EXHIBIT
10.4


PARENT GUARANTEE AGREEMENT


between


INTERNATIONAL
BUSINESS MACHINES CORPORATION


and


[SELLER]


 


Dated as of May 25, 2007
















TABLE OF CONTENTS


	
   

  	
   

  	
  PAGE

  
	
  ARTICLE 1

  DEFINED TERMS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.01. Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  GUARANTEE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.01. Guarantee

  	
   

  	
  2

  
	
  Section 2.02. Guarantee Absolute and
  Unconditional

  	
   

  	
  2

  
	
  Section 2.03. Waiver and
  Acknowledgements

  	
   

  	
  3

  
	
  Section 2.04. Subrogation

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF GUARANTOR

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.01. Representations,
  Warranties and Agreements of Guarantor

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.01. Amendments in Writing

  	
   

  	
  9

  
	
  Section 4.02.  No Waiver by Course of Conduct; Cumulative Remedies

  	
   

  	
  9

  
	
  Section 4.03. Successors and Assigns

  	
   

  	
  9

  
	
  Section 4.04. Set-Off

  	
   

  	
  9

  
	
  Section 4.05. No Collateral

  	
   

  	
  9

  
	
  Section 4.06. Equity Rights

  	
   

  	
  9

  
	
  Section 4.07  Acknowledgments and Agreements With Respect To Hedging and Market
  Activity

  	
   

  	
  10

  
	
  Section 4.08. Counterparts

  	
   

  	
  10

  
	
  Section 4.09. Severability

  	
   

  	
  11

  
	
  Section 4.10. Section Headings

  	
   

  	
  11

  
	
  Section 4.11. Integration

  	
   

  	
  11

  
	
  Section 4.12. Governing Law; Waiver
  of Jury Trial

  	
   

  	
  11

  
	
  Section 4.13. Acknowledgements

  	
   

  	
  11

  
	
  Section 4.14. Other Derivatives

  	
   

  	
  12

  



 



 i















PARENT
GUARANTEE AGREEMENT


This PARENT GUARANTEE AGREEMENT (this “Agreement”), dated as of May 25, 2007, is entered into
between International Business Machines Corporation, a New York corporation, (“Guarantor”) and [SELLER] (“Seller”)
and contains a guarantee made by Guarantor in favor of Seller.


W I
T N E S S E T H:


WHEREAS, Guarantor is the issuer of
shares of common stock, par value $0.20 per share (Ticker: IBM) (“Shares”);


WHEREAS, IBM International Group B.V. (“Company”)
and Seller have entered into a Cover Letter for Accelerated Share Repurchase
dated as of May 25, 2007, including a Schedule of Standard Terms and Conditions
attached thereto, (together, the “Accelerated Share
Repurchase Agreement”), pursuant to which, Company and Seller may
enter into a transaction to purchase and sell Shares upon the terms and subject
to the conditions set forth therein (the “Transaction”);


WHEREAS, it is a condition
precedent to the effectiveness of the Transaction that Guarantor shall have
executed and delivered this Agreement to Seller;


NOW, THEREFORE, in consideration of
the premises and to induce Seller to enter into the Accelerated Share
Repurchase Agreement, Guarantor hereby agrees with Seller, for the benefit of
Seller, as follows:


ARTICLE
1

DEFINED TERMS


Section 1.01.  Definitions.  (a) Unless otherwise defined
herein, terms defined in the Accelerated Share Repurchase Agreement are used
herein as therein defined.


(b)           The
following terms have the following meanings:


“Accelerated Share Repurchase
Agreement”: has the meaning set forth in the introductory paragraph
hereof.


“Agreement”:  has the meaning set forth in the introductory
paragraph hereof.


“Company”: has
the meaning set forth in the introductory paragraph hereof.













“Exchange Act”:
has the meaning set forth in Section 3.01.


“Guarantor”:  has the meaning set forth in the introductory
paragraph hereof.


