Document:

Exhibit
10.3

 

Note:  This exhibit reflects an amendment to
Section 13(b) of this long-term performance plan to provide that the
Rescission Period shall mean that period of time established by the Committee
which shall not be less than 6 months after any exercise, payment or delivery
pursuant to an Award.  The remaining
terms and conditions of this long-term performance plan were not modified,
including the maximum number of shares that may be issued under the plan as set
forth in Section 3.

 

IBM PWCC Acquisition Long-Term Performance Plan

 

1.
Objectives.

 

The IBM
PWCC Acquisition Long-Term Performance Plan (the “Plan”) is designed to
attract, motivate and retain selected employees of, and other individuals
providing services to, the Company in connection with the Company’s acquisition
of certain businesses and assets of PricewaterhouseCoopers. These objectives
are accomplished by making long-term incentive and other awards under the Plan,
thereby providing Participants with a proprietary interest in the growth and
performance of the Company.

 

2.
Definitions.

 

(a)
“Awards”—The grant of any form of stock option, stock appreciation right, stock
or cash award, whether granted singly, in combination or in tandem, to a
Participant pursuant to such terms, conditions, performance requirements,
limitations and restrictions as the Committee may establish in order to fulfill
the objectives of the Plan.

 

(b) “Award
Agreement”—An agreement between the Company and a Participant that sets forth
the terms, conditions, performance requirements, limitations and restrictions
applicable to an Award.

 

(c)
“Board”—The Board of Directors of International Business Machines Corporation
(“IBM”).

 

(d)
“Capital Stock” or “stock”—Authorized and issued or unissued Capital Stock of
IBM, at such par value as may be established from time to time.

 

(e)
“Code”—The Internal Revenue Code of 1986, as amended from time to time.

 

(f)
“Committee”—The committee designated by the Board to administer the Plan.

 

(g)
“Company”—IBM and its affiliates and subsidiaries including subsidiaries of
subsidiaries and partnerships and other business ventures in which IBM has an
equity interest.

 

(h) “Fair
Market Value”—The average of the high and low prices of Capital Stock on the
New York Stock Exchange for the date in question, provided that, if no sales of
Capital Stock were made on said exchange on that date, the average of the high
and low prices of Capital Stock as reported for the most recent preceding day
on which sales of Capital Stock were made on said exchange.

 

(i)
“Participant”— An individual to whom an Award has been made under the Plan.
Awards may be made to any employee of, or any other individual providing
services to, the Company in

 

 

connection
with the Company’s acquisition of certain businesses and assets of
PricewaterhouseCoopers.

 

(j)
“Performance Period” — A multi-year period of no more than five consecutive
calendar years over which one or more of the performance criteria listed in
Section 6 shall be measured pursuant to the grant of Long-Term Performance
Incentive Awards (whether such Awards take the form of stock, stock units or
equivalents or cash). Performance Periods may overlap one another, but no two
Performance Periods may consist solely of the same calendar years.

 

3. Capital
Stock Available for Awards.

 

The number
of shares that may be issued under the Plan for Awards granted wholly or partly
in stock during the term of the Plan is 41,000,000. Shares of Capital Stock may
be made available from the authorized but unissued shares of the Company or
from shares held in the Company’s treasury and not reserved for some other
purpose. For purposes of determining the number of shares of Capital Stock
issued under the Plan, no shares shall be deemed issued until they are actually
delivered to a Participant, or such other person in accordance with
Section 10. Shares covered by Awards that either wholly or in part are not
earned, or that expire or are forfeited, terminated, canceled, settled in cash,
payable solely in cash or exchanged for other awards, shall be available for
future issuance under Awards. Further, shares tendered to or withheld by the
Company in connection with the exercise of stock options, or the payment of tax
withholding on any Award, shall also be available for future issuance under
Awards.

 

4.
Administration.

 

The Plan
shall be administered by the Committee, which shall have full power to select
Participants, to interpret the Plan, to grant waivers of Award restrictions, to
continue, accelerate or suspend exercisability, vesting or payment of an Award
and to adopt such rules, regulations and guidelines for carrying out the Plan
as it may deem necessary or proper. These powers include, but are not limited
to, the adoption of modifications, amendments, procedures, subplans and the like
as necessary to comply with provisions of the laws and regulations of the
countries in which the Company operates in order to assure the viability of
Awards granted under the Plan and to enable Participants regardless of where
employed to receive advantages and benefits under the Plan and such laws and
regulations.

 

5.
Delegation of Authority.

 

The
Committee may delegate to officers of the Company its duties, power and
authority under the Plan pursuant to such conditions or limitations as the
Committee may establish.

 

6. Awards.

 

The
Committee shall determine the type or types of Award(s) to be made to each
Participant and shall set forth in the related Award Agreement the terms,
conditions, performance requirements, and limitations applicable to each Award.
Awards may include but are not limited to those listed in this Section 6.
Awards may be granted singly, in combination or in tandem. Awards may also be
made in combination or in tandem with, in replacement or payment of, or as
alternatives to, grants, rights or compensation earned under any other plan of
the Company, including the plan of any acquired entity.

 

2

 

(a) Stock
Option—A grant of a right to purchase a specified number of shares of Capital Stock
the exercise price of which shall be as determined by the Committee, provided
that, in the case of a stock option granted retroactively in tandem with or as
substitution for another award granted under any plan of the Company, the
exercise price may be the same as the purchase or designated price of such
other award.

