading Day in the
Valuation Period, the Company shall deliver to the Seller a number of Registered
Payment Shares equal to the Share Amount for such Trading Day, and if the Share
Amount for any Trading Day during the Valuation Period includes fractional
shares, in lieu of delivering the fractional shares, the Company or the Seller
(as the case may be) shall deliver cash to the Seller or the Company, as the
case may be, in an amount based on the closing price of the Common Stock on the
NYSE on that Trading Day, and

(iii)                if Restricted Payment Shares are to be transferred to the
Seller, on the Settlement Day corresponding to the Purchase Completion Date, the
Company shall deliver to the Seller a number of Restricted Payment Shares equal
to the Restricted Share Amount, and the Company shall deliver any additional
Make-Whole Payment Shares as provided in Section 5(c).

(c)      If Restricted Payment Shares are delivered in accordance with Section
5(b)(iii), on the Purchase Completion Date a balance (the “Settlement Balance”)
shall be established with an initial balance equal to the absolute value of the
Settlement Amount.  Following the delivery of Restricted Payment Shares or any
Make-Whole Payment Shares, Seller shall sell all such Restricted Payment Shares
or Make-Whole Payment Shares in a commercially reasonable manner during the
Valuation Period.  At the end of each Trading Day upon which sales have been
made, the Settlement Balance shall be reduced by an amount equal to 95% of the
aggregate proceeds received by Seller upon the sale of such Restricted Payment
Shares or Make-Whole Payment Shares.  If, on any Trading Day, all Restricted
Payment Shares and Make-Whole Payment Shares have been sold and the Settlement
Balance has not been reduced to zero, the Company shall (i) deliver to Seller or
as directed by Seller on the Settlement Day corresponding to such Trading Day an
additional number of Shares (the “Make-Whole Payment Shares”) equal to (x) the
Settlement Balance as of such Trading Day divided by (y) the Restricted Share
Value of the Make-Whole

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Payment Shares or (ii) promptly deliver to Seller cash in an amount equal to the
then remaining Settlement Balance.  This provision shall be applied successively
until either the Settlement Balance is reduced to zero or the aggregate number
of Restricted Payment Shares and Make-Whole Payment Shares equals the Maximum
Deliverable Number.  If the Settlement Balance has been reduced to zero prior to
the sale of all Restricted Payment Shares and Make-Whole Payment Shares that
have been delivered to the Seller, the Seller shall return any unsold Restricted
Payment Shares and Make-Whole Payment Shares to the Company.

SECTION 6.  Payment Shares. 

(a)      The Company may only deliver Registered Payment Shares pursuant to
Section 5(a)(ii)(A) subject to satisfaction of the following conditions:

(i)                  a registration statement covering public resale of the
Registered Payment Shares by the Seller and complying with the requirements of
the Securities Act (the “Registration Statement”) shall have been filed with the
Securities and Exchange Commission under the Securities Act and shall have
become effective on or prior to the Purchase Completion Date, and no stop order
shall be in effect with respect to the Registration Statement; a printed
prospectus relating to the Registered Payment Shares (including any prospectus
supplement thereto, the “Prospectus”) shall have been delivered to the Seller,
in such quantities as the Seller shall reasonably have requested, on or prior to
the Purchase Completion Date;

(ii)                 the form and content of the Registration Statement and the
Prospectus (including, without limitation, any sections describing the plan of
distribution) shall be satisfactory to the Seller;

(iii)                the Seller and its agents, including the Seller’s
Broker-Dealer Entity, if any, shall have been afforded a commercially reasonable
opportunity to conduct a due diligence investigation with respect to IBM
customary in scope for underwritten offerings of equity securities of comparable
issuers and the results of such investigation are satisfactory to the Seller, in
its discretion; and

(iv)                as of the Purchase Completion Date, an agreement (the
“Transfer Agreement”) shall have been entered into among the Seller, the Company
and IBM in connection with the public resale of the Registered Payment Shares by
the Seller substantially similar to underwriting agreements customary for
underwritten offerings of equity securities of comparable issuers, in form and
substance commercially reasonably satisfactory to the Seller, which Transfer
Agreement shall include, without limitation, provisions substantially similar to
those contained in such underwriting agreements relating to the indemnification
of, and contribution in connection with the liability of, the Seller and its
affiliates.