“Seller”: has
the meaning set forth in the introductory paragraph hereof.


“Shares”: has
the meaning set forth in the introductory paragraph hereof.


“Transaction”:
has the meaning set forth in the introductory paragraph hereof.


ARTICLE
2

GUARANTEE


Section 2.01.  Guarantee.  Guarantor hereby unconditionally
and irrevocably guarantees to Seller, for the benefit of Seller, the prompt and
complete payment and performance when due of the obligations of Company under
the Accelerated Share Repurchase
Agreement (including, without limitation, any obligation Company may
have under the Settlement provisions of the Accelerated Share Repurchase
Agreement), as may be further modified, amended or supplemented from time to
time (collectively, the “Obligations”).  Any amounts or deliveries that would be owed
or become due by Company to Seller under the Accelerated Share Repurchase
Agreement  but are unenforceable or not
allowable against Company because Company is the subject of a bankruptcy,
liquidation, reorganization or similar case or proceeding, shall nonetheless be
deemed owed or due for the purposes of this Article.  Seller shall not be obligated to file any
claim relating to the Obligations in the event Company becomes subject to a
bankruptcy, liquidation, reorganization or similar case or proceeding, and the
failure by Seller to so file shall not affect Guarantor’s obligations
hereunder.


(a)           This
Article is a guarantee of payment and performance when due and not of
collection.  Guarantor agrees that Seller
may resort to Guarantor for payment or performance of any of the Obligations,
whether or not Seller shall have proceeded or attempted to proceed against Company
or any other entity principally or secondarily obligated with respect to the
Obligations.


(b)           Guarantor’s
obligations under this Article shall continue to be effective or be reinstated,
as the case may be, if at any time any payment or performance of any of the
Obligations is rescinded or must otherwise be returned by Seller upon or as a
result of the insolvency, bankruptcy, liquidation or reorganization of Company
or otherwise, all as though such payment or performance had not been made.


Section 2.02.  Guarantee Absolute and
Unconditional.  Guarantor
guarantees that the Obligations will be performed strictly in accordance with
the



 2
 









provisions of this Agreement and the Accelerated Share
Repurchase Agreement, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such provisions or the
rights of Seller with respect thereto. 
The liability of Guarantor under this Article shall be irrevocable,
absolute and unconditional irrespective of, and Guarantor hereby irrevocably
waives, any defenses it may now or hereafter have (including any defense based
on the failure to provide notice to or obtain the consent of Guarantor) in any
way relating to, any or all of the following:


(a)           lack of
validity or enforceability of this Agreement or the Accelerated Share
Repurchase Agreement;


(b)           the
entry into additional transactions, any indulgence, concession, waiver or
consent given to Company, or any other changes in the amount of, time, manner
or place of payment of, or in any other term of any or all of the Obligations;


(c)           any change, restructuring or
termination in or of the structure or existence of Company; or


(d)           any other circumstance (including,
without limitation, any statute of limitations) that might otherwise constitute
a defense available to, or a discharge of, Guarantor or Company.


Section 2.03.  Waiver and
Acknowledgements.  (a)
Guarantor hereby waives promptness, diligence, demand for performance, notice
of acceptance, presentment, protest, non-performance, default, acceleration,
early termination, protest or dishonor, any other notice with respect to any of
the Obligations and this Article, and any requirement that Seller exhaust any
right or take any action against Guarantor or any other entity.


(b)
          Guarantor hereby waives any
right to revoke this guarantee, and acknowledges that its obligations under
this Article is continuing in nature and applies to all Obligations, whether
existing now or in the future.


(c)           Guarantor hereby waives (i) any
defense arising by reason of any claim or defense based upon an election of
remedies by Seller that in any manner impairs, reduces, releases or otherwise
adversely affects Guarantor’s subrogation, reimbursement, exoneration,
contribution or indemnification rights or other rights to proceed against
Company, any other guarantor or any other entity, and (ii) any defense based on
any right of set-off or counterclaim against or in respect of Guarantor’s
obligations under this Article.