 

(b) Stock
Appreciation Right—A right to receive a payment, in cash and/or Capital Stock,
equal in value to the excess of the Fair Market Value of a specified number of
shares of Capital Stock on the date the stock appreciation right (SAR) is
exercised over the grant price of the SAR, which shall not be less than 100% of
the Fair Market Value on the date of grant of such SAR, as determined by the
Committee, provided that, in the case of a SAR granted retroactively in tandem
with or as substitution for another award granted under any plan of the
Company, the grant price may be the same as the exercise or designated price of
such other award.

 

(c) Stock
Award—An Award made in stock and denominated in units of stock. All or part of
any stock award may be subject to conditions established by the Committee, and
set forth in the Award Agreement, which may include, but are not limited to,
continuous service with Company, achievement of specific business objectives,
increases in specified indices, attaining growth rates, and other comparable
measurements of Company performance. An Award made in stock or denominated in
units of stock that is subject to restrictions on transfer and/or forfeiture
provisions may be referred to as an Award of “Restricted Stock,” “Restricted
Stock Units” or “Long-Term Incentive Program” units.

 

(d) Cash
Award—An Award denominated in cash with the eventual payment amount subject to
future service and such other restrictions and conditions as may be established
by the Committee, and as set forth in the Award Agreement, including, but not
limited to, continuous service with the Company, achievement of specific
business objectives, increases in specified indices, attaining growth rates,
and other comparable measurements of Company performance.

 

7. Payment
of Awards.

 

Payment of
Awards may be made in the form of cash, stock or combinations thereof and may
include such restrictions as the Committee shall determine. Further, with Committee
approval, payments may be deferred, either in the form of installments or as a
future lump-sum payment, in accordance with such procedures as may be
established from time to time by the Committee. Any deferred payment, whether
elected by the Participant or specified by the Award Agreement or the
Committee, may require the payment to be forfeited in accordance with the
provisions of Section 13. Dividends or dividend equivalent rights may be
extended to and made part of any Award denominated in stock or units of stock,
subject to such terms, conditions and restrictions as the Committee may
establish. The Committee may also establish rules and procedures for the
crediting of interest on deferred cash payments and dividend equivalents for
deferred payments denominated in stock or units of stock. At the discretion of
the Committee, a Participant may be offered an election to substitute an Award
for another Award or Awards of the same or different type.

 

3

 

8. Stock
Option Exercise.

 

The price
at which shares of Capital Stock may be purchased under a stock option shall be
paid in full in cash at the time of the exercise or, if permitted by the
Committee, by means of tendering Capital Stock or surrendering another Award or
any combination thereof. The Committee shall determine acceptable methods of
tendering Capital Stock or other Awards and may impose such conditions on the
use of Capital Stock or other Awards to exercise a stock option as it deems
appropriate.

 

9. Tax
Withholding.

 

Prior to
the payment or settlement of any Award, the Participant must pay, or make
arrangements acceptable to the Company for the payment of, any and all federal,
state and local tax withholding that in the opinion of the Company is required
by law. The Company shall have the right to deduct applicable taxes from any
Award payment and withhold, at the time of delivery or vesting of shares under
the Plan, an appropriate number of shares for payment of taxes required by law
or to take such other action as may be necessary in the opinion of the Company
to satisfy all obligations for withholding of such taxes.

 

10.
Transferability.

 

No Award
shall be transferable or assignable, or payable to or exercisable by, anyone
other than the Participant to whom it was granted, except (i) by law, will or
the laws of descent and distribution, (ii) as a result of the disability of a
Participant or (iii) that the Committee (in the form of an Award Agreement or
otherwise) may permit transfers of Awards by gift or otherwise to a member of a
Participant’s immediate family and/or trusts whose beneficiaries are members of
the Participant’s immediate family, or to such other persons or entities as may
be approved by the Committee.

 

11.
Amendment, Modification, Suspension or Discontinuance of the Plan.

 

The Board
may amend, modify, suspend or terminate the Plan for the purpose of meeting or
addressing any changes in legal requirements or for any other purpose permitted
by law.

 

12.
Termination of Employment.

 

If the
employment of a Participant terminates, other than as a result of the death or
disability of a Participant, all unexercised, deferred and unpaid Awards shall
be canceled immediately, unless the Award Agreement provides otherwise. In the
event of the death of a Participant or in the event a Participant is deemed by
the Company to be disabled and eligible for benefits under the terms of the IBM
Long-Term Disability Plan (or any successor plan or similar plan of another
employer), the Participant’s estate, beneficiaries or representative, as the
case may be, shall have the rights and duties of the Participant under the
applicable Award Agreement.