If the Settlement Amount is less than zero and the Company has elected to
deliver Registered Payment Shares and any of the above conditions is not
satisfied as of the Purchase Completion Date, the Company shall, in lieu of
delivery of Registered Payment Shares, either (x) make a cash payment to the
Seller in immediately available funds in an amount equal to the absolute value
of the Settlement Amount on the second Trading Day following the Purchase
Completion Date and shall reimburse the Seller for all reasonable out-of-pocket
expenses it has incurred in connection with due diligence and otherwise in
connection with the anticipated delivery of the Registered Payment Shares,
including, without limitation, the reasonable fees and expenses of outside
counsel to the Seller incurred in connection thereof or (y) deliver Restricted
Payment Shares pursuant to Section 5(a)(ii)(B) and Make-Whole Payment Shares
pursuant to Section 5(c), in which case the Calculation Agent may make
appropriate adjustments to the settlement terms to compensate the

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Seller for all reasonable out-of-pocket expenses it has incurred in connection
with due diligence and otherwise in connection with the anticipated delivery of
the Registered Payment Shares, including, without limitation, the reasonable
fees and expenses of outside counsel to the Seller incurred in connection
thereof.

(b)      If the Company elects to deliver Restricted Payment Shares pursuant to
Section 5(a)(ii)(B) and Make-Whole Payment Shares pursuant to Section 5(c),
then:

(i)                  all Restricted Payment Shares and Make-Whole Payment Shares
shall be delivered to the Seller (or any affiliate of the Seller designated by
the Seller) pursuant to the exemption from the registration requirements of the
Securities Act provided by Section 4(2) thereof;

(ii)                 The Seller’s Broker-Dealer Entity, if any, the Seller and
any potential purchaser of any such shares from the Seller (or any affiliate of
the Seller designated by the Seller) identified by the Seller’s Broker-Dealer
Entity, if any, or the Seller shall be afforded a commercially reasonable
opportunity to conduct a due diligence investigation with respect to IBM
customary in scope for private placements of equity securities and the results
of such investigation are satisfactory to such person, in its discretion; and

(iii)                the Company and IBM shall enter into an agreement (a
“Private Placement Agreement”) with the Seller (or any affiliate of the Seller
designated by the Seller) in connection with the private placement of such
shares by the Company to the Seller (or any such affiliate) and the private
resale of such shares by the Seller (or any such affiliate), substantially
similar to private placement purchase agreements customary for private
placements of equity securities of comparable issuers, in form and substance
commercially reasonably satisfactory to the Seller or such affiliate, which
Private Placement Agreement shall include, without limitation, provisions
substantially similar to those contained in such private placement purchase
agreements relating to the indemnification of, and contribution in connection
with the liability of, the Seller and its affiliates, and shall provide for the
payment by the Company of all reasonable out-of-pocket expenses in connection
with such resale, including all fees and expenses of counsel for the Seller, and
shall contain representations, warranties and agreements of IBM and the Company
reasonably necessary or advisable to establish and maintain the availability of
an exemption from the registration requirements of the Securities Act for such
resales.

For the avoidance of doubt nothing in this Section 6(b) shall be read as
requiring the Company to deliver cash in respect of the settlement of the
transactions contemplated by the Agreement.

(c)      If the Company elects to deliver Restricted Payment Shares pursuant to
Section 5(a)(ii)(B) above, the Company shall not take or cause to be taken any
action that would make unavailable either (i) the exemption set forth in Section
4(2) of the Securities Act for the sale of any Restricted Payment Shares or
Make-Whole Payment Shares by the Company to the Seller or (ii) an exemption from
the registration requirements of the Securities Act reasonably acceptable to the
Seller for resales of Restricted Payment Shares and Make-Whole Payment Shares by
the Seller.

(d)      Notwithstanding the provisions of Section 5(a) above, if the Company
has elected to deliver any Payment Shares hereunder, the Company shall not be
required to deliver more than the Maximum Deliverable Number of shares of Common
Stock as Payment Shares hereunder.