Section 2.04.  Subrogation.  Guarantor will not exercise any
rights that it may now have or hereafter acquire against Company or any other
guarantor that arise from the existence, payment, performance or enforcement of
Guarantor’s obligations under this Article, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution or
indemnification and any



 3
 









right to participate in any claim or remedy of Seller
against Company or any other guarantor, whether or not such claim, remedy or
right arises in equity or under contract, statute or common law, including,
without limitation, the right to take or receive from Company or any other
guarantor, directly or indirectly, in cash or other property, by set-off or in
any other manner, payment on account of such claim, remedy or right, unless and
until all of the Obligations shall have been finally and irrevocably satisfied
in full.  If any amount shall be paid to
Guarantor in violation of the preceding sentence at any time prior to the final
and irrevocable payment or performance in full of all of the Obligations, such
amount shall be held in trust for the benefit of Seller and shall forthwith be
paid to Seller to be (at the election of Seller) credited and applied to the
Obligations, whether matured or unmatured, in accordance with the terms of this
Agreement and the Accelerated Share Repurchase Agreement.


ARTICLE
3

REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF GUARANTOR


Section 3.01.  Representations, Warranties
and Agreements of Guarantor.


(a)           Guarantor represents and warrants to
Seller that it is duly organized and validly existing under the laws of the
jurisdiction of its organization or incorporation and, if relevant under such
law, in good standing.


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


(c)           Guarantor represents and warrants to
Seller that the execution and delivery by Guarantor of, and the compliance by
the Guarantor with all of the provisions of, this Agreement and the
consummation of the Transaction will not (i) 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 Guarantor or any of its subsidiaries is a party or by which
Guarantor or any of its subsidiaries is bound or to which any of the property
or assets of Guarantor or any of its subsidiaries is subject, and which
conflict, breach or default has a material adverse effect on the Guarantor and
its subsidiaries taken as a whole or (ii) result in any violation of the
provisions of the Certificate of Incorporation or By-laws or other constitutive
documents of Guarantor or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over Guarantor or any
of its subsidiaries or any of their respective properties.



 4
 









(d)           Guarantor represents and warrants to Seller
that, except as contemplated by clause (e) below, no consent, approval,
authorization, order, registration, qualification or filing of or with any
court or governmental agency or body having jurisdiction over Guarantor or any
of its subsidiaries or any of their respective properties is required for the
execution and delivery by Guarantor of, and the performance by Guarantor of all
its obligations  under this Agreement or
the consummation by Guarantor of the transaction contemplated hereby.


(e)           Guarantor represents and warrants to
Seller that Guarantor has made as of June 1, 2007, and agrees that it shall use
its best efforts during the Averaging Period and the Valuation Period (if any)
to make, all filings, if any, required to be made by it with the Securities and
Exchange Commission, any securities exchange or any other regulatory body with
respect to the existence and terms of the Transaction.


(f)            Guarantor represents and warrants to
Seller as of the date hereof and agrees that as of the date, if any, that
Company delivers a Company Election Notice to Seller choosing Share Settlement,
neither Guarantor nor any of its officers and directors is, or will be, as the
case may be, aware of any material nonpublic information regarding Guarantor or
the Shares.


(g)           Guarantor represents and warrants to
Seller as of June 1, 2007 and agrees that as of the date, if any, that Company
delivers a Company Election Notice to Seller choosing Share Settlement, all
reports and other documents filed by Guarantor with the Securities and Exchange
Commission pursuant to the Exchange Act when considered as a whole (with the
more recent such reports and documents deemed to amend inconsistent statements
contained in any earlier such reports and documents), do not, or will not, as the
case may be, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.


(h)           Guarantor represents and warrants to
Seller that Guarantor is not entering into this Agreement to facilitate a
distribution of the Shares (or any security convertible into or exchangeable
for Shares) or in connection with a future issuance of securities.