 

13.
Cancellation and Rescission of Awards.

 

(a) Unless
the Award Agreement specifies otherwise, the Committee may cancel, rescind,
suspend, withhold or otherwise limit or restrict any unexpired, unpaid, or
deferred Awards at any time if the Participant is not in compliance with all
applicable provisions of the Award

 

4

 

Agreement
and the Plan, or if the Participant engages in any “Detrimental Activity.” For
purposes of this Section 13, “Detrimental Activity” shall include: (i) the
rendering of services for any organization or engaging directly or indirectly
in any business which is or becomes competitive with the Company, or which
organization or business, or the rendering of services to such organization or
business, is or becomes otherwise prejudicial to or in conflict with the
interests of the Company; (ii) the disclosure to anyone outside the Company, or
the use in other than the Company’s business, without prior written
authorization from the Company, of any confidential information or material, as
defined in the Company’s Agreement Regarding Confidential Information and
Intellectual Property, relating to the business of the Company, acquired by the
Participant either during or after employment with the Company; (iii) the
failure or refusal to disclose promptly and to assign to the Company, pursuant
to the Company’s Agreement Regarding Confidential Information and Intellectual
Property, all right, title and interest in any invention or idea, patentable or
not, made or conceived by the Participant during employment by the Company,
relating in any manner to the actual or anticipated business, research or
development work of the Company or the failure or refusal to do anything
reasonably necessary to enable the Company to secure a patent where appropriate
in the United States and in other countries; (iv) activity that results in
termination of the Participant’s employment for cause; (v) a violation of any
rules, policies, procedures or guidelines of the Company, including but not
limited to the Company’s Business Conduct Guidelines; (vi) any attempt directly
or indirectly to induce any employee of the Company to be employed or perform
services elsewhere or any attempt directly or indirectly to solicit the trade
or business of any current or prospective customer, supplier or partner of the
Company; (vii) the Participant being convicted of, or entering a guilty plea
with respect to, a crime, whether or not connected with the Company; or (viii)
any other conduct or act determined to be injurious, detrimental or prejudicial
to any interest of the Company.

 

(b) Upon
exercise, payment or delivery pursuant to an Award, the Participant shall
certify in a manner acceptable to the Company that he or she is in compliance
with the terms and conditions of the Plan. In the event a Participant fails to
comply with the provisions of paragraphs (a)(i)-(viii) of this Section 13
prior to, or during the Rescission Period, then any exercise, payment or
delivery may be rescinded within two years after such exercise, payment or
delivery.  In the event of any such
rescission, the Participant shall pay to the Company the amount of any gain
realized or payment received as a result of the rescinded exercise, payment or
delivery, in such manner and on such terms and conditions as may be required,
and the Company shall be entitled to set-off against the amount of any such
gain any amount owed to the Participant by the Company.  As used herein, Rescission Period shall mean
that period of time established by the Committee which shall not be less than 6
months after any exercise, payment or delivery pursuant to an Award.

 

14.
Adjustments.

 

In the
event of any change in the outstanding Capital Stock of the Company by reason
of a stock split, stock dividend, combination or reclassification of shares,
recapitalization, merger, or similar event, the Committee may adjust
proportionately: (a) the number of shares of Capital Stock (i) available for
issuance under the Plan, (ii) for which Awards may be granted to an individual
Participant set forth in Section 6, and (iii) covered by outstanding
Awards denominated in stock or units of stock; (b) the exercise and grant
prices related to outstanding

 

5

 

Awards; and
(c) the appropriate Fair Market Value and other price determinations for such
Awards. In the event of any other change affecting the Capital Stock or any
distribution (other than normal cash dividends) to holders of Capital Stock,
such adjustments in the number and kind of shares and the exercise, grant and
conversion prices of the affected Awards as may be deemed equitable by the
Committee, including adjustments to avoid fractional shares, shall be made to
give proper effect to such event. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Committee shall be authorized to cause IBM to issue or assume
stock options, whether or not in a transaction to which section 424(a) of
the Code applies, by means of substitution of new stock options for previously
issued stock options or an assumption of previously issued stock options. In
such event, the aggregate number of shares of Capital Stock available for
issuance under Awards under Section 3, including the individual
Participant maximums set forth in Section 6 will be increased to reflect
such substitution or assumption.

 

15.
Miscellaneous.

 

(a) Any
notice to the Company required by any of the provisions of the Plan shall be
addressed to the chief human resources officer of IBM in writing, and shall
become effective when it is received.

 

(b) The
Plan shall be unfunded and the Company shall not be required to establish any
special account or fund or to otherwise segregate or encumber assets to ensure
payment of any Award.

 

(c) Nothing
contained in the Plan shall prevent the Company from adopting other or
additional compensation arrangements or plans, subject to shareholder approval
if such approval is required, and such arrangements or plans may be either
generally applicable or applicable only in specific cases.

 

(d) No
Participant shall have any claim or right to be granted an Award under the Plan
and nothing contained in the Plan shall be deemed or be construed to give any
Participant the right to be retained in the employ of the Company or to
interfere with the right of the Company to discharge any Participant at any
time without regard to the effect such discharge may have upon the Participant
under the Plan. Except to the extent otherwise provided in any plan or in an
Award Agreement, no Award under the Plan shall be deemed compensation for purposes
of computing benefits or contributions under any other plan of the Company.

 

(e) The
Plan and each Award Agreement shall be governed by the laws of the State of New
York, excluding any conflicts or choice of law rule or principle that might
otherwise refer construction or interpretation of the Plan to the substantive
law of another jurisdiction. Unless otherwise provided in the Award Agreement,
recipients of an Award under the Plan are deemed to submit to the exclusive
jurisdiction and venue of the federal or state courts of New York, County of
Westchester, to resolve any and all issues that may arise out of or relate to
the Plan or any related Award Agreement.