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SECTION 7.  Adjustment of Terms. 

(a)      In the event (i) of any of the following corporate events involving IBM
or the Common Stock: bankruptcy, insolvency, reorganization pursuant to Title 11
of the United States Code, Merger Event, Tender Offer, issuance of any
securities convertible or exchangeable into share of Common Stock or Potential
Adjustment Event or the announcement of any such corporate event, (ii) the
Seller determines, in its reasonable discretion, that it is unable or it is
impracticable to establish, re-establish, substitute or maintain a hedge of its
position in respect of the transactions contemplated by the Agreement or (iii)
the Seller determines, in its reasonable discretion, that it is unable to borrow
Common Stock at a rebate rate greater than or equal to the Federal Funds Rate
minus 35 basis points, then, in each case, the number of Trading Days in the
Averaging Period, any Daily Average Price and the Settlement Amount shall be
subject to adjustment by the Calculation Agent as in the exercise of its good
faith judgment it deems appropriate under the circumstances.  For the avoidance
of doubt, no such adjustment shall result in an obligation of the Company to
make a cash payment to Seller, it being understood that such adjustment may be
reflected in the cash amount payable at the Company’s election pursuant to
Section 5(a)(ii)(C).

(b)      Notwithstanding the authority provided to the Calculation Agent in
subsection (a) of this Section 7, in the event of a corporate event (such as
certain reorganizations, mergers, or other similar events) in which all holders
of Common Stock may receive consideration other than the common equity
securities of the continuing or surviving entity, the adjustments referred to in
such subsection shall permit the Company to satisfy its settlement obligations
hereunder by delivering the consideration received by holders of Common Stock
upon such corporate event, in such proportions as in the exercise of its good
faith judgment the Calculation Agent deems appropriate under the circumstances.

(c)      In the event that IBM declares or pays any Extraordinary Dividend, the
Seller shall have the right in its discretion to accelerate the settlement of
the transactions contemplated by the Agreement by designating any date on or
after the date of the declaration of such Extraordinary Dividend as the
“Acceleration Date”, in which event the last day of the Averaging Period shall
be accelerated to the Acceleration Date (regardless of whether the Averaging
Period Start Date has occurred prior to the Acceleration Date), and the Average
Purchase Price shall be determined as if the Daily Average Price for all Trading
Days that were, but for such acceleration, scheduled to occur during the
Averaging Period on or after the Acceleration Date were the average per share
price obtained by the Calculation Agent from at least three experienced third
party market participants as the price at which such participant would offer to
sell to the Seller a block of shares of Common Stock (with such legal or other
restrictions as the Seller may in its reasonable judgment impose on such
participant relating to the acquisition of such block or, if such block may be
sold short to the Seller, the covering of such participant’s resulting short
position) equal in number to the Seller’s theoretical net short position in
relation to the Agreement and the transactions contemplated thereby as of the
Acceleration Date, as determined by the Calculation Agent.  “Extraordinary
Dividend” means any dividend on the Common Stock with an ex-dividend date that
occurs from and including the date of the Cover Letter through and including the
last day of the Averaging Period, other than an ordinary cash dividend of $0.40
per share with an ex-dividend date on August 8, 2007, November 7, 2007 or
February 6, 2008.

(d)      In the event that the Company effects a share split of the Common
Stock, the Maximum Deliverable Number shall be adjusted to equal (i) the Maximum
Deliverable Number prior to such adjustment multiplied by (ii) (x) the number of
shares of Common Stock outstanding immediately after the effective date of such
share split divided by (y) the number of shares of Common Stock outstanding
immediately prior to the effective date of such share split; provided that in no
event shall the Maximum Deliverable Number exceed three times the number of
Initial Shares.

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SECTION 8.  Governing Law; Waiver of Jury Trial. 

(a)      THE AGREEMENT SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
 THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE
FEDERAL AND STATE COURTS LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW
YORK IN ANY SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THE AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED THEREBY.

(b)      EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY
JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE
AGREEMENT OR ANY TRANSACTION CONTEMPLATED THEREBY.

(c)      IBM International Group B.V. hereby appoints IBM as its agent for
service of process in any proceeding in any of the Federal and State courts
located in the Borough of Manhattan in connection with the Agreement.

SECTION 9.  Assignment and Transfer. 

The rights and duties under the Agreement may not be assigned or transferred by
the Company or the Seller without the prior written consent of the other party;
provided that the Seller may assign any of such rights or duties hereunder to
any affiliate of the Seller with a rating or whose obligations are guaranteed by
an affiliate with a rating for its long term, unsecured and unsubordinated
indebtedness of A+ or better by Standard and Poor’s Rating Group, Inc. or its
successor (“S&P”) or A1 or better by Moody’s Investor Service, Inc. or its
successor (“Moody’s”) or, if either S&P or Moody’s ceases to rate such debt, at
least an equivalent rating or better by a substitute rating agency mutually
agreed to by the Company and the Seller.

SECTION 10.  No Condition of Confidentiality. 

The Seller and the Company hereby acknowledge and agree that the Seller has
authorized the Company to disclose the Agreement and the transactions
contemplated thereby to any and all persons, and there are no express or implied
agreements, arrangements or understandings to the contrary, and the Seller
hereby waives any and all claims to any proprietary rights with respect to the
Agreement and the transactions contemplated thereby, and authorizes the Company
to use any information that the Company receives or has received with respect to
the Agreement and the transactions contemplated thereby in any manner.

SECTION 11.  Calculations. 

The Calculation Agent shall make all calculations in respect of the Agreement
and shall promptly provide written notice of the same to the Company.

SECTION 12.  Acknowledgments, Representations, Warranties and Agreements. 

(a)        The Company acknowledges and agrees that it is not relying, and has
not relied, upon the Seller or any affiliate of the Seller with respect to the
legal, accounting, tax or other implications of the Agreement and that it has
conducted its own analyses of the legal, accounting, tax and other implications
hereof.  The Company further acknowledges and agrees that neither the Seller nor
any affiliate of the Seller has acted as its advisor in any capacity in
connection with the Agreement or the transactions contemplated thereby.  The
Company is entering into the Agreement with a full understanding of all of the
terms and risks hereof (economic and otherwise), has adequate expertise in
financial matters to evaluate those terms and risks and is capable of

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assuming (financially and otherwise) those risks. Without limiting the
generality of the foregoing, the Company acknowledges that the Seller is not
making any representations or warranties with respect to the treatment of the
transactions contemplated by the Agreement under FASB Statements 133, as
amended, or 150, EITF Issue No. 00-19 (or any successor issue statements) or
under FASB’s Liabilities & Equity Project.

(b)      The Company represents and warrants to Seller that (i) it has all
corporate power and authority to enter into the Agreement and to consummate the
transactions contemplated thereby and (ii) the Agreement has been duly
authorized and validly executed and delivered by the Company and constitutes a
valid and legally binding obligation of the Company, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally and to general equitable principles.

(c)      The Company agrees that if Payment Shares are delivered pursuant to
Section 5(a)(ii) or Section 5(c), such Payment Shares, when delivered, shall
have been duly authorized and shall be duly and validly issued, fully paid and
nonassessable and free of preemptive or similar rights, and such delivery shall
pass title thereto free and clear of any liens or encumbrances.

(d)      The Company represents and warrants to the Seller that it is not
entering into the Agreement to facilitate a distribution of the Common Stock (or
any security convertible into or exchangeable for Common Stock) or in connection
with a future issuance of securities.

(e)      The Company represents and warrants to the Seller that it is not
entering into the Agreement to create actual or apparent trading activity in the
Common Stock (or any security convertible into or exchangeable for Common Stock)
or to raise or depress or otherwise manipulate the price of the Common Stock (or
any security convertible into or exchangeable for Common Stock), in any case for
the purpose of inducing the purchase or sale of any such securities by others.

(f)       The Company represents and warrants to the Seller that the execution
and delivery by the Company of, and the compliance by the Company with all of
the provisions of, the Agreement and the consummation of the transactions
therein contemplated will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or any other agreement or instrument to which the
Company is a party or by which the Company is bound or to which any of the
property or assets of the Company is subject, nor will such action result in any
violation of the provisions of the constitutive documents of the Company or any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its properties.