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


(j)            Guarantor represents and warrants to
Seller on the Purchase Date and agrees that on each day to and including the
final day of the Valuation Period (i) its assets at their fair valuation exceed
its liabilities, including contingent



 5
 









liabilities, (ii) its capital is adequate to conduct
its business and (iii) it has the ability to pay its debts and obligations as
such debts mature and does not intend to, or does not believe that it will,
incur debt beyond its ability to pay as such debts mature.


(k)           Guarantor shall use its best efforts
to cause the Registration Statement to remain effective under the Securities
Act for a period of 30 days immediately following the date any Registered
Payment Shares are delivered to Seller pursuant to Section 5(a)(ii) of the
Accelerated Share Repurchase Agreement and facilitate the ability of the Seller
or Seller’s affiliates to distribute the Registered Payment Shares in
compliance with the Securities Act.


(l)            Guarantor acknowledges and agrees
that it is not relying, and has not relied, upon Seller or any affiliate of
Seller with respect to the legal, accounting, tax or other implications of this
Agreement and that it has conducted its own analyses of the legal, accounting,
tax and other implications hereof.  It
further acknowledges and agrees that neither Seller nor any affiliate of Seller
has acted as its advisor in any capacity in connection with this
Agreement.  It is entering into this
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 assuming (financially and otherwise)
those risks. Without limiting the generality of the foregoing, it acknowledges
that Seller is not making any representations or warranties with respect to the
treatment of the Transaction contemplated by the Accelerated Share Repurchase
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.


(m)          Guarantor agrees that neither it nor
any of its affiliates or agents shall take any action that would cause
Regulation M to be applicable to any purchases of Shares, or any security for
which the Shares are a reference security (as defined in Regulation M), by it
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 Guarantor or its affiliates has provided written
notice to Seller of a planned “distribution” (as defined in Regulation M) of
Shares or any security for which the Shares are 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 Guarantor acknowledges that any such notice is likely to result in
the extension or suspension of the Averaging Period or the Valuation Period, as
the case may be, pursuant to Section 3(c) of the Accelerated Share Repurchase
Agreement.  Accordingly, the Guarantor
acknowledges that it will not provide such notice while aware of material
non-public information.


(n)           Guarantor represents and warrants to
Seller that it is not and, after giving effect to any Transaction, will not be,
required to register as an



 6
 









“investment company” as such term is defined in the
Investment Company Act of 1940, as amended.


(o)           Guarantor represents and warrants to
Seller that it has publicly disclosed its program for the acquisition of
Shares.


(p)           Guarantor further represents,
warrants and covenants to Seller that:


(i)            Guarantor does not have, and shall
not attempt to exercise, any influence over how, when or whether Seller effects
any purchases of Shares in connection with the Accelerated Share Repurchase
Agreement;


(ii)           from and including the date hereof to
and including the last Settlement Day under the Accelerated Share Repurchase
Agreement, neither the Guarantor nor its officers or employees shall, directly
or indirectly, communicate any material nonpublic information regarding the
Guarantor or the Shares to, or otherwise influence the trading decisions of,
any Restricted Contact Personnel;


(iii)          Guarantor is entering into this
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


(iv)          Guarantor will not alter or deviate
from this Agreement or enter into or alter a corresponding hedging transaction
with respect to the Shares and will otherwise comply with Rule
10b5-1(c)(1)(i)(C).


(q)           Guarantor represents and agrees that
it has not made and will not make Rule 10b-18 purchases of blocks pursuant to
the once-a-week block exception contained in Rule 10b-18(b)(4) by or for
Guarantor or any of its affiliated purchasers during any of the four calendar
weeks preceding the first day of the Averaging Period or during the calendar
week in which the first day of the Averaging Period occurs (“Rule 10b-18
purchase”, “blocks” and “affiliated purchaser” each being used as defined in
Rule 10b-18).