 

(f) In the
event that a Participant or the Company brings an action to enforce the terms of
the Plan or any Award Agreement and the Company prevails, the Participant shall
pay all costs and expenses incurred by the Company in connection with that
action, including reasonable

 

6

 

attorneys’
fees, and all further costs and fees, including reasonable attorneys’ fees
incurred by the Company in connection with collection.

 

(g) The
Committee and any officers to whom it may delegate authority under 

Section 5 shall have full power and authority to interpret the Plan and to
make any determinations thereunder, including determinations under
Section 13, and the Committee’s or such officer’s determinations shall be
binding and conclusive. Determinations made by the Committee or any such
officer under the Plan need not be uniform and may be made selectively among
individuals, whether or not such individuals are similarly situated.

 

(h) If any
provision of the Plan is or becomes or is deemed invalid, illegal or
unenforceable in any jurisdiction, or would disqualify the Plan or any Award
under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended or limited in scope to conform to applicable laws
or, in the discretion of the Committee, it shall be stricken and the remainder
of the Plan shall remain in full force and effect.

 

(i) The
Plan is effective as of July 30, 2002, which is the date of Board approval
of the Plan.

 

Federal Income Tax
Consequences

 

The Company
has been advised by counsel that, in general, under the Internal Revenue Code,
as presently in effect, a Participant will not be deemed to recognize any
income for federal income tax purposes at the time an option or SAR is granted
or a restricted stock award is made, nor will the Company be entitled to a tax
deduction at that time. However, when any part of an option or SAR is
exercised, when restrictions on restricted stock lapse, or when an unrestricted
stock award is made, the federal income tax consequences may be summarized as
follows:

 

1. In the
case of an exercise of a stock option, the optionee will generally recognize
ordinary income in an amount equal to the excess of the fair market value of
the shares on the exercise date over the option price.

 

2. In the
case of an exercise of a SAR, the Participant will generally recognize ordinary
income on the exercise date in an amount equal to any cash and the fair market
value of any unrestricted shares received.

 

3. In the
case of an exercise of an option or SAR payable in restricted stock, or in the
case of an award of restricted stock, the immediate federal income tax effect
for the recipient will depend on the nature of the restrictions. Generally, the
fair market value of the stock will not be taxable to the recipient as ordinary
income until the year in which his or her interest in the stock is freely
transferable or is no longer subject to a substantial risk of forfeiture.
However, the recipient may elect to recognize income when the stock is
received, rather than when his or her interest in the stock is freely
transferable or is no longer subject to a substantial risk of forfeiture. If
the recipient makes this election, the amount taxed to the recipient as
ordinary income is determined as of the date of receipt of the restricted
stock.

 

4. Upon the
exercise of a stock option, the exercise of a SAR, the award of stock, or the
recognition of income on restricted stock, the Company will generally be
allowed an income tax deduction equal to the ordinary income recognized by a
Participant. When a cash payment is

 

7

 

made
pursuant to the Award, the recipient will recognize the amount of the cash
payment as ordinary income, and the Company will generally be entitled to a
deduction in the same amount.

 

8Exhibit 10.4

 

	
   

  	
   

  	
  International Business
  Machines Corporation (“IBM”)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Stock
  Option Award Agreement 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Under the IBM 1999
  Long-Term Performance Plan (the “Plan”)

  
	
   

  	
   

  	
   

  
	
  Identification

  	
   

  	
  Name: Sample
Home Country & Employee ID: United States (USA) SAMP

  
	
   

  	
   

  	
   

  
	
  Purpose

  	
   

  	
  The purpose of this grant
  is to retain selected executives and employees whose skills and talents are
  important to IBM’s operations and to align their interests with those of
  IBM’s stockholders.  You recognize that
  these options represent a potentially significant benefit to you and are
  granted for the purposes stated here.

  
	
   

  	
   

  	
   

  
	
  Grant

  	
   

  	
  Date of Grant: xx

  Price Per Share: xx

  Nonqualified Stock Options (NQSOs): xx

  
	
   

  	
   

  	
   

  
	
  Vesting
  and Term

  	
   

  	
  Options become exercisable
  in 4 equal installments on the first 4 anniversaries of the date of
  grant.  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Options expire 10 years
  from the date of grant, subject to earlier termination under Sections 12 and
  13 of the Plan and as set forth below.

  
	
   

  	
   

  	
   

  
	
  Death,
  Disability, Termination of

  Employment

  	
   

  	
  Death or
  Disability:  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In the event of your death,
  all Options shall become fully exercisable and remain exercisable for their
  full term.  In the event you become
  disabled (as described in Section 12 of the Plan), while employed by the
  Company or its subsidiaries or affiliates, any unvested Options shall
  continue to vest as if you were fully employed.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Termination
  of Employment  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If your employment
  terminates for any reason (other than for cause):

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  any options that are not
  exercisable as of the date your employment terminates shall be canceled
  immediately, and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  any options that are
  exercisable as of the date your employment terminates will remain exercisable
  for 90 days after the date of termination, after which any unexercised
  options are canceled; provided, however, that if you are an executive when
  your employment with IBM terminates (other than for cause) after age 55 with
  at least 15 years of IBM service at the time of termination, any options that
  are exercisable as of the date your employment terminates shall remain
  exercisable for the full term as set forth above.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If your employment
  terminates for cause, all options are canceled immediately.

