<PAGE>
                                                                    Exhibit 10.4

                                                           DRAFT: March 11, 2000

            INTERNATIONAL BUSINESS MACHINES CORPORATION, a corporation existing
            under the laws of the State of Delaware ("IBM")

                                      -and-

            3040696 NOVA SCOTIA COMPANY, an unlimited company incorporated under
            the laws of the Province of Nova Scotia ("Holdco")

                                     - and -

            IBM ACQUISITION INC., a corporation existing under the laws of
            Canada ("Corporation")

                                     - and -

            CIBC MELLON TRUST COMPANY, a trust company existing under the laws
            of Canada (the "Trustee")

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

                            EXCHANGE TRUST AGREEMENT

--------------------------------------------------------------------------------
<PAGE>

                                TABLE OF CONTENTS

                                                                           Page

ARTICLE 1
      DEFINITIONS AND INTERPRETATION.........................................2
      1.1   Definitions......................................................2
      1.2   Interpretation Not Affected by Headings, etc.....................5
      1.3   Number, Gender and Persons.......................................5
      1.4   Date for Any Action..............................................5
      1.5   Payments.........................................................5

ARTICLE 2
      TRUST..................................................................6
      2.1   Establishment of Trust...........................................6

ARTICLE 3
      STOCKHOLDER INFORMATION RIGHTS.........................................6
      3.1   Copies of Stockholder Information................................6
      3.2   Other Materials..................................................6
      3.3   Distribution of Written Materials................................7

ARTICLE 4
      EXCHANGE RIGHT.........................................................7
      4.1   Grant and Ownership of the Exchange Right........................7
      4.2   Legended Share Certificate.......................................8
      4.3   General Exercise of Exchange Right...............................8
      4.4   Purchase Price...................................................8
      4.5   Exercise Instructions............................................8
      4.6   Delivery of IBM Common Stock; Effect of Exercise.................9
      4.7   Exercise of Exchange Right Subsequent to Retraction.............10
      4.8   Stamp or other Transfer Taxes...................................10
      4.9   Notice of Insolvency Event......................................11
      4.10  IBM Common Stock................................................11
      4.11  Automatic Exchange on Liquidation of IBM........................11
      4.12  Call Rights.....................................................13
      4.13  Acknowledgement of Consideration................................13

ARTICLE 5
      CONCERNING THE TRUSTEE................................................13
      5.1   Powers and Duties of the Trustee................................13
      5.2   No Conflict of Interest.........................................14
      5.3   Dealings with Transfer Agents, Registrars, etc..................14
      5.4   Books and Records...............................................15
      5.5   Income Tax Returns and Reports..................................15
      5.6   Indemnification Prior to Certain Actions by Trustee.............15


                                      -i-
<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

                                                                           Page

      5.7   Actions by Non-Affiliated Holders...............................16
      5.8   Reliance upon Declarations......................................16
      5.9   Evidence and Authority to Trustee...............................16
      5.10  Experts, Advisors and Agents....................................17
      5.11  Investment of Money Held by Trustee.............................18
      5.12  Trustee Not Required to Give Security...........................18
      5.13  Trustee Not Bound to Act on the Corporation's Request...........18
      5.14  Authority to Carry on Business..................................18
      5.15  Conflicting Claims..............................................19
      5.16  Acceptance of Trust.............................................19

ARTICLE 6
      COMPENSATION..........................................................19
      6.1   Fees and Expenses of the Trustee................................19

ARTICLE 7
      INDEMNIFICATION AND LIMITATION OF LIABILITY...........................20
      7.1   Indemnification of the Trustee..................................20
      7.2   Limitation of Liability.........................................21

ARTICLE 8
      CHANGE OF TRUSTEE.....................................................21
      8.1   Resignation.....................................................21
      8.2   Removal.........................................................21
      8.3   Successor Trustee...............................................21
      8.4   Notice of Successor Trustee.....................................22

ARTICLE 9
      IBM SUCCESSORS........................................................22
      9.1   Certain Requirements in Respect of Combination, etc.............22
      9.2   Vesting of Powers in Successor..................................22
      9.3   Wholly-Owned Subsidiaries.......................................23

ARTICLE 10
      AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS..........................23
      10.1  Amendments, Modifications, etc..................................23
      10.2  Ministerial Amendments..........................................23
      10.3  Meeting to Consider Amendments..................................24
      10.4  Changes in Capital of IBM and the Corporation...................24
      10.5  Execution of Supplemental Trust Agreements......................24
      10.6  Wholly-Owned Subsidiaries.......................................25

ARTICLE 11
      TERMINATION...........................................................25


                                      -ii-
<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

                                                                           Page

      11.1  Term............................................................25
      11.2  Survival of Agreement...........................................25

ARTICLE 12
      GENERAL...............................................................25
      12.1  Severability....................................................25
      12.2  Enurement.......................................................26
      12.3  Notices to Parties..............................................26
      12.4  Notice of Non-Affiliated Holders................................26
      12.5  Risk of Payments by Post........................................27
      12.6  Counterparts....................................................27
      12.7  Jurisdiction....................................................27
      12.8  Attornment......................................................27


                                     -iii-
<PAGE>

                            EXCHANGE TRUST AGREEMENT

            AGREEMENT made as of the            day of           , 2000.

AMONG:

            INTERNATIONAL BUSINESS MACHINES CORPORATION, a corporation existing
            under the laws of the State of Delaware ("IBM")

                                      -and-

            3040696 NOVA SCOTIA COMPANY, an unlimited company incorporated under
            the laws of the Province of Nova Scotia ("Holdco")

                                      -and-

            IBM ACQUISITION INC., a corporation existing under the laws of
            Canada (the "Corporation")

                                      -and-

            CIBC MELLON TRUST COMPANY, a trust company existing under the laws
            of Canada (the "Trustee")

            WHEREAS pursuant to the terms of the offer by the Corporation and
IBM dated March o, 2000, to purchase all of the Class A Subordinate Voting
Shares and all of the Class B Multiple Voting Shares of LGS Group Inc., IBM,
Holdco and the Corporation agreed that IBM, Holdco, the Corporation, and a
Canadian trust company would execute and deliver an Exchange Trust Agreement;

            AND WHEREAS pursuant to that offer, certain Class A Subordinate
Voting Shares and Class B Multiple Voting Shares of LGS Group Inc. are to be
acquired by the Corporation in exchange for Exchangeable Shares of the
Corporation (the "Exchangeable Shares") and certain rights granted hereunder;

            AND WHEREAS the Corporation may issue additional Exchangeable Shares
following completion of the Offer, including pursuant to any compulsory
acquisition rights the Corporation may exercise;

            AND WHEREAS IBM is to grant to and in favour of Non-Affiliated
Holders (as hereinafter defined) of Exchangeable Shares the right, in the
circumstances set forth herein, to
<PAGE>
                                      -2-


require IBM (or, at the election of IBM, Holdco) to purchase from each
Non-Affiliated Holder all or any part of the Exchangeable Shares held by the
Non-Affiliated Holder;

            AND WHEREAS in certain circumstances the Exchangeable Shares are to
be automatically exchanged for shares of IBM Common Stock;

            AND WHEREAS the parties desire to make appropriate provision and to
establish a procedure whereby IBM and Holdco will be able to take certain
actions and make certain payments and to deliver or cause to be delivered shares
of Common Stock of IBM, par value US$0.20 per share (the "IBM Common Stock") in
satisfaction of the obligations of IBM and/or Holdco under the Exchangeable
Share Provisions (as hereinafter defined) and this trust agreement and IBM will
take certain actions such that if Holdco seeks to exercise its rights under the
Exchangeable Share Provisions, it will only do so if it will be able to make
certain payments and cause to be delivered shares of IBM Common Stock in
satisfaction of the obligations of Holdco under the Exchangeable Share
Provisions;

            AND WHEREAS these recitals and any statements of fact in this trust
agreement are made by IBM, Holdco and the Corporation and not by the Trustee;

            NOW THEREFORE, in consideration of the respective covenants and
agreements provided in this trust agreement and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties agree as follows:

                                   ARTICLE 1
                         DEFINITIONS AND INTERPRETATION

1.1   Definitions

In this trust agreement, unless something in the subject matter or content is
inconsistent therewith:

      "Automatic Exchange Rights" means the benefit of the obligation of IBM to
      effect the automatic exchange of shares of IBM Common Stock for
      Exchangeable Shares pursuant to Section 4.11 hereof.

      "Board of Directors" means the board of directors of the Corporation.

      "Business Day" means a day, other than a Saturday, a Sunday or a statutory
      holiday, when banks are generally open in each of Montreal, Quebec and
      Toronto, Ontario for the transaction of banking business.