(g)      The Company represents and warrants to the Seller that no consent,
approval, authorization, order, registration, qualification or filing of or with
any court or governmental agency or body having jurisdiction over the Company or
any of its properties is required for the execution and delivery by the Company
of, and the compliance by the Company with all the terms of, the Agreement or
the consummation by the Company of the transactions contemplated thereby.

(h)      The Company represents and warrants to the Seller as of the date of the
Agreement and agrees that, as of the date, if any, that the Company delivers a
Company Election Notice to Seller choosing Share Settlement, none of the Company
and its officers and directors is, or will be, as the case may be, aware of any
material nonpublic information regarding IBM or the Common Stock.

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(i)       The Company represents and warrants to the Seller that the Company is
not, and after giving effect to the transactions contemplated by the Agreement,
will not be, and “investment company” as such term is defined in the Investment
Company Act of 1940, as amended.

(j)       For the avoidance of doubt, the parties agree that the commissions
incorporated in the definitions of Restricted Share Amount and Restricted Share
Value and in Section 5(c) above are commercially reasonable fees for the
Seller’s or Seller’s Broker-Dealer Entity’s, as the case may be, activities in
connection with Settlement under Section 5.

SECTION 13.  Acknowledgments and Agreements With Respect To Hedging and Market
Activity. 

(a)      The Company acknowledges and agrees that, subject to Section 13(c):

(i)                  During the Averaging Period and, if applicable, the
Valuation Period, the Seller and its affiliates may buy or sell shares of Common
Stock or other securities or buy or sell options or futures contracts or enter
into swaps or other derivative securities in order to adjust its hedge position
with respect to the transactions contemplated by the Agreement;

(ii)                 The Seller and its affiliates also may be active in the
market for the Common Stock other than in connection with hedging activities in
relation to the transactions contemplated by the Agreement;

(iii)                The Seller shall make its own determination as to whether,
when or in what manner any hedging or market activities in IBM’s securities
shall be conducted and shall do so in a manner that it deems appropriate to
hedge its price and market risk with respect to the Daily Average Price and
Reported VWAP; and

(iv)               Any market activities of the Seller and its affiliates with
respect to the Common Stock may affect the market price and volatility of the
Common Stock, as well as the Daily Average Price and Reported VWAP, each in a
manner that may be adverse to the Company.

(b)      Each of the Company and the Seller agrees that Non-Reliance as set
forth in Section 13.1 of the ISDA Definitions, Agreements and Acknowledgments
Regarding Hedging Activities as set forth in Section 13.2 of the ISDA
Definitions and Additional Acknowledgments as set forth in Section 13.4 of the
ISDA Definitions shall be deemed to be Applicable to the transactions
contemplated by the Agreement as if the Agreement were a confirmation that was
governed by, and incorporated, such Sections of the ISDA Definitions.

(c)      Subject to Section 12(e), Seller represents and agrees that it is not
entering into the Agreement, and will not purchase shares of Common Stock in
connection with the Agreement during the Averaging Period or, if applicable, the
Valuation Period or otherwise, to create actual or apparent trading activity in
the Common Stock (or any security convertible into or exchangeable for Common
Stock) or to raise or depress or otherwise manipulate the price of Common Stock
(or any security convertible into or exchangeable for Common Stock), in any case
for the purpose of inducing the purchase or sale of any such securities by
others; it being understood that the Seller shall not be responsible for
reporting errors of the NYSE or third party reporting systems on which it may be
relying.

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SECTION 14.  Designation of Affiliate for Transactions in Common Stock. 

The Seller may designate any of its affiliates (the “Designee”) to deliver or
take delivery, as the case may be, and otherwise perform its obligations to
deliver or take delivery of, as the case may be, any shares of Common Stock in
respect of the transactions contemplated by the Agreement, and the Designee may
assume such obligations and the obligations of the Seller under the Agreement
with respect to such shares of Common Stock.  Such designation shall not relieve
the Seller of any of its obligations hereunder.  Notwithstanding the previous
sentence, if the Designee shall have indefeasibly performed the obligations of
the Seller hereunder, then the Seller shall be discharged of its obligations to
the Company to the extent of such performance.  In addition, the parties
acknowledge and agree that every time that the Seller is described in this
Schedule as buying, selling or otherwise transacting with third parties in the
Common Stock, such buying, selling or transacting may be conducted by the Seller
or one or more of its affiliates.