  

 

1 of 2

 

	
  Cancellation
  and Rescission

  	
   

  	
  You understand that IBM may
  cancel, modify, rescind, suspend, withhold or otherwise limit or restrict
  this award in accordance with the terms of the Plan, including, without
  limitation, canceling or rescinding this award if you render services for a competitor
  prior to, or during the Rescission Period. 
  You understand that the Rescission Period that has been established is
  12 months.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  All determinations
  regarding enforcement, waiver or modification of the cancellation and
  rescission and other provisions of the Plan and this Agreement (including the
  provisions relating to death, disability and termination of employment) shall
  be made in IBM’s sole discretion. 
  Determinations made under this Agreement and the Plan need not be
  uniform and may be made selectively among individuals, whether or not such
  individuals are similarly situated.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  You agree that the
  cancellation and rescission provisions of the Plan and this Agreement are
  reasonable and agree not to challenge the reasonableness of such provisions,
  even where forfeiture of options is the penalty for violation.

  
	
   

  	
   

  	
   

  
	
  Non-Solicitation

  	
   

  	
  In consideration of this
  award, you agree that during your employment with IBM and for one year
  following the termination of your employment for any reason, you will not
  directly or indirectly:  a) hire,
  solicit or make an offer to any employee of the Company (as defined in the
  Plan) to be employed or perform services outside of the Company; or b)
  solicit, for competitive business purposes, any customer of the Company with
  which you were involved as part of your job responsibilities during the last
  year of your employment with IBM.  By
  accepting this award, you acknowledge that IBM would suffer irreparable harm
  if you fail to comply with the foregoing, and that IBM would be entitled to
  any appropriate relief, including money damages, equitable relief and
  attorneys’ fees.

  
	
   

  	
   

  	
   

  
	
  Jurisdiction,
  Governing Law,

  Expenses and Taxes

  	
   

  	
  You submit to the exclusive
  jurisdiction and venue of the federal or state courts of New York, County of
  Westchester, to resolve all issues that may arise out of or relate to this
  Agreement.

  This Agreement shall be governed by the laws of the State of New York,
  without regard to conflicts or choice of law rules or principles.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If you or IBM bring an
  action to enforce this Agreement and IBM prevails, you will pay all costs and
  expenses incurred by IBM in connection with that action and in connection
  with collection, including reasonable attorneys’ fees.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If IBM, in its sole
  discretion, determines that it has incurred or will incur any obligation to
  withhold taxes as a result of this award, IBM may withhold the number of
  shares that it determines is required to satisfy such liability and, to the
  extent that such amounts are not withheld, you will pay to IBM any amount
  demanded by IBM for the purpose of satisfying such liability.

  
	
   

  	
   

  	
   

  
	
  Miscellaneous

  	
   

  	
  In consideration of this
  option grant, you agree (i) to comply with the terms of the Plan and this
  Agreement, including those provisions relating to cancellation and rescission
  of awards and (ii) that by your acceptance of this award, all awards and
  options previously granted to you under the Plan or prior IBM plans are
  subject to the terms set forth above under “Cancellation and Rescission” and “Jurisdiction,
  Governing Law, Expenses and Taxes.” The Company may alter, amend or terminate
  this Agreement without your consent, upon written notice to you.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By accepting this award,
  you acknowledge having received and read the Plan, and you consent to
  receiving information and materials in connection with this award or any
  subsequent awards under the Company’s long term performance plans, including
  without limitation any prospectuses and plan documents, by any means of
  electronic delivery available now and/or in the future (including without
  limitation by e-mail, by Web site access and/or by facsimile), such consent
  to remain in effect unless and until revoked in writing by you.  This Agreement and the Plan, which is
  incorporated herein by reference, constitute the entire agreement between you
  and IBM regarding the terms and conditions of this Award.

  

 

2 of 2

 

	
   

  	
   

  	
  International Business
  Machines Corporation (“IBM”)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Long-Term
  Incentive Program Award Agreement

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Under the IBM 1999
  Long-Term Performance Plan (the “Plan”).

  
	
   

  	
   

  	
   

  
	
  Identification

  	
   

  	
  Name: Sample

  Home Country & Employee ID: United  States (USA) SAMP

  
	
   

  	
   

  	
   

  
	
  Purpose

  	
   

  	
  The purpose of this award
  is to retain members of IBM’s senior leadership team. You recognize that
  these Performance Stock Units (PSUs) represent a potentially significant
  benefit to you and are awarded for the purposes stated here.