      "Canadian Dollar Equivalent" means in respect of an amount expressed in a
      foreign currency (the "Foreign Currency Amount") at any date the product
      obtained by multiplying (a) the Foreign Currency Amount by (b) the
      official noon spot exchange rate on such date for such foreign currency as
      reported by the Bank of Canada or, in the event
<PAGE>
                                      -3-


      such spot exchange rate is not available, such exchange rate on such date
      for such foreign currency as may be deemed by the Board of Directors to be
      appropriate for such purpose.

      "Current Market Price" means, in respect of a share of IBM Common Stock on
      any date, the Canadian Dollar Equivalent of the average closing sales
      price of shares of IBM Common Stock during a period of five consecutive
      trading days ending not more than five trading days before such date on
      the New York Stock Exchange or, if the shares of IBM Common Stock are not
      then listed on the New York Stock Exchange, on such other stock exchange
      or automated quotation system on which the shares of IBM Common Stock are
      listed or quoted, as the case may be, as may be selected by the Board of
      Directors for such purpose; provided, however, that if in the opinion of
      the Board of Directors the public distribution or trading activity of IBM
      Common Stock during such period is inadequate to create a market that
      reflects the fair market value of the IBM Common Stock, then the Current
      Market Price of a share of IBM Common Stock shall be determined by the
      Board of Directors based upon the advice of such qualified independent
      financial advisors as the Board of Directors may deem to be appropriate,
      and provided further that any such selection, opinion or determination by
      the Board of Directors shall be conclusive and binding.

      "Dividend Amount" has the meaning set out in Section 1.1 of the
      Exchangeable Share Provisions.

      "Exchange Right" has the meaning set out in Section 4.1 hereof.

      "Exchangeable Share Provisions" means the rights, privileges, restrictions
      and conditions attaching to the Exchangeable Shares.

      "Exchangeable Shares" has the meaning set out in the recitals hereto.

      "IBM Board of Directors" means the board of directors of IBM.

      "IBM Common Stock" means the shares of common stock of IBM, par value US
      $0.20 per share, having voting rights of one vote per share, and any other
      securities into which such shares may be changed or for which such shares
      may be exchanged (whether or not IBM shall be the issuer of such other
      securities) or any other consideration which may be received by the
      holders of such shares, pursuant to a recapitalization, reconstruction,
      reorganization or reclassification of, or amalgamation, merger,
      liquidation or similar transaction, affecting such shares.

      "IBM Liquidation Event" has the meaning set out in Section 4.11 hereof.

      "IBM Successor" has the meaning set out in Section 9.1 hereof.

      "Insolvency Event" means the institution by Corporation of any proceeding
      to be adjudicated a bankrupt or insolvent or to be dissolved or wound up,
      or the consent of the Corporation to the institution of bankruptcy,
      insolvency, dissolution or winding-up
<PAGE>
                                      -4-


      proceedings against it, or the filing of a petition, answer or consent
      seeking dissolution or winding up under any bankruptcy, insolvency or
      analogous laws, including without limitation the Companies Creditors'
      Arrangement Act (Canada) and the Bankruptcy and Insolvency Act (Canada),
      and the failure by the Corporation to contest in good faith any such
      proceedings commenced in respect of the Corporation within 15 days of
      becoming aware thereof, or the consent by the Corporation to the filing of
      any such petition or to the appointment of a receiver, or the making by
      the Corporation of a general assignment for the benefit of creditors, or
      the admission in writing by Corporation of its inability to pay its debts
      generally as they become due, or the Corporation not being permitted,
      pursuant to solvency requirements or other provisions of applicable law to
      redeem any Retracted Shares pursuant to Section 6.1 of the Exchangeable
      Share Provisions.

      "Liquidation Amount" has the meaning set out in Section 5.1(1) of the
      Exchangeable Share Provisions.

      "Liquidation Call Right" has the meaning set out in Section 5.2(1) of the
      Exchangeable Share Provisions.

      "Non-Affiliated Holders" means the registered holders of Exchangeable
      Shares other than IBM and its Subsidiaries.

      "Offer" has the meaning set out in Section 5.8 hereof.

      "Officer's Certificate" means, with respect to IBM or the Corporation, as
      the case may be, a certificate signed by any one of the Chairman of the
      Board, the Chief Executive Officer, the President, any Vice-President or
      any other senior officer of IBM or the Corporation, as the case may be.

      "Redemption Call Right" has the meaning set out in Section 7.2(1) of the
      Exchangeable Share Provisions.

      "Redemption Price" has the meaning set out in Section 7.1(1) of the
      Exchangeable Share Provisions.

      "Retracted Shares" has the meaning set out in Section 4.7 hereof.

      "Retraction Call Right" has the meaning set out in Section 6.2(1) of the
      Exchangeable Share Provisions.

      "Retraction Price" has the meaning set out in Section 6.1(1) of the
      Exchangeable Share Provisions.

      "Subsidiary" of IBM means any corporation more than 50% of the outstanding
      stock of which, by vote or value, is owned, directly or indirectly, by
      IBM, by one or more other Subsidiaries of IBM or by IBM and one or more
      other Subsidiaries of IBM.
<PAGE>
                                      -5-


      "Support Agreement" means the support agreement made as of o ,2000 among
      IBM, Holdco and the Corporation.

      "Transfer Agent" has the meaning set out in Section 1.1 of the
      Exchangeable Share Provisions.

      "Trust" means the trust created by this trust agreement.

      "Trust Estate" means any securities, the Exchange Right, the Automatic
      Exchange Rights and any money or other rights or assets that may be held
      by the Trustee from time to time pursuant to this trust agreement.

      "Trustee" means CIBC Mellon Trust Company and, subject to the provisions
      of Article 8 hereof, includes any successor trustee or permitted assigns.

1.2   Interpretation Not Affected by Headings, etc.

The division of this trust agreement into articles and Sections and the
insertion of headings are for reference purposes only and shall not affect the
interpretation of this trust agreement. Unless otherwise indicated, any
reference in this trust agreement to an article or Section refers to the
specified article or Section of this trust agreement.

1.3   Number, Gender and Persons

In this trust agreement, unless the context otherwise requires, words importing
the singular number include the plural and vice versa, words importing any
gender include all genders and words importing persons include individuals,
corporations, partnerships, companies, associations, trusts, unincorporated
organizations, governmental bodies and other legal or business entitles of any
kind.

1.4   Date for Any Action

If any date on which any action is required to be taken under this trust
agreement is not a Business Day, such action shall be required to be taken on
the next succeeding Business Day.

1.5   Payments

All payments to be made hereunder shall be made without interest. Further, IBM,
Holdco, the Corporation and the Trustee shall be entitled to deduct and withhold
from any consideration otherwise payable under this trust agreement to any
holder of Exchangeable Shares such amounts as IBM, Holdco, the Corporation or
the Trustee is required or permitted to deduct and withhold with respect to such
payment under the Income Tax Act (Canada), the United States Internal Revenue
Code of 1986 or any provision of provincial, state, local or foreign tax law, in
each case as amended or succeeded. To the extent that amounts are so withheld,
such withheld amounts shall be treated for all purposes as having been paid to
the holder of the shares in respect of which such deduction and withholding was
made, provided that such withheld amounts are actually remitted to the
appropriate taxing authority. To the extent that the amounts
<PAGE>
                                      -6-


so required or permitted to be deducted or withheld from any payment to a holder
exceeds the cash portion of the consideration otherwise payable to the holder,
IBM, Holdco, the Corporation and the Trustee are hereby authorized to sell or
otherwise dispose of such portion of the consideration as is necessary to
provide sufficient funds to IBM, Holdco, the Corporation or the Trustee, as the
case may be, to enable it to comply with such deduction or withholding
requirements and IBM, Holdco, the Corporation or the Trustee shall notify the
holder thereof and remit to such holder any unapplied balance of the net
proceeds of such sale.

                                   ARTICLE 2
                                      TRUST

2.1   Establishment of Trust

One of the purposes of this trust agreement is to create the Trust for the
benefit of the Non-Affiliated Holders, as herein provided. The Trustee will hold
the Exchange Right and the Automatic Exchange Rights in order to enable the
Trustee to exercise such rights and will hold the other rights granted in or
resulting from the Trustee being a party to this trust agreement in order to
enable the Trustee to exercise or enforce such rights, in each case as trustee
for and on behalf of the Non-Affiliated Holders as provided in this trust
agreement.

                                   ARTICLE 3
                         STOCKHOLDER INFORMATION RIGHTS

3.1   Copies of Stockholder Information

IBM will deliver to the Trustee copies of all proxy materials (including notices
of IBM Meetings but excluding proxies to vote shares of IBM Common Stock),
information statements, reports (including without limitation all interim and
annual financial statements) and other written communications that are to be
distributed to holders of IBM Common Stock, in sufficient quantities and in
sufficient time so as to enable the Trustee to send those materials to each
Non-Affiliated Holder at the same time as such materials are first sent to
holders of IBM Common Stock. The Trustee will mail or otherwise send to each
Non-Affiliated Holder, at the expense of IBM, copies of all such materials (and
all materials specifically directed to the Non-Affiliated Holders or to the
Trustee for the benefit of the Non-Affiliated Holders by IBM) received by the
Trustee from IBM at the same time as such materials are first sent to holders of
IBM Common Stock. The Trustee will make copies of all such materials available
for inspection by any Non-Affiliated Holder at the Trustee's principal office in
the cities of Toronto and Montreal.

3.2   Other Materials

Promptly after receipt by IBM of any material to be sent or given generally to
the holders of IBM Common Stock by or on behalf of a third party, including
without limitation dissident proxy and information circulars (and related
information and material) and tender and exchange offer circulars (and related
information and material), IBM shall use reasonable efforts to obtain and
deliver to the Trustee copies thereof in sufficient quantities so as to enable
the Trustee to forward such material (unless the same has been provided to the
Trustee or sent directly to Non-Affiliated
<PAGE>
                                      -7-


Holders by such third party) to each Non-Affiliated Holder as soon as
practicable thereafter. As soon as practicable after receipt thereof, the
Trustee will mail or otherwise send to each Non-Affiliated Holder, at the
expense of IBM, copies of all such materials received by the Trustee from IBM.
The Trustee will also make copies of all such materials available for inspection
by any Non-Affiliated Holder at the Trustee's principal office in the cities of
Toronto and Montreal.

3.3   Distribution of Written Materials

Any written materials to be distributed by the Trustee to the Non-Affiliated
Holders pursuant to this trust agreement shall be delivered or sent by mail (or
otherwise communicated in the same manner as IBM utilizes in communications to
holders of IBM Common Stock, subject to the Trustee being advised in writing of
such method of communication and its ability to provide same) to each
Non-Affiliated Holder at its address as shown on the share register of the
Corporation. The Corporation shall provide or cause to be provided to the
Trustee for this purpose, on a timely basis and without charge or other expense:

      (a)   current lists of the Non-Affiliated Holders; and

      (b)   upon the request of the Trustee, mailing labels to enable the
            Trustee to carry out its duties under this trust agreement.

The materials referred to above are to be provided by IBM to the Trustee, but
shall be subject to review and comment by the Trustee.

                                   ARTICLE 4
                                 EXCHANGE RIGHT

4.1   Grant and Ownership of the Exchange Right

IBM hereby grants to the Trustee as trustee for and on behalf of, and for the
use and benefit of, the Non-Affiliated Holders the right (the "Exchange Right"),
upon the occurrence and during the continuance of an Insolvency Event, to
require IBM (or, at the election of IBM, Holdco) to purchase from each
Non-Affiliated Holder all or any part of the Exchangeable Shares held by the
Non-Affiliated Holders, all in accordance with the provisions of this trust
agreement. IBM hereby acknowledges receipt from the Trustee, as trustee for and
on behalf of the Non-Affiliated Holders, of good and valuable consideration (and
the adequacy thereof) for the grant of the Exchange Right by IBM to the Trustee.
During the term of the Trust and subject to the terms and conditions of this
trust agreement, the Trustee shall possess and be vested with full legal
ownership of the Exchange Right and shall be entitled to exercise all of the
rights and powers of an owner with respect to the Exchange Right, provided that
the Trustee shall:

      (a)   hold the Exchange Right and the legal title thereto as trustee
            solely for the use and benefit of the Non-Affiliated Holders in
            accordance with the provisions of this trust agreement; and
<PAGE>
                                      -8-


      (b)   except as specifically authorized by this trust agreement, have no
            power or authority to exercise or otherwise deal in or with the
            Exchange Right, and the Trustee shall not exercise such right for
            any purpose other than the purposes for which this Trust is created
            pursuant to this trust agreement.

4.2   Legended Share Certificate

The Corporation will cause each certificate representing Exchangeable Shares to
bear an appropriate legend notifying the Non-Affiliated Holders of their right
to instruct the Trustee with respect to the exercise of the Exchange Right in
respect of the Exchangeable Shares held by a Non-Affiliated Holder.

4.3   General Exercise of Exchange Right

The Exchange Right shall be and remain vested in and exercisable by the Trustee.
Subject to Sections 5.7 and 5.15 hereof, the Trustee shall exercise the Exchange
Right only on the basis of instructions received pursuant to this Article 4 from
Non-Affiliated Holders entitled to instruct the Trustee as to the exercise
thereof. To the extent that no instructions are received from a Non-Affiliated
Holder with respect to the Exchange Right, the Trustee shall not exercise or
permit the exercise of the Exchange Right.

4.4   Purchase Price

The purchase price payable by IBM or Holdco for each Exchangeable Share to be
purchased by IBM or Holdco under the Exchange Right shall be an amount per share
equal to (a) the Current Market Price of a share of IBM Common Stock on the last
Business Day prior to the day of closing of the purchase and sale of such
Exchangeable Share under the Exchange Right, which shall be satisfied in full by
causing to be delivered to such holder one share of IBM Common Stock plus (b)
the Dividend Amount, if any. The purchase price for each such Exchangeable Share
so purchased may be satisfied only by IBM or Holdco delivering or causing to be
delivered to the Trustee, on behalf of the relevant Non-Affiliated Holder, one
share of IBM Common Stock and a cheque for the balance, if any, of the purchase
price.

4.5   Exercise Instructions

Subject to the terms and conditions herein set forth, a Non-Affiliated Holder
shall be entitled, upon the occurrence and during the continuance of an
Insolvency Event, to instruct the Trustee to exercise the Exchange Right with
respect to all or any part of the Exchangeable Shares registered in the name of
such Non-Affiliated Holder on the books of the Corporation. To cause the
exercise of the Exchange Right by the Trustee, the Non-Affiliated Holder shall
deliver to the Trustee, in person or by certified or registered mail, at its
principal office in Toronto, Ontario or at such other places in Canada as the
Trustee may from time to time designate by written notice to the Non-Affiliated
Holders, the certificates representing the Exchangeable Shares which such
Non-Affiliated Holder desires IBM (or, at the election of IBM, Holdco) to
purchase, duly endorsed in blank, and accompanied by such other documents and
instruments as may be required to effect a transfer of Exchangeable Shares under
the Canada Business Corporations
<PAGE>
                                      -9-


Act and the by-laws of the Corporation and such additional documents and
instruments as the Trustee and the Corporation may reasonably require together
with (a) a duly completed form of notice of exercise of the Exchange Right,
contained on the reverse of or attached to the Exchangeable Share certificates,
stating (i) that the Non-Affiliated Holder thereby instructs the Trustee to
exercise the Exchange Right so as to require IBM (or, at the election of IBM,
Holdco) to purchase from the Non-Affiliated Holder the number of Exchangeable
Shares specified therein, (ii) that such Non-Affiliated Holder has good title to
and owns all such Exchangeable Shares to be acquired by IBM or Holdco free and
clear of all liens, claims and encumbrances, (iii) the names in which the
certificates representing IBM Common Stock issuable in connection with the
exercise of the Exchange Right are to be issued and (iv) the names and addresses
of the persons to whom such new certificates should be delivered and (b) payment
(or evidence satisfactory to the Trustee, the Corporation and IBM of payment) of
the taxes (if any) payable as contemplated by Section 4.8 of this trust
agreement. If only a portion of the Exchangeable Shares represented by any
certificate delivered to the Trustee are to be purchased by IBM or Holdco under
the Exchange Right, a new certificate for the balance of such Exchangeable
Shares shall be issued to the holder at the expense of the Corporation.

4.6   Delivery of IBM Common Stock; Effect of Exercise

Promptly after receipt of the certificates representing the Exchangeable Shares
that a Non-Affiliated Holder desires IBM or Holdco to purchase under the
Exchange Right (together with such documents and instruments of transfer and a
duly completed form of notice of exercise of the Exchange Right and payment of
taxes payable as contemplated by Section 4.8, if any, or evidence thereof), duly
endorsed for transfer to IBM or Holdco, the Trustee shall notify IBM, Holdco and
the Corporation of its receipt of the same, which notice to IBM, Holdco and the
Corporation shall constitute exercise of the Exchange Right by the Trustee on
behalf of the holder of such Exchangeable Shares, and IBM or Holdco shall
immediately thereafter deliver or cause to be delivered to the Trustee, for
delivery to the Non-Affiliated Holder of such Exchangeable Shares (or to such
other persons, if any, properly designated by such Non-Affiliated Holder), a
certificate for the number of shares of IBM Common Stock deliverable in
connection with such exercise of the Exchange Right (which shares shall be duly
issued as fully paid and non-assessable and shall be free and clear of any lien,
claim or encumbrance, security interest or adverse claim) and a cheque for the
balance, if any, of the purchase price therefor; provided, however, that no such
delivery shall be made unless and until the Non-Affiliated Holder requesting the
same shall have paid (or provided evidence satisfactory to the Trustee, Holdco,
the Corporation and IBM of the payment of) the taxes (if any) payable as
contemplated by Section 4.8 of this trust agreement. Immediately upon the giving
of notice by the Trustee to IBM, Holdco and the Corporation of the exercise of
the Exchange Right, as provided in this Section 4.6, the closing of the
transaction of purchase and sale contemplated by the Exchange Right shall be
deemed to have occurred, and the Non-Affiliated Holder of such Exchangeable
Shares shall be deemed to have transferred to IBM or Holdco all of its right,
title and interest in and to such Exchangeable Shares and the related interest
in the Trust Estate and shall not be entitled to exercise any of the rights of a
holder in respect thereof, other than the right to receive its proportionate
part of the total purchase price therefor, unless the requisite number of shares
of IBM Common Stock (together with a cheque for the balance, if any, of the
total purchase price
<PAGE>
                                      -10-


therefor) is not delivered by IBM or Holdco to the Trustee, for delivery to such
Non-Affiliated Holder (or to such other persons, if any, properly designated by
such Non-Affiliated Holder), within five Business Days of the date of the giving
of such notice by the Trustee, in which case the rights of the Non-Affiliated
Holder shall remain unaffected until such shares of IBM Common Stock are so
delivered by IBM or Holdco and any such cheque is so delivered and paid.
Concurrently with the closing of the transaction of purchase and sale
contemplated by the Exchange Right, such Non-Affiliated Holder shall be
considered and deemed for all purposes to be the holder of the shares of IBM
Common Stock delivered to it pursuant to the Exchange Right.

4.7   Exercise of Exchange Right Subsequent to Retraction

In the event that a Non-Affiliated Holder has exercised its right under Article
5 of the Exchangeable Share Provisions to require the Corporation to redeem any
or all of the Exchangeable Shares held by the Non-Affiliated Holder (the
"Retracted Shares") and is notified by the Corporation pursuant to Section
6.1(4) of the Exchangeable Share Provisions that the Corporation will not be
permitted as a result of solvency requirements of applicable law to redeem all
such Retracted Shares, subject to receipt by the Trustee of written notice to
that effect from the Corporation and provided that neither IBM nor Holdco shall
have exercised its Retraction Call Right with respect to the Retracted Shares
and that the Non-Affiliated Holder shall not have revoked the retraction request
delivered by the Non-Affiliated Holder to the Corporation pursuant to Section
6.1(5) of the Exchangeable Share Provisions, the retraction request will
constitute and will be deemed to constitute notice from the Non-Affiliated
Holder to the Trustee instructing the Trustee to exercise the Exchange Right
with respect to those Retracted Shares that the Corporation is unable to redeem.
In any such event, the Corporation hereby agrees with the Trustee and in favour
of the Non-Affiliated Holder immediately to notify the Trustee of such
prohibition against the Corporation redeeming all of the Retracted Shares and
immediately to forward or cause to be forwarded to the Trustee all relevant
materials delivered by the Non-Affiliated Holder to the Corporation or to the
Transfer Agent (including without limitation a copy of the retraction request
delivered pursuant to Section 6.1(1) of the Exchangeable Shares Provisions) in
connection with such proposed redemption of the Retracted Shares and the Trustee
will thereupon exercise the Exchange Right with respect to the Retracted Shares
that the Corporation is not permitted to redeem and will require IBM to purchase
such shares in accordance with the provisions of this Article 4.

4.8   Stamp or other Transfer Taxes

Upon any sale of Exchangeable Shares to IBM or Holdco pursuant to the Exchange
Right, the share certificate or certificates representing the IBM Common Stock
to be delivered in connection with the payment of the total purchase price
therefor shall be issued in the name of the Non-Affiliated Holder of the
Exchangeable Shares so sold or in such names as such Non-Affiliated Holder may
otherwise direct in writing without charge to the holder of the Exchangeable
Shares so sold; provided, however, that such Non-Affiliated Holder (a) shall pay
(and neither IBM, Holdco, the Corporation nor the Trustee shall be required to
pay) any documentary, stamp, transfer or other similar taxes that may be payable
in respect of any transfer involved in the issuance or delivery of such shares
to a person other than such Non-Affiliated
<PAGE>
                                      -11-


Holder or (b) shall have established to the satisfaction of the Trustee, IBM,
Holdco and the Corporation that such taxes, if any, have been paid.

4.9   Notice of Insolvency Event

Promptly upon the occurrence of an Insolvency Event or any event that with the
giving of notice or the passage of time or both would be an Insolvency Event,
the Corporation and IBM shall give written notice thereof to the Trustee. As
soon as practicable after receiving notice from the Corporation or IBM or from
any other person of the occurrence of an Insolvency Event, the Trustee will mail
to each Non-Affiliated Holder, at the expense of IBM, a notice of such
Insolvency Event in the form provided by IBM, which notice shall contain a brief
statement of the right of the Non-Affiliated Holders with respect to the
Exchange Right.

4.10  IBM Common Stock

All shares of IBM Common Stock delivered to or to the order of a former holder
of surrendered Exchangeable Shares shall be duly issued as fully paid,
non-assessable, free of pre-emptive rights and shall be free and clear of any
lien, encumbrance, security interest or adverse claim.

4.11  Automatic Exchange on Liquidation of IBM

      (a)   IBM shall give the Trustee prompt written notice of each of the
            following events (each an "IBM Liquidation Event"):

            (i)   any determination by the board of directors of IBM to
                  institute voluntary liquidation, dissolution or winding-up
                  proceedings with respect to IBM (not including a
                  reorganization under applicable bankruptcy laws) or to effect
                  any other distribution of assets of IBM among its stockholders
                  for the purpose of winding-up its affairs; and

            (ii)  receipt by IBM of notice of, or IBM otherwise becoming aware
                  of, any instituted claim, suit, petition or other proceedings
                  with respect to the involuntary liquidation, dissolution or
                  winding-up of IBM (not including a reorganization under
                  applicable bankruptcy laws) or to effect any other
                  distribution of assets of IBM among its stockholders for the
                  purpose of winding-up its affairs.

      (b)   Immediately following receipt by the Trustee from IBM of notice of
            any IBM Liquidation Event contemplated by Section 4.11(a), the
            Trustee will give notice thereof to the holders of Exchangeable
            Shares. Such notice shall be provided by IBM to the Trustee and
            shall include a brief description of the automatic exchange of
            Exchangeable Shares for shares of IBM Common Stock provided for in
            Section 4.11(c).

      (c)   In order that the holders of Exchangeable Shares (other than IBM and
            any Subsidiary) will be able to participate on a pro rata basis with
            the holders of IBM
<PAGE>
                                      -12-


            Common Stock in the distribution of assets of IBM in connection with
            a IBM Liquidation Event, on the fifth Business Day prior to the
            effective date (the "IBM Liquidation Event Effective Date") of an
            IBM Liquidation Event all of the then outstanding Exchangeable
            Shares (other than Exchangeable Shares held by IBM and any
            Subsidiary) shall be automatically exchanged for shares of IBM
            Common Stock. To effect such automatic exchange, IBM (or, at the
            election of IBM, Holdco) shall purchase each Exchangeable Share
            outstanding on the fifth Business Day prior to the IBM Liquidation
            Event Effective Date and held by a holder of Exchangeable Shares
            (other than IBM and any of its Subsidiaries), and each such holder
            shall sell the Exchangeable Shares held by it at such time, for a
            purchase price per share equal to (i) the Current Market Price of a
            share of IBM Common Stock on the fifth Business Day prior to the IBM
            Liquidation Event Effective Date, which shall be satisfied in full
            by IBM or Holdco delivering to such holder one share of IBM Common
            Stock, plus (ii) the Dividend Amount, if any.

      (d)   On the fifth Business Day prior to the IBM Liquidation Event
            Effective Date, the closing of the transaction of purchase and sale
            contemplated by the automatic exchange of Exchangeable Shares for
            IBM Common Stock shall be deemed to have occurred, and each holder
            of Exchangeable Shares (other than IBM and any Subsidiary) shall be
            deemed to have transferred to IBM (or, at the election of IBM,
            Holdco) all of such holder's right, title and interest in and to
            such Exchangeable Shares and shall cease to be a holder of such
            Exchangeable Shares at such time as IBM or Holdco shall deliver or
            cause to be delivered to the Transfer Agent, for delivery to such
            holders, the certificates representing the number of shares of IBM
            Common Stock deliverable upon the automatic exchange of Exchangeable
            Shares for IBM Common Stock (which shares shall be duly issued as
            fully paid and non-assessable and shall be free and clear of any
            lien, claim or encumbrance, security interest or adverse claim) and
            a cheque for the balance, if any, of the total purchase price for
            such Exchangeable Shares; interest on such deposit shall belong to
            IBM. Concurrently with each such holder ceasing to be a holder of
            Exchangeable Shares, such holder shall be considered and deemed for
            all purposes to be the holder of the shares of IBM Common Stock
            delivered to it, or to the Transfer Agent on its behalf, pursuant to
            the automatic exchange of Exchangeable Shares for IBM Common Stock
            and the certificates held by such holder previously representing the
            Exchangeable Shares exchanged by such holder with IBM pursuant to
            such automatic exchange shall thereafter be deemed to represent the
            shares of IBM Common Stock delivered to such holder by IBM pursuant
            to such automatic exchange. Upon the request of any such former
            holder of Exchangeable Shares and the surrender by such holder of
            Exchangeable Share certificates deemed to represent shares of IBM
            Common Stock, duly endorsed in blank and accompanied by such
            instruments of transfer as IBM may reasonably require, IBM shall
            deliver or cause to be delivered to such holder certificates
            representing the shares of IBM Common Stock of which such
<PAGE>
                                      -13-


            holder is the holder and a cheque in payment of the remaining
            portion, if any, of the aggregate purchase price therefor.

4.12  Call Rights

The Liquidation Call Right, the Redemption Call Right and the Retraction Call
Right and the Automatic Exchange Right are hereby agreed, acknowledged and
confirmed. It is agreed and acknowledged that such rights are enforceable
against each holder of Exchangeable Shares by IBM or Holdco, as the case may be.

4.13  Acknowledgement of Consideration

It is expressly acknowledged that the Exchange Right and the Automatic Exchange
Right granted to the holders of the Exchangeable Shares hereunder are granted in
partial consideration for the transfer of shares of LGS Group Inc. to the
Corporation.

                                   ARTICLE 5
                             CONCERNING THE TRUSTEE

5.1   Powers and Duties of the Trustee

The rights, powers and authorities of the Trustee under this trust agreement, in
its capacity as trustee of the Trust, shall include:

      (a)   distributing materials to Non-Affiliated Holders as provided in this
            trust agreement;

      (b)   receiving the grant of the Exchange Right and the Automatic Exchange
            Rights from IBM as trustee for and on behalf of the Non-Affiliated
            Holders in accordance with the provisions of this trust agreement;

      (c)   exercising the Exchange Right in accordance with the provisions of
            this trust agreement, and in connection therewith receiving from
            Non-Affiliated Holders Exchangeable Shares and other requisite
            documents and distributing to such Non-Affiliated Holders the shares
            of IBM Common Stock and cheques, if any, to which such
            Non-Affiliated Holders are entitled upon the exercise of the
            Exchange Right;

      (d)   holding title to the Trust Estate;

      (e)   investing any money forming, from time to time, a part of the Trust
            Estate as provided in this trust agreement;

      (f)   taking action at the direction of a Non-Affiliated Holder to enforce
            the obligations of the Corporation and/or IBM under this trust
            agreement; and
<PAGE>
                                      -14-


      (g)   taking such other actions and doing such other things as are
            specifically provided in this trust agreement.

In the exercise of such rights, powers and authorities the Trustee shall have
(and is granted) such incidental and additional rights, powers and authority not
in conflict with any of the provisions of this trust agreement as the Trustee,
acting in good faith and in the reasonable exercise of its discretion, may deem
necessary, appropriate or desirable to effect the purpose of the Trust. Any
exercise of such discretionary rights, powers and authorities by the Trustee
shall be final, conclusive and binding upon all persons. For greater certainty,
the Trustee shall have only those duties as are set out specifically in this
trust agreement. The Trustee in exercising its rights, powers, duties and
authorities hereunder shall act honestly and in good faith with a view to the
best interests of the Non-Affiliated Holders and shall exercise the care,
diligence and skill that a reasonably prudent trustee would exercise in
comparable circumstances. The Trustee shall not be bound to give any notice or
do or take any act, action or proceeding by virtue of the powers conferred on it
hereby unless and until it shall be specifically required to do so under the
terms hereof; nor shall the Trustee be required to take any notice of, or to do
or to take any act, action or proceeding as a result of any default or breach of
any provision hereunder, unless and until notified in writing of such default or
breach, which notice shall distinctly specify the default or breach desired to
be brought to the attention of the Trustee and in the absence of such notice the
Trustee may for all purposes of this trust agreement conclusively assume that no
default or breach has been made in the observance or performance of any of the
representations, warranties, covenants, agreements or conditions contained
herein.

5.2   No Conflict of Interest

The Trustee represents to the Corporation and IBM that at the date of execution
and delivery of this trust agreement there exists no material conflict of
interest in the role of the Trustee as a fiduciary hereunder and the role of the
Trustee in any other capacity. The Trustee shall, within 90 days after it
becomes aware that such a material conflict of interest exists, either eliminate
such material conflict of interest or resign in the manner and with the effect
specified in Article 10 hereof. If, notwithstanding the foregoing provisions of
this Section 5.2, the Trustee has such a material conflict of interest, the
validity and enforceability of this trust agreement shall not be affected in any
manner whatsoever by reason only of the existence of such material conflict of
interest. If the Trustee contravenes the foregoing provisions of this Section
5.2, any interested party may apply to the Ontario Court (General Division) for
an order that the Trustee be replaced as trustee hereunder.

5.3   Dealings with Transfer Agents, Registrars, etc.

The Corporation and IBM irrevocably authorize the Trustee, from time to time,
to:

      (a)   consult, communicate and otherwise deal with the registrar and
            transfer agent, and with any such subsequent registrar or transfer
            agent, of the IBM Common Stock; and
<PAGE>
                                      -15-


      (b)   requisition, from time to time, from any such registrar or transfer
            agent any information readily available from the records maintained
            by it which the Trustee may reasonably require for the discharge of
            its duties and responsibilities under this trust agreement.

IBM covenants that it will supply, and will cause Holdco to supply, the Trustee,
or the Transfer Agent, as the case may be, in a timely manner with duly executed
share certificates for the purpose of completing the exercise from time to time
of all rights to acquire IBM Common Stock hereunder, under the Offer, under the
Exchangeable Share Provisions and under any other security or commitment given
to the Non-Affiliated Holders pursuant thereto, in each case pursuant to the
provisions hereof, the terms of the Offer or of the Exchangeable Share
Provisions or otherwise.

5.4   Books and Records

The Trustee shall keep available for inspection by IBM and the Corporation, at
the Trustee's principal office in Toronto, Ontario, correct and complete books
and records of account relating to the Trustee's actions under this trust
agreement, including without limitation all information relating to mailings and
instructions to and from Non-Affiliated Holders and all transactions pursuant to
the Exchange Right for the term of this Agreement. On or before March 31, 2001
and on or before March 31 in every year thereafter, so long as any Exchangeable
Shares are held by Non-Affiliated Holders, the Trustee shall transmit to IBM and
the Corporation a brief report, dated as of the preceding December 31, with
respect to: (a) the property and funds comprising the Trust Estate as of that
date; (b) the number of exercises of the Exchange Right, if any, and the
aggregate number of Exchangeable Shares received by the Trustee on behalf of
Non-Affiliated Holders in consideration of the issue and delivery by IBM of
shares of IBM Common Stock in connection with the Exchange Right, during the
calendar year ended on such date; and (c) all other actions taken by the Trustee
in the performance of its duties under this trust agreement which it had not
previously reported.

5.5   Income Tax Returns and Reports

The Trustee shall, to the extent necessary, prepare and file on behalf of the
Trust appropriate United States and Canadian income tax returns and any other
returns or reports as may be required by applicable law or pursuant to the rules
and regulations of any securities exchange or other trading system through which
the Exchangeable Shares are traded and, in connection therewith, may obtain the
advice and assistance of such experts as the Trustee may consider necessary or
advisable. If required by the Trustee, IBM shall retain such experts as may be
required for the purposes of providing such advice and assistance.

5.6   Indemnification Prior to Certain Actions by Trustee

The Trustee shall exercise any or all of the rights, duties, powers or
authorities vested in it by this trust agreement at the request, order or
direction of any Non-Affiliated Holder upon such Non-Affiliated Holder
furnishing to the Trustee reasonable funding, security and indemnity against the
costs, expenses and liabilities that may be incurred by the Trustee therein or
thereby,
<PAGE>
                                      -16-


provided that no Non-Affiliated Holder shall be obligated to furnish to the
Trustee any such funding, security or indemnity in connection with the exercise
by the Trustee of any of its rights, duties, powers and authorities with respect
to the Exchange Right pursuant to Article 4 hereof, subject to the provisions of
Section 5.15 hereof. None of the provisions contained in this trust agreement
shall require the Trustee to expend or risk its own funds or otherwise incur
financial liability in the exercise of any of its rights, powers, duties or
authorities unless funded, given funds, security and indemnified as aforesaid.

5.7   Actions by Non-Affiliated Holders

No Non-Affiliated Holder shall have the right to institute any action, suit or
proceeding or to exercise any other remedy authorized by this trust agreement
for the purpose of enforcing any of its rights or for the execution of any trust
or power hereunder unless the Non-Affiliated Holder has requested the Trustee to
take or institute such action, suit or proceeding and furnished the Trustee with
the funding, security and indemnity referred to in Section 5.6 hereof and the
Trustee shall have failed to act within a reasonable time thereafter. In such
case, but not otherwise, the Non-Affiliated Holder shall be entitled to take
proceedings in any court of competent jurisdiction such as the Trustee might
have taken; it being understood and intended that no one or more Non-Affiliated
Holders shall have any right in any manner whatsoever to affect, disturb or
prejudice the rights hereby created by any such action, or to enforce any right
hereunder or under the Voting Rights or the Exchange Right except subject to the
conditions and in the manner herein provided, and that all powers and trusts
hereunder shall be exercised and all proceedings at law be instituted, had and
maintained by the Trustee, except only as herein provided, and in any event for
the equal benefit of all Non-Affiliated Holders.

5.8   Reliance upon Declarations

The Trustee shall not be considered to be in contravention of any of its rights,
powers, duties and authorities hereunder if, when required, it acts and relies
in good faith upon lists, mailing labels, notices, statutory declarations,
certificates, opinions, reports or other papers or documents furnished pursuant
to the provisions hereof or required by the Trustee to be furnished to it in the
exercise of its rights, powers, duties and authorities hereunder and such lists,
mailing labels, notices, statutory declarations, certificates, opinions, reports
or other papers or documents comply with the provisions of Section 5.9 hereof,
if applicable, and with any other applicable provisions of this trust agreement.

5.9   Evidence and Authority to Trustee

The Corporation and/or IBM shall furnish to the Trustee evidence of compliance
with the conditions provided for in this trust agreement relating to any action
or step required or permitted to be taken by the Corporation and/or IBM or the
Trustee under this trust agreement or as a result of any obligation imposed
under this trust agreement, including, without limitation, in respect of the
Exchange Right and the taking of any other action to be taken by the Trustee at
the request of or on the application of the Corporation and/or IBM forthwith if
and when:
<PAGE>
                                      -17-


      (a)   such evidence is required by any other Section of this trust
            agreement to be furnished to the Trustee in accordance with the
            terms of this Section 5.9; or

      (b)   the Trustee, in the exercise of its rights, powers, duties and
            authorities under this trust agreement, gives the Corporation and/or
            IBM written notice requiring it to furnish such evidence in relation
            to any particular action or obligation specified in such notice.

Such evidence shall consist of an Officer's Certificate of the Corporation
and/or IBM or a statutory declaration or a certificate made by persons entitled
to sign an Officer's Certificate stating that any such condition has been
complied with in accordance with the terms of this trust agreement. Whenever
such evidence relates to a matter other than the Exchange Right and except as
otherwise specifically provided herein, such evidence may consist of a report or
opinion of any solicitor, auditor, accountant, appraiser, valuer, engineer or
other expert or any other person whose qualifications give authority to a
statement made by such person, provided that if such report or opinion is
furnished by a director, officer or employee of the Corporation and/or IBM it
shall be in the form of an Officer's Certificate or a statutory declaration.
Each statutory declaration, certificate, opinion or report furnished to the
Trustee as evidence of compliance with a condition provided for in this trust
agreement shall include a statement by the person giving the evidence:

      (a)   declaring that such person has read and understands the provisions
            of this trust agreement relating to the condition in question; and

      (b)   declaring that such person has made such examination or
            investigation as such person believes is necessary to enable such
            person to make the statements or give the opinions contained or
            expressed therein.

5.10  Experts, Advisors and Agents

The Trustee may:

      (a)   in relation to these presents act and rely on the opinion or advice
            of or information obtained from or prepared by any solicitor,
            auditor, accountant, appraiser, valuer, engineer or other expert,
            whether retained by the Trustee or by the Corporation and/or IBM or
            otherwise, and may employ such assistants as may be necessary to the
            proper determination and discharge of its powers and duties and
            determination of its rights hereunder and may pay proper and
            reasonable compensation for all such legal and other advice or
            assistance as aforesaid; and

      (b)   employ such agents and other assistants as it may reasonably require
            for the proper determination and discharge of its powers and duties
            hereunder, and may pay reasonable remuneration for all services
            performed for it (and shall be entitled to receive reasonable
            remuneration for all services performed by it) in the discharge of
            the trusts hereof and compensation for all disbursements, costs and
<PAGE>
                                      -18-


            expenses made or incurred by it in the determination and discharge
            of its duties hereunder and in the management of the Trust.

5.11  Investment of Money Held by Trustee

Unless otherwise provided in this trust agreement, any money held by or on
behalf of the Trustee which under the terms of this trust agreement may or ought
to be invested or which may be on deposit with the Trustee or which may be in
the hands of the Trustee may be invested and reinvested in the name or under the
control of the Trustee in securities in which, under the laws of the Province of
Ontario, trustees are authorized to invest trust money, provided that such
securities are stated to mature within two years after their purchase by the
Trustee, and the Trustee shall so invest such money on the written direction of
the Corporation. Pending the investment of any money as hereinbefore provided,
such money may be deposited in the name of the Trustee in any chartered bank in
Canada or, with the consent of the Corporation, in the deposit department of the
Trustee or any other loan or trust company authorized to accept deposits under
the laws of Canada or any province thereof at the rate of interest then current
on similar deposits.

5.12  Trustee Not Required to Give Security

The Trustee shall not be required to give any bond or security in respect of the
execution of the trusts, rights, duties, powers and authorities of this trust
agreement or otherwise in respect of the premises.

5.13  Trustee Not Bound to Act on the Corporation's Request

Except as in this trust agreement otherwise specifically provided, the Trustee
shall not be bound to act in accordance with any direction or request of the
Corporation and/or IBM or of the directors thereof until a written copy of the
instrument or resolution containing such direction or request shall have been
delivered to the Trustee, and the Trustee shall be empowered to act and rely
upon any such copy believed by the Trustee to be genuine.

5.14  Authority to Carry on Business

The Trustee represents to the Corporation and IBM that at the date of execution
and delivery by it of this trust agreement it is authorized to carry on the
business of a trust company in the Province of Ontario but if, notwithstanding
the provisions of this Section 5.14, it ceases to be so authorized to carry on
business, the validity and enforceability of this trust agreement and the
Exchange Right and the other rights granted in or resulting from the Trustee
being a party to this trust agreement shall not be affected in any manner
whatsoever by reason only of such event but the Trustee shall, within 90 days
after ceasing to be authorized to carry on the business of a trust company in
the Province of Ontario, either become so authorized or resign in the manner and
with the effect specified in Article 8 hereof.
<PAGE>
                                      -19-


5.15  Conflicting Claims

If conflicting claims or demands are made or asserted with respect to any
interest of any Non-Affiliated Holder in any Exchangeable Shares, including any
disagreement between the heirs, representatives, successors or assigns
succeeding to all or any part of the interest of any Non-Affiliated Holder in
any Exchangeable Shares resulting in conflicting claims or demands being made in
connection with such interest, then the Trustee shall be entitled, at its sole
discretion, to refuse to recognize or to comply with any such claim or demand.
In so refusing, the Trustee may elect not to exercise the Exchange Right or
other rights subject to such conflicting claims or demands and, in so doing, the
Trustee shall not be or become liable to any person on account of such election
or its failure or refusal to comply with any such conflicting claims or demands.
The Trustee shall be entitled to continue to refrain from acting and to refuse
to act until:

      (a)   the rights of all adverse claimants with respect to the Exchange
            Right or other rights subject to such conflicting claims or demands
            have been adjudicated by a final judgment of a court of competent
            jurisdiction; or

      (b)   all differences with respect to the Exchange Right or other rights
            subject to such conflicting claims or demands have been conclusively
            settled by a valid written agreement binding on all such adverse
            claimants, and the Trustee shall have been furnished with an
            executed copy of such agreement.

If the Trustee elects to recognize any claim or comply with any demand made by
any such adverse claimant, it may in its discretion require such claimant to
furnish such surety, bond or other security satisfactory to the Trustee as it
shall deem appropriate fully to indemnify it as between all conflicting claims
or demands.

5.16  Acceptance of Trust

The Trustee hereby accepts the Trust created and provided for by and in this
trust agreement and agrees to perform the same upon the terms and conditions
herein set forth and to hold all rights, privileges and benefits conferred
hereby and by law in trust for the various persons who shall from time to time
be Non-Affiliated Holders, subject to all the terms and conditions herein set
forth.