SECTION 15.  No Collateral or Setoff.

Notwithstanding any provision of the Agreement or any other agreement between
the parties to the contrary, the obligations of the parties hereunder are not
secured by any collateral.  Obligations under the Agreement shall not be set off
by either party against any other obligations of the other party or that other
party’s affiliate, whether arising under the Agreement, under any other
agreement between the parties hereto by operation of law or otherwise. 

SECTION 16.  Equity Rights. 

The Seller agrees that in the event of bankruptcy of the Company or IBM, the
Seller shall not have any rights or assert a claim in respect of the Agreement
and the transactions contemplated thereby that is senior in priority to the
rights and claims available to shareholders of Common Stock.

SECTION 17.  Other Derivatives.

Notwithstanding anything to the contrary contained herein, the Seller:

(i)                  acknowledges that it has been advised by the Company (A)
that the EDCP Swaps are currently outstanding and (B) that IBM Entities may have
entered into one or more Internal Equity Transactions;

(ii)                 agrees that the EDCP Swaps and any such Internal Equity
Transactions, the transactions contemplated thereby and the performance by any
IBM Entity of its obligations thereunder shall not constitute a breach of any
representation, warranty or agreement by the Company under the Agreement;

(iii)                acknowledges and agrees that the EDCP Swaps may be renewed,
extended or amended at the discretion of any IBM Entity during the Averaging
Period and the Valuation Period, if any, and without any notice to or consent of
the Seller, and such renewal, extension or amendment shall not constitute a
breach of any representation, warranty or agreement by the Company under the
Agreement; provided, however, that any such renewal, extension or amendment does
not include or result in, directly or indirectly, the purchase or sale of Common
Stock in the public market;

(iv)                acknowledges and agrees that any existing Internal Equity
Transactions may be renewed, extended or amended at the discretion of any IBM
Entity during the

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Averaging Period and the Valuation Period, if any, and without any notice to or
consent of such Seller, and such renewal, extension or amendment shall not
constitute a breach of any representation, warranty or agreement by the Company
under the Agreement; provided, however, that any such renewal, extension or
amendment does not include or result in, directly or indirectly, the purchase or
sale of Common Stock in the public market; and

(v)                acknowledges and agrees that nothing in the Agreement shall
prohibit the Company or any IBM Entity from entering into any Internal Equity
Transaction.

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APPENDIX A
[Exhibit Omitted]

APPENDIX B

IBM International Group B.V.
Johan Huizingalaan 765
1066 VH Amsterdam, the Netherlands

[     ], 200[ ]

[Seller]
[Address]
[Attn: [    ]]
[Phone]
[Fax]

Accelerated Share Repurchase
Company Election Notice

Reference is hereby made to the Cover Letter for Accelerated Share Repurchase
(the “Cover Letter” and, together with the Schedule of Standard Terms and
Conditions attached thereto, the “Agreement”) between IBM International Group
B.V., a Netherlands limited liability company with its corporate seat in
Amsterdam (the “Company”) and [Seller] (“Seller”), dated May 25, 2007. 
Capitalized terms used but not defined herein shall have the meaning assigned to
them in the Agreement.

This notice (this “Company Election Notice”) is a Company Election Notice under
the Agreement.

The Company hereby informs the Seller that, pursuant to Section 5(a) of the
Schedule, the Company makes the following election under such section: [the
Seller shall [deliver Refund Shares] [make a cash payment]](1) [the Company
shall [deliver Registered Payment Shares] [deliver Restricted Payment Shares]
[make a cash payment]](2).

 

IBM INTERNATIONAL GROUP

 

B.V.

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

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(1) Applicable choices for election if the Settlement Amount is greater than
zero.

(2) Applicable choices for election if the Settlement Amount is less than zero.

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