  
	
   

  	
   

  	
   

  
	
  Award

  	
   

  	
  Date of award: xx

  Number of PSUs awarded: xx

  
	
   

  	
   

  	
   

  
	
  Vesting

  	
   

  	
  You can earn the PSUs
  awarded based on IBM’s performance in achieving cumulative business targets
  of earnings-per-share and cash flow, weighted 80/20 respectively, over a
  3-year period beginning xx/xx/xxxx and ending xx/xx/xxxx (“Performance
  Period”).  Performance against each of
  the targets will be subject to separate payout calculations according to the
  following table:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  % of Target

  	
   

  	
  <70

  	
  %

  	
  70

  	
  %

  	
  80

  	
  %

  	
  90

  	
  %

  	
  100

  	
  %

  	
  110

  	
  %

  	
  >120

  	
  %

  
	
   

  	
   

  	
  % of PSU’s earned

  	
   

  	
  0

  	
  %

  	
  25

  	
  %

  	
  50

  	
  %

  	
  75

  	
  %

  	
  100

  	
  %

  	
  125

  	
  %

  	
  150

  	
  %

  
	
   

  	
   

  	
   

  
	
  Payout of
  award

  	
   

  	
  After the end of the Performance
  Period, IBM shall either (a) deliver to you a number of shares of the
  Company’s Capital Stock equal to the number of your earned PSUs, or (b) make
  a cash payment to you equal to the value of your earned PSUs at the end of
  the Performance Period, in either case, net of any applicable tax
  withholding, and the respective PSUs shall thereafter be canceled.  If paid in cash, the value of each PSU at
  the end of the Performance Period shall be equal to the average closing
  price, as reported on the New York Stock Exchange (“NYSE”), of one share of
  IBM common stock for the month of January following the end of the
  Performance Period.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  All payouts under this
  award are subject to the provisions of the Plan and this Agreement relating
  to the cancellation and rescission of awards.

  
	
   

  	
   

  	
   

  
	
  Ceasing to
  be an active, full-time

  employee or Senior Leadership

  Team member

  	
   

  	
  Death or
  Disability: 

  
	
   

  	
   

  	
  In the event of your death
  or if you become disabled (as described in Section 12 of the Plan), all
  PSUs shall be prorated and the reduced number of PSUs will be earned based on
  IBM performance over the entire Performance Period.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Other:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If you cease to be an
  active, full-time employee for any other reason before the payout of the
  PSUs, all PSUs are canceled immediately.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If you remain an active,
  full-time employee but cease to be a member of the IBM Senior Leadership Team
  (“SLT”) before the payout of the PSUs but after your completion of at least
  one year as an SLT member during the Performance Period, the total number of
  PSUs under this award will be prorated for the number of months completed as
  an SLT member during the Performance Period. 
  The prorated number of PSUs will be paid out on schedule as
  outlined above.  If you have not
  completed at least one year as an SLT member during the Performance Period,
  the PSUs under this award will be canceled immediately.

  

 

1  of 2

 

	
  Cancellation
  and Rescission

  	
   

  	
  You understand that IBM may
  cancel, modify, rescind, suspend, withhold or otherwise limit or restrict
  this award in accordance with the terms of the Plan, including, without
  limitation, canceling or rescinding this award if you render services for a
  competitor prior to, or during the Rescission Period.  You understand that the Rescission Period
  that has been established is 12 months.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  All determinations
  regarding enforcement, waiver or modification of the cancellation and
  rescission and other provisions of the Plan and this Agreement (including the
  provisions relating to death, disability and termination of employment) shall
  be made in IBM’s sole discretion. 
  Determinations made under this Agreement and the Plan need not be
  uniform and may be made selectively among individuals, whether or not such
  individuals are similarly situated.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  You agree that the
  cancellation and rescission provisions of the Plan and this Agreement are
  reasonable and agree not to challenge the reasonableness of such provisions,
  even where forfeiture is the penalty for violation.

  
	
   

  	
   

  	
   

  
	
  Non-Solicitation

  	
   

  	
  In consideration of this
  award, you agree that during your employment with IBM and for one year
  following the termination of your employment for any reason, you will not
  directly or indirectly:  a) hire,
  solicit or make an offer to any employee of the Company (as defined in the
  Plan) to be employed or perform services outside of the Company; or b)
  solicit, for competitive business purposes, any customer of the Company with
  which you were involved as part of your job responsibilities during the last
  year of your employment with IBM.  By
  accepting this award, you acknowledge that IBM would suffer irreparable harm
  if you fail to comply with the foregoing, and that IBM would be entitled to
  any appropriate relief, including money damages, equitable relief and
  attorneys’ fees.

  
	
   

  	
   

  	
   

  
	
  Jurisdiction,
  Governing Law,

  Expenses and Taxes

  	
   

  	
  You submit to the exclusive
  jurisdiction and venue of the federal or state courts of New York, County of
  Westchester, to resolve all issues that may arise out of or relate to this
  Agreement.

  This Agreement shall be governed by the laws of the State of New York,
  without regard to conflicts or choice of law rules or principles.  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If you or IBM bring an
  action to enforce this Agreement and IBM prevails, you will pay all costs and
  expenses incurred by IBM in connection with that action and in connection
  with collection, including reasonable attorneys’ fees.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If IBM, in its sole
  discretion, determines that it has incurred or will incur any obligation to
  withhold taxes as a result of this award, IBM may deduct from the amount
  payable to you hereunder any amount 
  necessary to satisfy such liability and, to the extent that such
  amounts are not withheld, you will pay to IBM any amount demanded by IBM for
  the purpose of satisfying such liability.