(r)            From the date hereof through the
last day of the Averaging Period or, if the Settlement Amount is greater than
zero, through the last day of the Valuation Period, Guarantor agrees to (i)
notify Seller prior to the opening of trading in the Shares on any day on which
Guarantor makes, or expects to make, 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 Guarantor (other than any
such transaction in which the consideration consists solely of cash and there
is no valuation period), (ii) promptly notify Seller following any such
announcement that such announcement has been made, and (iii) promptly deliver
to Seller following the making of any such announcement a certificate
indicating (A) Guarantor’s average daily Rule 10b-18 purchases (as defined in
Rule 10b-18) during the three full calendar months preceding the date



 7
 









of the announcement of such transaction and (B)
Guarantor’s block purchases (as defined in Rule 10b-18) effected pursuant to
paragraph (b)(4) of Rule 10b-18 during the three full calendar months preceding
the date of the announcement of such transaction.  In addition, Guarantor shall promptly notify
Seller of the earlier to occur of the completion of such transaction and the
completion of the vote by target shareholders. 
Guarantor acknowledges that any such public announcement may cause the
Averaging Period or the Valuation Period, as the case may be, to be suspended
pursuant to Section 3(c) of the Accelerated Share Repurchase Agreement.  Accordingly, Guarantor acknowledges it will
not provide such notice while aware of material non-public information.


(s)           On any Trading Day prior to the last
Settlement Date under the Accelerated Share Repurchase Agreement on which
Seller is permitted to purchase Shares pursuant to the Accelerated Share
Repurchase Agreement, without the prior written consent of Seller,  Guarantor shall not, and shall cause its
affiliates and affiliated purchasers (each as defined in Rule 10b-18) not to,
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 (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 except as contemplated
in Section 4.14 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.


(t)            In respect of any settlement
pursuant to the Accelerated Share Repurchase Agreement in which Company is
obligated to deliver Shares to Seller, Guarantor shall use its best efforts to
facilitate the delivery of Shares by Company pursuant to Sections 5 and 6 of
the Accelerated Share Repurchase Agreement. Without limiting the generality of
the foregoing, if necessary, Guarantor shall use its best efforts to cause the
number of authorized but unissued Shares to be increased to an amount
sufficient to permit the Company to fulfill its obligations under Section 5 of
the Accelerated Share Repurchase Agreement.


(u)           In respect of any cash payment
obligation of Guarantor under this Agreement, Guarantor shall have the right to
settle such obligation in Shares applying the settlement procedures in Sections
5 and 6 of the Accelerated Share Repurchase Agreement mutatis mutandis. Seller may designate any
of its affiliates to take delivery, and otherwise perform its obligations to
take delivery of, as the case may be, any Shares in respect of this Agreement.



 8
 









ARTICLE
4

MISCELLANEOUS


Section 4.01.  Amendments in Writing.  None of the terms or provisions of
this Agreement may be waived, amended, supplemented or otherwise modified
except by written consent of the parties hereto.


Section 4.02.  No Waiver by Course of
Conduct; Cumulative Remedies.   Seller shall not by any act, delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder.  No failure to exercise, nor
any delay in exercising, on the part of Seller, any right, power or privilege
hereunder shall operate as a waiver thereof. 
No single or partial exercise of any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.  A
waiver by Seller of any right or remedy hereunder on any one occasion shall not
be construed as a bar to any right or remedy which Seller would otherwise have
on any future occasion.  The rights and
remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any other rights or remedies provided by
law.


Section 4.03.  Successors and Assigns.  This Agreement shall be binding
upon the successors and assigns of Guarantor and shall inure to the benefit of
Seller and its successors and assigns. The rights and duties under this
Agreement may not be assigned or transferred by the Guarantor or Seller without
the prior written consent of the other party, not to be unreasonably withheld.


Section 4.04.  Set-Off.  Notwithstanding any provision of
this Agreement, the Accelerated Share Repurchase Agreement or any other
agreement between the parties to the contrary, Obligations under this 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 this Agreement,
under any other agreement between the parties hereto, by operation of law or
otherwise.