                                   ARTICLE 6
                                  COMPENSATION

6.1   Fees and Expenses of the Trustee

IBM and the Corporation jointly and severally agree to pay to the Trustee
reasonable compensation for all of the services rendered by it under this trust
agreement and will reimburse the Trustee for all reasonable expenses (including
but not limited to taxes (other than taxes based on income), compensation paid
to experts, agents and advisors and travel expenses) and disbursements,
including the cost and expense of any suit or litigation of any character and
any proceedings before any governmental agency reasonably incurred by the
Trustee in connection
<PAGE>
                                      -20-


with its rights and duties under this trust agreement; provided that IBM and the
Corporation shall have no obligation to reimburse the Trustee for any expenses
or disbursements paid, incurred or suffered by the Trustee in any suit or
litigation in which the Trustee is determined to have acted in bad faith or with
negligence or wilful misconduct or for any matter in respect of which the
provisions of Section 5.6 entitle the Trustee to funding, security and indemnity
from any Non-Affiliated Holder.

                                   ARTICLE 7
                   INDEMNIFICATION AND LIMITATION OF LIABILITY

7.1   Indemnification of the Trustee

IBM and the Corporation jointly and severally agree to indemnify and hold
harmless the Trustee and each of its directors, officers, employees and agents
appointed and acting in accordance with this trust agreement (collectively, the
"Indemnified Parties") against all claims, losses, damages, costs, penalties,
fines and reasonable expenses (including reasonable expenses of the Trustee's
legal counsel) which, without fraud, negligence, wilful misconduct or bad faith
on the part of such Indemnified Party, may be paid, incurred or suffered by the
Indemnified Party by reason of or as a result of the Trustee's acceptance or
administration of the Trust, its compliance with its duties set forth in this
trust agreement, or any written or oral instructions delivered to the Trustee by
IBM or the Corporation pursuant hereto. In no case shall IBM or the Corporation
be liable under this indemnity for any claim against any of the Indemnified
Parties if such claim is incurred or suffered by reason of or as a result of the
fraud, negligence, wilful misconduct or bad faith of an Indemnified Party and
unless IBM and the Corporation shall be notified by the Trustee of the written
assertion of a claim or of any action commenced against the Indemnified Parties,
promptly after any of the Indemnified Parties shall have received any such
written assertion of a claim or shall have been served with a summons or other
first legal process giving information as to the nature and basis of the claim.
Subject to (ii), below, IBM and the Corporation shall be entitled to participate
at their own expense in the defense and, if IBM or the Corporation so elect at
any time after receipt of such notice, any of them may assume the defense of any
suit brought to enforce any such claim. The Trustee shall have the right to
employ separate counsel in any such suit and participate in the defense thereof
but the fees and expenses of such counsel shall be at the expense of the Trustee
unless: (i) the employment of such counsel has been authorized by IBM or the
Corporation, such authorization not to be unreasonably withheld; or (ii) the
named parties to any such suit include both the Trustee and IBM or the
Corporation and the Trustee shall have been advised by counsel acceptable to IBM
or the Corporation that there may one or more legal defenses available to the
Trustee that are different from or in addition to those available to IBM or the
Corporation and that an actual or potential conflict of interest exists (in
which case IBM and the Corporation shall not have the right to assume the
defense of such suit on behalf of the Trustee but shall be liable to pay the
reasonable fees and expenses of one counsel for the Trustee). Such
indemnification shall survive the resignation or removal of the Trustee and the
termination of this trust agreement.
<PAGE>
                                      -21-


7.2   Limitation of Liability

The Trustee shall not be held liable for any loss which may occur by reason of
depreciation of the value of any part of the Trust Estate or any loss incurred
on any investment of funds pursuant to this trust agreement, except to the
extent that such loss is attributable to the fraud, negligence, wilful
misconduct or bad faith on the part of the Trustee.

                                   ARTICLE 8
                                CHANGE OF TRUSTEE

8.1   Resignation

The Trustee, or any trustee hereafter appointed, may at any time resign by
giving written notice of such resignation to IBM and the Corporation specifying
the date on which it desires to resign, provided that such notice shall never be
given less than 60 days before such desired resignation date unless IBM and
Corporation otherwise agree and provided further that such resignation shall not
take effect until the date of the appointment of a successor trustee and the
acceptance of such appointment by the successor trustee. Upon receiving such
notice of resignation, IBM and the Corporation shall promptly appoint a
successor trustee by written instrument in duplicate, one copy of which shall be
delivered to the resigning trustee and one copy to the successor trustee.
Failing acceptance by a successor trustee, a successor trustee may be appointed
by an order of the Ontario Court (General Division) upon application of one or
more of the parties hereto.

8.2   Removal

The Trustee, or any trustee hereafter appointed, may be removed with or without
cause, at any time on 60 days' prior notice by written instrument executed by
IBM and the Corporation, in duplicate, one copy of which shall be delivered to
the trustee so removed and one copy to the successor trustee.

8.3   Successor Trustee

Any successor trustee appointed as provided under this trust agreement shall
execute, acknowledge and deliver to IBM and the Corporation and to its
predecessor trustee an instrument accepting such appointment. Thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, duties and obligations of its
predecessor under this trust agreement, with like effect as if originally named
as trustee in this trust agreement. However, on the written request of IBM and
the Corporation or of the successor trustee, the trustee ceasing to act shall,
upon payment of any amounts then due it pursuant to the provisions of this trust
agreement, execute and deliver an instrument transferring to such successor
trustee all the rights and powers of the trustee so ceasing to act. Upon the
request of any such successor trustee, IBM and the Corporation and such
predecessor trustee shall execute any and all instruments in writing for more
fully and certainly vesting in and confirming to such successor trustee all such
rights and powers.
<PAGE>
                                      -22-


8.4   Notice of Successor Trustee

Upon acceptance of appointment by a successor trustee as provided herein, IBM
and the Corporation shall cause to be mailed notice of the succession of such
trustee hereunder to each Non-Affiliated Holder specified in a List. If IBM or
the Corporation shall fail to cause such notice to be mailed within 10 days
after acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of IBM and the Corporation.

                                   ARTICLE 9
                                 IBM SUCCESSORS

9.1   Certain Requirements in Respect of Combination, etc.

If IBM enters into any transaction (whether by way of reconstruction,
reorganization, consolidation, merger, transfer, sale, lease or otherwise)
whereby all or substantially all of its undertaking, property and assets would
become the property of any other person or, in the case of a merger, of the
continuing corporation resulting therefrom, then IBM will take all necessary
actions to ensure that:

      (a)   such other person or continuing corporation (the "IBM Successor"),
            by operation of law, becomes, without more, bound by the terms and
            provisions of this trust agreement or, if not so bound, executes,
            prior to or contemporaneously with the consummation of such
            transaction a trust agreement supplemental hereto and such other
            instruments (if any) as are satisfactory to the Trustee, acting
            reasonably, and in the opinion of legal counsel to the Trustee, are
            reasonably necessary or advisable to evidence the assumption by the
            IBM Successor of liability for all money payable and property
            deliverable hereunder and the covenant of such IBM Successor to pay
            and deliver or cause to be delivered the same and its agreement to
            observe and perform all the covenants and obligations of IBM under
            this trust agreement; and

      (b)   such transaction shall be upon such terms as substantially to
            preserve and not to impair in any material respect any of the
            rights, duties, powers and authorities of the Trustee or of the
            Non-Affiliated Holders hereunder.

9.2   Vesting of Powers in Successor

Whenever the covenants of Section 9.1 hereof have been duly observed and
performed, if required by Section 9.1 hereof, the Trustee, the IBM Successor and
the Corporation shall execute and deliver the supplemental trust agreement
provided for in Article 10 hereof and thereupon the IBM Successor shall possess
and from time to time may exercise each and every right and power of IBM under
this trust agreement in the name of IBM or otherwise and any act or proceeding
by any provision of this trust agreement required to be done or performed by the
IBM Board of Directors or any officers of IBM may be done and performed with
like force and effect by the directors or officers of such IBM Successor.
<PAGE>
                                      -23-


9.3   Wholly-Owned Subsidiaries

Nothing herein shall be construed as preventing the amalgamation or merger of
any Subsidiary of IBM with or into IBM or the winding up, liquidation or
dissolution of any Subsidiary of IBM. In addition, nothing herein shall be
construed as preventing the amalgamation or merger of LGS Group Inc. with, and
or into the Corporation and/or one or more other corporations, or the winding
up, liquidation or dissolution of LGS Group Inc.

                                   ARTICLE 10
                  AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS

10.1  Amendments, Modifications, etc.

This trust agreement may not be amended or modified except by an agreement in
writing executed by the Corporation, IBM and the Trustee and approved by the
Non-Affiliated Holders in accordance with Section 9.2 of the Exchangeable Share
Provisions. This trust agreement shall apply in respect of any issuance of
additional Exchangeable Shares in one or more transactions or financings which,
for greater certainty, may be unrelated to the Arrangement or the transactions
contemplated thereby.

10.2  Ministerial Amendments

Notwithstanding the provisions of Section 10.1 hereof, the parties to this trust
agreement may in writing, at any time and from time to time, without the
approval of the Non-Affiliated Holders, amend or modify this trust agreement for
the purposes of:

      (a)   adding to the covenants of any or all of the parties hereto for the
            protection of the Non-Affiliated Holders hereunder;

      (b)   making such amendments or modifications not inconsistent with this
            trust agreement as may be necessary or desirable with respect to
            matters or questions which, in the opinion of the Board of Directors
            and the Board of Directors of IBM and in the opinion of the Trustee,
            having in mind the best interests of the Non-Affiliated Holders as a
            whole, it may be expedient to make, provided that such boards of
            directors and the Trustee shall be of the opinion that such
            amendments and modifications will not be prejudicial to the
            interests of the Non-Affiliated Holders as a whole; or

      (c)   making such changes or corrections which are required for the
            purpose of curing or correcting any ambiguity or defect or
            inconsistent provision or clerical omission or mistake or manifest
            error, provided that each of the Trustee, the Board of Directors and
            the Board of Directors of IBM shall be of the opinion that such
            changes or corrections will not be prejudicial to the interests of
            the Non-Affiliated Holders as a whole.
<PAGE>
                                      -24-


10.3  Meeting to Consider Amendments

The Corporation, at the request of IBM, shall call a meeting or meetings of the
Non-Affiliated Holders for the purpose of considering any proposed amendment or
modification requiring approval pursuant hereto. Any such meeting or meetings
shall be called and held in accordance with the by-laws of the Corporation, the
Exchangeable Share Provisions and all applicable laws.

10.4  Changes in Capital of IBM and the Corporation

At all times after the occurrence of any event effected pursuant to Section 2.7
or Section 2.8 of the Support Agreement or Section 9.1 of this trust agreement,
as a result of which either IBM Common Stock or the Exchangeable Shares or both
are in any way changed, this trust agreement shall forthwith be amended and
modified as necessary in order that it shall apply with full force and effect,
mutatis mutandis, to all new securities into which IBM Common Stock or the
Exchangeable Shares or both are so changed and the parties hereto shall execute
and deliver a supplemental trust agreement giving effect to and evidencing such
necessary amendments and modifications.

10.5  Execution of Supplemental Trust Agreements

No amendment to or modification or waiver of any of the provisions of this trust
agreement otherwise permitted hereunder shall be effective unless made in
writing and signed by all of the parties hereto. From time to time the
Corporation, IBM and the Trustee may, subject to the provisions of these
presents, and they shall, when so directed by these presents, execute and
deliver by their proper officers, trust agreements or other instruments
supplemental hereto, which thereafter shall form part hereof, for any one or
more of the following purposes:

      (a)   evidencing the succession of IBM Successors to IBM and the covenants
            of and obligations assumed by each such IBM Successor in accordance
            with the provisions of Article 9 and the successor of any successor
            trustee in accordance with the provisions of Article 8;

      (b)   taking any additions to, deletions from or alterations of the
            provisions of this trust agreement or the Exchange Right which, in
            the opinion of the Trustee, will not be prejudicial to the interests
            of the Non-Affiliated Holders as a whole or are, in the opinion of
            counsel to the Trustee, necessary or advisable in order to
            incorporate, reflect or comply with any legislation the provisions
            of which apply to IBM, the Corporation, the Trustee or this trust
            agreement; and

      (c)   for any other purposes not inconsistent with the provisions of this
            trust agreement, including without limitation to make or evidence
            any amendment or modification to this trust agreement as
            contemplated hereby, provided that, in the opinion of the Trustee,
            the rights of the Trustee and the Non-Affiliated Holders as a whole
            will not be prejudiced thereby.
<PAGE>
                                      -25-


10.6  Wholly-Owned Subsidiaries

Nothing herein shall be construed as preventing the amalgamation or merger of
any Subsidiary of IBM with or into IBM or the winding up, liquidation or
dissolution of any Subsidiary of IBM. In addition, nothing herein shall be
construed as preventing the amalgamation or merger of LGS Group Inc. and/or IBM
Canada Limited with, and or into Holdco or the Corporation and/or one or more
other corporations, or the winding up, liquidation or dissolution of LGS Group
Inc.

                                   ARTICLE 11
                                   TERMINATION

11.1  Term

The Trust created by this trust agreement shall continue until the earliest to
occur of the following events:

      (a)   no outstanding Exchangeable Shares are held by any Non-Affiliated
            Holder;

      (b)   each of the Corporation and IBM elects in writing to terminate the
            Trust and such termination is approved by the Non-Affiliated Holders
            of the Exchangeable Shares in accordance with Section 8.2 of the
            Exchangeable Share Provisions; and

      (c)   21 years after the death of the last survivor of the descendants of
            His Majesty King George VI of the United Kingdom of Great Britain
            and Northern Ireland living on the date of the creation of the
            Trust.

11.2  Survival of Agreement

This trust agreement shall survive any termination of the Trust and shall
continue until there are no Exchangeable Shares outstanding held by any
Non-Affiliated Holder; provided, however, that the provisions of Articles 6 and
7 hereof shall survive any such termination of this trust agreement.

                                   ARTICLE 12
                                     GENERAL

12.1  Severability

If any provision of this trust agreement is held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remainder of this
trust agreement shall not in any way be affected or impaired thereby and this
trust agreement shall be carried out as nearly as possible in accordance with
its original terms and conditions.
<PAGE>
                                      -26-


12.2  Enurement

This trust agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective successors and permitted assigns and to the
benefit of the Non-Affiliated Holders.

12.3  Notices to Parties

All notices and other communications between the parties hereunder shall be in
writing and shall be deemed to have been given if delivered personally or by
confirmed telecopy to the parties at the following addresses (or at such other
address for such party as shall be specified in like notice):

      (a)   if to IBM at:

                  o

      (b)   if to Holdco at:

                  o

      (c)   if to the Corporation at:

                  o

      (d)   if to the Trustee at:

                  o

Any notice or other communication given personally shall be deemed to have been
given and received upon delivery thereof and if given by telecopy shall be
deemed to have been given and received on the next Business Day after the date
of receipt thereof unless such day is not a Business Day in which case it shall
be deemed to have been given and received upon the immediately following
Business Day.

12.4  Notice of Non-Affiliated Holders

Any and all notices to be given and any documents to be sent to any
Non-Affiliated Holder may be given or sent to the address of such holder shown
on the register of holders of Exchangeable Shares in any manner permitted by the
Canada Business Corporations Act from time to time in force in respect of
notices to shareholders and shall be deemed to be received (if given or sent in
such manner) at the time specified in such Act, the provisions of which Act
shall apply mutatis mutandis to notices or documents as aforesaid sent to such
holders.
<PAGE>
                                      -27-


12.5  Risk of Payments by Post

Whenever payments are to be made or documents are to be sent to any
Non-Affiliated Holder by the Trustee or by the Corporation, IBM or by such
Non-Affiliated Holder to the Trustee or to IBM or the Corporation, the making of
such payment or sending of such document sent through the post or by courier
shall be at the risk of Corporation, in the case of payments made or documents
sent by the Trustee or the Corporation or IBM and the Non-Affiliated Holder, in
the case of payments made or documents sent by the Non-Affiliated Holder.

12.6  Counterparts

This trust agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument.

12.7  Jurisdiction

This trust agreement shall be construed and enforced in accordance with the laws
of the Province of Ontario and the laws of Canada applicable therein.

12.8  Attornment

IBM agrees that any action or proceeding arising out of or relating to this
trust agreement may be instituted in the courts of Ontario, waives any objection
which it may have now or hereafter to the venue of any such action or
proceeding, irrevocably submits to the jurisdiction of the said courts in any
such action or proceeding, agrees to be bound by any final and unappealable
judgment of the said courts and hereby appoints the Corporation at its
registered office in the Province of Ontario as its attorney for service of
process.
<PAGE>
                                      -28-


            IN WITNESS WHEREOF, the parties hereto have caused this trust
agreement to be duly executed as of the date first above written.



INTERNATIONAL BUSINESS MACHINES          IBM ACQUISITION INC.
CORPORATION

    By:______________________________     By:___________________________________
        Name: o                               Name: o
        Title: o                              Title: o

    By:______________________________     By:___________________________________
        Name: o                               Name: o
        Title: o                              Title: o


3040696 NOVA SCOTIA COMPANY              CIBC MELLON TRUST COMPANY

    By:______________________________     By:___________________________________
        Name: o                               Name: o
        Title: o                              Title: o

    By:______________________________     By:___________________________________
        Name: o                               Name: o
        Title: o                              Title: o