  
	
   

  	
   

  	
   

  
	
  Miscellaneous

  	
   

  	
  In consideration of this
  award, you agree (i) to comply with the terms of the Plan and this Agreement,
  including those provisions relating to cancellation and rescission of awards
  and (ii) that by your acceptance of this award, all awards and options
  previously granted to you under the Plan or prior IBM plans are subject to
  the terms set forth above under “Cancellation and Rescission” and
  “Jurisdiction, Governing Law, Expenses and Taxes.” The Company may alter,
  amend or terminate this Agreement without your consent, upon written notice
  to you.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By accepting this award,
  you acknowledge having received and read the Plan, and you consent to
  receiving information and materials in connection with this award or any
  subsequent awards under the Company’s long term performance plans, including
  without limitation any prospectuses and plan documents, by any means of
  electronic delivery available now and/or in the future (including without
  limitation by e-mail, by Web site access and/or by facsimile), such consent
  to remain in effect unless and until revoked in writing by you.  This Agreement and the Plan, which is
  incorporated herein by reference, constitute the entire agreement between you
  and IBM regarding the terms and conditions of this Award.

  

 

2 of 2

 

	
   

  	
   

  	
  International Business
  Machines Corporation (“IBM” or the “Company”), Armonk, New York  10504

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Restricted
  Stock Unit and Stock Option Award Agreement

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Under the IBM 1999
  Long-Term Performance Plan (the “Plan”).

  
	
   

  	
   

  	
   

  
	
  Identification

  	
   

  	
  Name: Sample
Home Country & Employee ID: United States (USA) SAMP

  
	
   

  	
   

  	
   

  
	
  Grant

  	
   

  	
  Under Sections 6 (a) and
  (c) of the 1999 Long-Term Performance Plan (the “Plan”), as of xx/xx/xxxx  (the “Award Date”) the Company has awarded
  to you the following:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Restricted Stock Units
  (“RSUs”): xx

  Stock Options (“Options”): xx

  
	
   

  	
   

  	
  Price Per Share: xx

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  All of the terms,
  conditions and other provisions of the Plan are incorporated by reference
  herein.  Capitalized terms used in this
  Agreement but not defined herein shall have the same meanings as in the
  Plan.  If there is any conflict between
  the provisions of this document and provisions of the Plan, the provisions of
  the Plan govern.  By accepting the
  grant of the RSUs and Options, you agree to be bound by all the terms and
  provisions of the Plan (as presently in effect or later amended), rules and
  regulations under the Plan adopted from time to time, and decisions and
  determinations made from time to time by the Committee, the Chief Executive
  Officer or other senior officer designated by the Committee.

  
	
   

  	
   

  	
   

  
	
  Restricted
  Stock Units

  (RSUs)

  	
   

  	
  The RSUs awarded under this
  Agreement will vest 100% on the fourth anniversary of the Award Date (“Vesting
  Date”).  Provided that you are still
  employed by the Company or a subsidiary of the Company on the Vesting Date,
  the Company shall, as soon as practicable following the Vesting Date, either
  (a) deliver to you a number of shares of the Company’s Capital Stock equal to
  the aggregate number of RSUs which became vested on the Vesting Date or (b)
  make a cash payment to you equal to the Fair Market Value on the Vesting Date
  multiplied by the number of RSUs which became vested on the Vesting Date, in
  either case, net of any applicable withholding tax requirements, and the
  respective RSUs shall thereafter be canceled. 
  Fair Market Value will be calculated in your home country currency at
  the exchange rate as reported in the Wall Street Journal, New York edition
  published on the business day immediately preceding the payment date.  RSUs are not shares of IBM Capital Stock
  and do not convey any stockholder rights.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In the event your
  employment with the Company or its subsidiary or affiliate terminates prior
  to the Vesting Date, all then unvested RSUs under this Agreement shall be
  canceled; provided, however, if you are an executive when your employment
  terminates (other than for Cause) after you have attained age 55, completed
  at least 15 years of service with IBM at the time of termination, and
  completed at least one year of active service during the period between the
  Award Date and the Vesting Date, the total number of RSUs under this award
  will be prorated for the number of months completed as an active employee
  during the Vesting Period.  The
  prorated number of RSUs will be paid as soon as is practicable following the
  termination of employment in cash or stock as set forth above.

  
	
   

  	
   

  	
   

  
	
  RSU Award
  - Dividend Equivalents

  	
   

  	
  Prior to the Vesting Date,
  the Company shall cause to be paid to you an amount equal to the dividend
  paid on one share of IBM Capital Stock whenever such actual dividends are
  paid to IBM stockholders for each RSU awarded (but not yet vested) hereunder,
  provided that the respective RSUs have been awarded as of the dividend record
  date.

  

 

1 of 3

 

	
  Stock
  Option Award - 

  Vesting and Term

  	
   

  	
  Your Options have an
  exercise price per share of $xx.xx (the “Option Price”).  The Options will become exercisable 25% on
  the first anniversary of the Award Date and 25% on each successive
  anniversary of the Award Date, with 100% becoming exercisable after four
  years (each such date an “Option Vesting Date”).  Subject to earlier termination pursuant to
  sections “Stock Option Award - Termination of Employment” and “Cancellation
  and Rescission” below, the Option shall expire on the close of business on
  the tenth anniversary of the Award Date (the “Stated Expiration Date”).

  
	
   

  	
   

  	
   

  
	
  Stock
  Option Award - 

  Termination of Employment

  	
   

  	
  In the event that your
  employment terminates prior to the applicable Option Vesting Date for any
  reason, all Options granted under this agreement which are not exercisable as
  of the date of such termination of employment shall be canceled immediately.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Any Options which are
  exercisable as of the date of your termination of employment will remain
  exercisable for a period of 90 days (but in no event past the Stated
  Expiration Date) after the date of such termination, and shall expire at the
  end of such period; provided, however, if you are an executive when your
  employment terminates (other than for Cause) after you have attained age 55
  and completed at least 15 years of service with IBM, any Options which are
  exercisable as of the date of your termination of employment shall remain
  exercisable until the Stated Expiration Date.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notwithstanding anything
  herein to the contrary, if your employment is terminated for Cause, all
  Options, whether or not exercisable will be canceled immediately.

  
	
   

  	
   

  	
   

  
	
  Death and
  Disability

  	
   

  	
  In the event of your death,
  any unvested RSUs then outstanding hereunder shall vest immediately and all
  Options shall become fully exercisable and remain exercisable for their full
  term.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In the event you become
  disabled (as described in Section 12 of the Plan), while employed by the
  Company or its subsidiaries or affiliates, any unvested RSUs and Options
  shall continue to vest as if you were fully employed.

  
	
   

  	
   

  	
   

  
	
  Cancellation
  and Rescission

  	
   

  	
  You understand that IBM may
  cancel, modify, rescind, suspend, withhold or otherwise limit or restrict
  this award in accordance with the terms of the Plan, including, without
  limitation, canceling or rescinding this award if you render services for a
  competitor prior to, or during the Rescission Period.  You understand that the Rescission Period
  that has been established is 12 months.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  All determinations
  regarding enforcement, waiver or modification of the cancellation and
  rescission and other provisions of the Plan and this Agreement (including the
  provisions relating to death, disability and termination of employment) shall
  be made in IBM’s sole discretion. 
  Determinations made under this Agreement and the Plan need not be
  uniform and may be made selectively among individuals, whether or not such
  individuals are similarly situated.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  You agree that the
  cancellation and rescission provisions of the Plan and this Agreement are
  reasonable and agree not to challenge the reasonableness of such provisions,
  even where forfeiture is the penalty for violation.

  
	
   

  	
   

  	
   

  
	
  Jurisdiction,
  Governing

  Law, Expenses and Taxes

  	
   

  	
  You submit to the exclusive
  jurisdiction and venue of the federal or state courts of New York, County of
  Westchester, to resolve all issues that may arise out of or relate to this
  Agreement.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  This Agreement shall be
  governed by the laws of the State of New York, without regard to any
  conflicts or choice of law rules or principles.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If you or the Company bring
  an action to enforce this Agreement and the Company prevails, you will pay
  all costs and expenses incurred by the Company in connection with that action
  and in connection with collections, including reasonable attorneys’ fees.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If the Company, in its sole
  discretion, determines that it has incurred or will incur any obligation to
  withhold any taxes as a result of this award, the Company will (a) deduct
  from the Cash value of the RSUs payable to you any amount necessary to
  satisfy such liability and/or (b) withhold the number of shares that it
  determines is required to satisfy such liability.  To the extent that the Company does not
  withhold such amounts or shares, you will, upon demand therefore by the
  Company, pay to the Company any amount demanded for the purpose of satisfying
  such liability.

  

 

2 of 3

 

	
  Non-Solicitation

  	
   

  	
  In consideration of this
  award, you agree that during your employment with IBM and for one year
  following the termination of your employment for any reason, you will not
  directly or indirectly:  a) hire,
  solicit or make an offer to any employee of the Company (as defined in the
  Plan) to be employed or perform services outside of the Company; or b)
  solicit, for competitive business purposes, any customer of the Company with
  which you were involved as part of your job responsibilities during the last
  year of your employment with IBM.  By
  accepting this award, you acknowledge that IBM would suffer irreparable harm
  if you fail to comply with the foregoing, and that IBM would be entitled to
  any appropriate relief, including money damages, equitable relief and
  attorneys’ fees.

  
	
   

  	
   

  	
   

  
	
  Miscellaneous

  	
   

  	
  This award shall not be
  considered part of your annual compensation for purposes of calculating
  benefits under any IBM plan or program.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In consideration of this
  award of options and RSUs, you agree (i) to comply with the terms of the Plan
  and this Agreement, including those provisions relating to cancellation and
  rescission of awards and (ii) that by your acceptance of this award,  all awards and options previously granted
  to you under the Plan or prior IBM plans are subject to the terms set forth
  above under “Cancellation and Rescission” and “Jurisdiction, Governing Law,
  Expenses and Taxes.” The Company may alter, amend or terminate this Agreement
  without your consent, upon written notice to you.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By accepting this award,
  you acknowledge having received and read the Plan, and you consent to
  receiving information and materials in connection with this award or any
  subsequent awards under the Company’s long term performance plans, including
  without limitation any prospectuses and plan documents, by any means of
  electronic delivery available now and/or in the future (including without
  limitation by e-mail, by Web site access and/or by facsimile), such consent
  to remain in effect unless and until revoked in writing by you.  This Agreement and the Plan, which is
  incorporated herein by reference, constitute the entire agreement between you
  and IBM regarding the terms and conditions of this Award.

  

 

3  of 3

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