Section 4.05.  No Collateral. Notwithstanding
any provision of this Agreement, the Accelerated Share Repurchase Agreement or
any other agreement between the parties to the contrary, the Obligations of the
parties hereunder are not secured by any collateral.


Section 4.06.  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 this
Agreement, the Accelerated Share Repurchase Agreement or the transactions
contemplated thereby that is senior in priority to the rights and claims
available to shareholders of Shares.



 9
 









Section 4.07  Acknowledgments
and Agreements With Respect To Hedging and Market Activity.


(a)           Subject
to Section 4.07(c) of this Agreement, Guarantor acknowledges and agrees that:


(i)            During the Averaging Period and, if
applicable, the Valuation Period, Seller and its affiliates may buy or sell
Shares 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 Accelerated Share
Repurchase Agreement;


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


(iii)          Seller shall make its own
determination as to whether, when or in what manner any hedging or market
activities in Guarantor’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 Seller and
its affiliates with respect to the Shares may affect the market price and
volatility of the Shares, as well as the Daily Average Price and Reported VWAP,
each in a manner that may be adverse to Company and to Guarantor.


(b)           Each
of Guarantor and 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 this Agreement as
if this Agreement were a confirmation that was governed by, and incorporated,
such Sections of the ISDA Definitions.


(c)           Subject
to Section 3.01(i) herein, Seller represents and agrees that it is not entering
into this Agreement, and will not purchase Shares in connection with this
Agreement during the Averaging Period or otherwise, to create actual or
apparent trading activity in the Shares (or any security convertible into or
exchangeable for Shares) or to raise or depress or otherwise manipulate the
price of the Shares (or any security convertible into or exchangeable for
Shares), 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.


Section 4.08.  Counterparts.  This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and the
same



 10
 









agreement. 
Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of an original executed
counterpart of this Agreement.


Section 4.09.  Severability.  Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.


Section 4.10.  Section Headings.  The Section headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.


Section 4.11.  Integration.  This Agreement to which Guarantor
is a party represents the agreement of Guarantor and Seller with respect to the
subject matter hereof, and there are no promises, undertakings, representations
or warranties by Seller relative to the subject matter hereof not expressly set
forth or referred to herein.


Section 4.12.  Governing
Law; Waiver of Jury Trial.


(a)           THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS 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 THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.


(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 THIS AGREEMENT.


Section 4.13.  Acknowledgements.  Guarantor hereby acknowledges
that:


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


(b)           Seller
has no fiduciary relationship with or duty to Guarantor arising out of or in
connection with this Agreement or the Accelerated Share Repurchase Agreement,
and the relationship between Company and Guarantor, on the one hand, and Seller
and Company, on the other hand, in connection herewith or therewith is solely
that of creditor and debtor.



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Section 4.14.  Other Derivatives.  Notwithstanding anything to the
contrary contained herein, the Seller:


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


(b)           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 Guarantor under this Agreement;


(c)           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 Guarantor under this Agreement; provided, however, that any such renewal, extension or
amendment does not include or result in, directly or indirectly, the purchase
or sale of Shares in the public market;


(d)           acknowledges
and agrees that any existing Internal Equity Transactions 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 such Seller, and such renewal, extension or amendment shall not constitute a
breach of any representation, warranty or agreement by the Guarantor under this
Agreement; provided, however, that any such
renewal, extension or amendment does not include or result in, directly or
indirectly, the purchase or sale of Shares in the public market; and


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


[Remainder
of Page Intentionally Left Blank]



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IN WITNESS
WHEREOF,
Guarantor has caused this Parent Guarantee Agreement to be duly executed and
delivered as of the date first above written.


 


	
  

  	
  INTERNATIONAL BUSINESS

  MACHINES CORPORATION

  
	
   

  	
   

  
	
   

  	
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  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Acknowledged
  and agreed by:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [SELLER]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title: