20,000,000,000 International Business Machines Corporation U.S. Medium-Term Notes AGENCY AGREEMENT August 21, 2003

20,000,000,000 International Business Machines Corporation U.S. Medium-Term Notes AGENCY AGREEMENT August 21, 2003

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$20,000,000,000

International Business Machines Corporation

U.S. Medium-Term Notes

AGENCY AGREEMENT

August 21, 2003

ABN AMRO Incorporated
00 Xxxx 00xx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000

Banc of America Securities LLC
Bank of America Corporate Center
000 Xxxxx Xxxxx Xxxxxx, 0xx Xxxxx
XX0-000-00-00
Xxxxxxxxx, XX 00000

Banc One Capital Markets, Inc.
1 Bank Xxx Xxxxx
Xxxxx XX0-0000, 0xx Xxxxx
Xxxxxxx, XX 00000

BNP Paribas Securities Corp.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000

BNY Capital Markets, Inc.
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, XX 00000

Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000

Credit Suisse First Boston LLC
00 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000

Deutsche Bank Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000

Xxxxxxx, Xxxxx & Co.
00 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000

HSBC Securities (USA) Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000

X. X. Xxxxxx Securities Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000

Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000

Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
4 World Financial Xxxxxx
Xxxxx 00
Xxx Xxxx, XX 00000

Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000

UBS Securities LLC
000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000

Ladies and Gentlemen:

1. Introduction. International Business Machines Corporation, a New York corporation (the "Issuer"), confirms its agreement with each of you (individually an "Agent" and collectively the "Agents") with respect to the issue and sale from time to time by the Issuer on or after the date hereof of up to $20,000,000,000 in aggregate initial offering price of its Medium-Term Debt Securities (or for Medium-Term Debt Securities denominated in currencies or currency units other than U.S. dollars, the equivalent thereof based on the prevailing exchange rates at the respective times such Medium-Term Securities are first offered) (the "Securities") issued under Article Three of the Indenture dated as of October 1, 1993, as supplemented by the First Supplemental Indenture thereto dated as of December 15, 1995 (the "Indenture"), between the Issuer and JPMorgan Chase Bank, as trustee (the "Trustee"). The Securities will be issued, and the terms thereof established, from time to time by the Issuer in accordance with the Indenture and the Procedures (as defined in Section 3(d) hereof).

2. Representations and Warranties of the Issuer. The Issuer represents and warrants to, and agrees with, each Agent as follows:

(a) A Registration statement of the Issuer (No. 333-102603), relating to securities of the Issuer (collectively the "Registered Securities"), including the Securities, has been filed with the Securities and Exchange Commission (the "Commission") and has become effective (such registration statement, as amended as of the Closing Date (as defined in Section 3(e) hereof), including all material incorporated by reference therein, being hereinafter collectively referred to as the "Registration Statement," and the prospectus dated February 4, 2003, a form of which is included in Registration Statement No. 333-102603, as supplemented as of the Closing Date, including all material incorporated by reference therein, being hereinafter referred to as the "Prospectus"). Any reference in this Agreement to amending or supplementing the Prospectus shall be deemed to include the filing of materials incorporated by reference in the Prospectus after the Closing Date and any reference in this Agreement to any amendment or supplement to the Prospectus shall be deemed to include any such materials incorporated by reference in the Prospectus after the Closing Date.

(b) On the effective date of the registration statement included in the definition of Registration Statement, such registration statement conformed, and on the Closing Date, the Prospectus as then amended or supplemented will conform, in all material respects to the

requirements of the Securities Act of 1933 (the "Act"), the Securities Exchange Act of 1934 (the "Exchange Act"), the Trust Indenture Act of 1939 (the "Trust Indenture Act") and the rules and regulations of the Commission thereunder (the "Rules and Regulations"), and on its effective date the registration statement did not, and such Prospectus will not, include 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 not misleading, except that the foregoing does not apply to statements in or omissions from any of such documents based upon written information furnished to the Issuer by any Agent specifically for use therein.

3. Appointment as Agent; Solicitations as Agent.

(a) Subject to the terms and conditions stated herein, the Issuer hereby appoints each of the Agents an agent of the Issuer for the purpose of soliciting or receiving offers to purchase the Securities from the Issuer by others. Nothing contained in this Agreement shall be construed to prevent the Issuer from selling at any time to any person any Registered Securities, including the Securities, directly on its own behalf or in a firm commitment underwriting pursuant to an underwriting agreement that does not provide for a continuous offering of such Securities. Each Agent agrees to use its reasonable efforts to solicit purchases of the Securities on the terms and subject to the conditions set forth herein and in the Procedures (as defined below).

(b) On the basis of the representations and warranties contained herein, but subject to the terms and conditions herein set forth, each Agent agrees, as agent of the Issuer, to solicit offers to purchase the Securities upon the terms and conditions set forth in the Prospectus, as from time to time amended or supplemented.

Upon receipt of notice from the Issuer as contemplated by Section 4(b) hereof, the Agents shall suspend solicitation of offers to purchase the Securities until such time as the Issuer shall have furnished them with an amendment or supplement to the Registration Statement or the Prospectus, as the case may be, contemplated by Section 4(b) and shall have advised the Agents that such solicitation may be resumed.

The Issuer reserves the right, in its sole discretion, to suspend solicitation of offers to purchase the Securities commencing at any time for any period of time or permanently. Upon receipt of notice from the Issuer, the Agents will forthwith suspend solicitation of offers to purchase the Securities from the Issuer until such time as the Issuer has advised the Agents that such solicitation may be resumed. During any such suspension, the Issuer's obligations under Sections 6(a), 6(b), 6(c) and 6(d) shall be suspended, except with respect to Notes held by an Agent for resale during the first 180 days after the Agent's purchase thereof and identified in a notice from the Agent to the Issuer as being held by such Agent for resale during such period.

Unless otherwise mutually agreed upon between the Issuer and the Agent soliciting such offer, the Agents are authorized to solicit offers to purchase Securities only in fully registered form in denominations of $100,000 or any amount in excess thereof which is an integral multiple of $1,000. The authorized denominations of Securities not denominated in U.S. dollars will be determined by the Issuer at the time of sale. Each Agent shall communicate to the Issuer, orally or in writing, each reasonable offer to purchase the Securities received by it as Agent. The Issuer shall have the sole right to accept offers to purchase the Securities and may reject any such offer, in whole or in part. Each Agent shall have the right, in its discretion reasonably exercised, without notice to the Issuer, to reject any offer to purchase the Securities received by it, in whole or in part, and any such rejection shall not be deemed a breach of its agreement contained herein.

No Security which the Issuer has agreed to sell pursuant to this Agreement shall be deemed to have been purchased and paid for, or sold, by the Issuer until such Security shall have been delivered to the purchaser thereof against payment by such purchaser.

(c) At the time of delivery of, and payment for, any Securities sold by the Issuer as a result of a solicitation made by, or offer to purchase received by, an Agent, the Issuer agrees to pay such Agent a commission in accordance with the schedule set forth in Exhibit A hereto, unless otherwise agreed.

(d) Administrative procedures respecting the sale of Securities (the "Procedures") shall be agreed upon from time to time by the Agents and the Issuer. The initial Procedures, which are set forth in Exhibit B hereto, shall remain in effect until changed by agreement among the Issuer and the Agents. Each Agent and the Issuer agree to perform the respective duties and obligations specifically provided to be performed by each of them herein and in the Procedures. The Issuer will furnish to the Trustee a copy of the Procedures as from time to time in effect.

(e) The documents required to be delivered by Section 5 hereof shall be delivered at the offices of the Issuer in Armonk, New York, or counsel for the Issuer in New York City, not later than 10:00 A.M., New York City time, on the date of this Agreement or at such other place, and at such later time and date as may be mutually agreed by the Issuer and the Agents, such time and date being herein called the "Closing Date."

4. Certain Agreements of the Issuer. The Issuer agrees with the Agents that, in connection with each offering of Securities,

(a) The Issuer will advise each Agent promptly of any proposal to amend or supplement the Registration Statement or the Prospectus (other than an amendment or supplement (i) providing solely for a change in the terms of the Securities, (ii) by means of the filing of materials incorporated by reference in the Prospectus, (iii) relating to an offering by the Issuer of Registered Securities other than the Securities or (iv) that is a pricing amendment or supplement relating to Securities the purchase of which was not solicited by any Agent) and will afford the Agents a reasonable opportunity to comment on any such proposed amendment or supplement; and the Issuer will also advise each Agent of the filing of any such amendment or supplement and of the institution by the Commission of any stop order proceedings in respect of the Registration Statement or of any part thereof and will use its best efforts to prevent the issuance of any such stop order and to obtain as soon as possible its lifting, if issued.

(b) If, at any time when a prospectus relating to the Securities is required to be delivered under the Act, any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or if it is necessary at any time to amend the Registration Statement or the Prospectus to comply with the Act, the Exchange Act or the Rules and Regulations (other than as contemplated in the parenthetical clause of Section 4(a) hereof), the Issuer will promptly notify each Agent to suspend solicitation of offers to purchase the Securities; and if the Issuer shall decide so to amend or supplement the Registration Statement or the Prospectus, it will promptly advise each Agent by telephone (with confirmation in writing) and will promptly prepare and file with the Commission an amendment or supplement which will correct such statement or omission or an amendment which will effect such compliance. Notwithstanding the foregoing, if, at the time of any notification to suspend solicitations, any Agent shall own any of the Securities with the intention of reselling them as contemplated by Section 11 hereof, or the Issuer has accepted an offer to purchase Securities but the related settlement has not occurred, the Issuer, subject to the provisions of subsection (a) of this Section, will promptly prepare and file with the Commission an amendment or supplement which will correct such statement or omission or an amendment which will effect such compliance.

(c) The Issuer, during the period when a prospectus relating to the Securities is required to be delivered under the Act, will file promptly all documents required to be filed with the Commission

pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act. The Issuer will promptly furnish each Agent with copies of all material press releases or announcements to the general public which are not filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and are not otherwise available on the IBM home page on the Internet, at "xxxx://xxx.xxx.xxx." The Issuer will also immediately notify each Agent of any downgrading in the rating of the Securities or any other debt securities of the Issuer, or any proposal to downgrade the rating of the Securities or any other debt securities of the Issuer, by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act), as soon as the Issuer learns of such downgrading or proposal to downgrade.

(d) The Issuer will furnish to each Agent copies of the Prospectus and all amendments and supplements thereto, and all amendments to the Registration Statement after the date hereof (other than an amendment or supplement (i) relating to an offering by the Issuer of Registered Securities other than the Securities or (ii) that solely specifies the terms of the Securities the purchase of which was not solicited by any Agent), in each case as soon as available and in such quantities as are reasonably requested.

(e) The Issuer will arrange for the qualification of the Securities for sale and the termination of their eligibility for investment under the laws of such jurisdictions as the Agents designate and will continue such qualifications in effect so long as required for the distribution of the Securities.

(f) So long as any Securities are outstanding, if so requested by the Agents, the Issuer will furnish to the Agents, (i) as soon as practicable after the end of each fiscal year, a copy of its annual report to stockholders for such year, (ii) as soon as available, a copy of each report or definitive proxy statement of the Issuer, if any, filed with the Commission under the Exchange Act or mailed to stockholders, and (iii) from time to time, such other information concerning the Issuer as the Agents may reasonably request.

(g) Unless otherwise agreed, the Issuer will pay all expenses incident to the performance of its obligations under this Agreement and will reimburse each Agent for any expenses (including fees and disbursements of counsel) incurred by it in connection with qualification of the Securities for sale and determination of their eligibility for investment under the laws of such jurisdictions as such Agent may designate and the printing of memoranda relating thereto, for any fees charged by investment rating agencies for the rating of the Securities, for expenses incurred in distributing the Prospectus and all supplements thereto, any preliminary prospectuses and any preliminary prospectus supplements, to each Agent and for the reasonable fees and disbursements of counsel to the Agents.

5. Conditions of Obligations. The obligation of each Agent, whether acting as agent of the Issuer or as principal under this Agreement, at any time to solicit offers to purchase the Securities is subject to the accuracy, on the date hereof, on the Closing Date, on the date of each such solicitation, and at each of the times of acceptance and of delivery referred to in Section 6(a) hereof and at each Representation Date (as defined in Section 6(b)), of the representations and warranties of the Issuer herein, to the accuracy, on each such date, of the statements of the Issuer's officers in any certificates made pursuant to the provisions hereof, to the performance, on or prior to each such date, by the Issuer of its obligations hereunder, and to each of the following additional conditions precedent:

(a) No stop order suspending the effectiveness of the Registration Statement or of any part thereof shall have been issued and no proceedings for that purpose shall have been instituted or, to the knowledge of the Issuer or any Agent, shall be contemplated by the Commission.

(b) The Prospectus, as amended or supplemented as of the Closing Date, the date of such solicitation or any Representation Date, shall not contain any untrue statement of fact which, in the opinion of any Agent, is material or omits to state a fact which, in the opinion of any Agent, is

material and is required to be stated therein or is necessary to make the statements therein not misleading.

(c) There shall not have occurred between each trade and settlement date (i) any change, or any development involving a prospective change, in or affecting particularly the business or properties of the Issuer or its subsidiaries which, in the judgment of such Agent, materially impairs the investment quality of the Securities; (ii) any downgrading in the rating of the Issuer's debt securities or public announcement that such debt securities are under surveillance or review, with possible negative implications, by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act); (iii) any suspension or limitation of trading in securities generally on the New York Stock Exchange, or any setting of minimum prices for trading on such exchange, or any suspension of trading of any securities of the Issuer on any exchange or in the over-the-counter market; (iv) any banking moratorium declared by Federal or New York authorities; or (v) any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress or any other substantial national or international calamity or emergency if, in the judgment of such Agent, the effect of any such outbreak, escalation, declaration, calamity or emergency makes it impractical or inadvisable to proceed with solicitations of purchases of, or sales of, Securities.

(d) At the Closing Date, the Agents shall have received:

(i) the opinion of the General Counsel of the Issuer (or any Assistant General Counsel, Associate General Counsel, or other internal Counsel of or representing the Issuer having knowledge of and competence in securities or other financial matters; the "Issuer Counsel"), or, at the election of the Issuer, the opinion of Cravath, Swaine & Xxxxx, outside counsel for the Issuer, dated the Closing Date, to the effect that:

(A) the Issuer (x) has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of New York, with full corporate power and authority to own its properties and conduct its business as described in the Prospectus and (y) is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction within the United States which requires such qualification wherein it owns or leases material properties or conducts material business where such failure so to qualify may have a material adverse effect on the financial condition, earnings, business or properties of the Issuer;

(B) to the knowledge of opining counsel, there is no pending or threatened action, suit or proceeding before any court or governmental agency, authority or body or any arbitrator involving the Issuer or any of its subsidiaries, of a character required to be disclosed in the Registration Statement which is not adequately disclosed in the Prospectus, and there is no franchise, contract or other document of a character required to be described in the Registration Statement or Prospectus, or to be filed as an exhibit, which is not described or filed as required; and the statements in the Prospectus describing the terms of the Securities and the provisions of the Indenture fairly summarize the matters therein described; and

(C) none of the issue and sale of the Securities, the consummation of any other of the transactions contemplated herein or the fulfillment of the terms hereof will conflict with, result in a breach of, or constitute a default under, (x) the charter or by-laws of the Issuer; (y) the terms of any indenture or other agreement or instrument known to such counsel and to which the Issuer or any of its subsidiaries is a party or bound, or (z) any order or regulation known to such counsel to be applicable to the Issuer or any of its subsidiaries of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Issuer or any of its subsidiaries.

(D) the authorized Securities conform in all material respects to the description thereof contained in the Prospectus;

(E) the Indenture has been duly authorized, executed and delivered by the Issuer, has been duly qualified under the Trust Indenture Act and constitutes a valid and binding instrument enforceable against the Issuer in accordance with its terms (subject to applicable bankruptcy, reorganization, insolvency, fraudulent transfer, moratorium or other similar laws affecting creditors' rights generally from time to time in effect and to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law); and the Securities have been duly authorized by resolutions of the Board of Directors of the Issuer for issuance for a period of time ending on the date when all Securities authorized under such resolutions have been issued (the "Period"), subject to the establishment of certain terms of the Securities by officers of the Issuer authorized by such resolutions to establish such terms, and, when the terms of any such Security have been established as provided in such resolutions and in the Indenture and such has been executed and authenticated during such period in accordance with the provisions of the Indenture and delivered to and paid for by the purchaser thereof in accordance with the terms of this Agreement, each such Security, assuming it does not violate any applicable law then binding on the Issuer, will constitute a valid and binding obligation of the Issuer entitled to the benefits of the Indenture;

(F) the Registration Statement and any amendments thereto have become effective under the Act, and, to the knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement, as amended, has been issued, and no proceedings for that purpose have been instituted or threatened;

(G) this Agreement has been duly authorized, executed and delivered by the Issuer; and

(H) no consent, approval, authorization or order of any United States Federal or New York governmental agency or regulatory body is required for the consummation of the transactions contemplated herein, except such as have been obtained under the Act and such as may be required under the blue sky laws of any jurisdiction in connection with the issue and sale of the Securities and such other approvals (specified in such opinion) as have been obtained.

(ii) such opining counsel shall also furnish a letter, dated the Closing Date, that shall state that such counsel has no reason to believe that: (A) the Registration Statement or any amendment thereof at the time it became effective contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus, as amended or supplemented, includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (in each case, except for the financial statements and other information of an accounting or financial nature included therein, and the Statement of Eligibility (Form T-1), included as an exhibit to the Registration Statement, as to which such counsel need express no view); and (B) the Registration Statement and the Prospectus as amended or supplemented (except the financial statements and other information of an accounting or financial nature included therein, and the Statement of Eligibility (Form T-1), included as an exhibit to the Registration Statement, as to which such counsel need express no view), were not appropriately

responsive in all material respects to the requirements of the Act and the Trust Indenture Act and the applicable rules and regulations thereunder.

(e) At the Closing Date, the Agents shall have received a certificate, dated the Closing Date, of the President or any Vice President, and by the Treasurer, Controller, or Secretary or any Assistant Treasurer, Assistant Controller or Assistant Secretary of the Issuer in which such officers, to the best of their knowledge after reasonable investigation, shall state that (i) the representations and warranties of the Issuer in this Agreement are true and correct, (ii) the Issuer has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date, (iii) no stop order suspending the effectiveness of the Registration Statement or of any part thereof has been issued and no proceedings for that purpose have been instituted or are threatened by the Commission, and (iv) subsequent to the date of the most recent financial statements in the Prospectus, there has been no material adverse change in the financial position or results of operations of the Issuer and its subsidiaries, except as set forth in or contemplated by the Prospectus or as described in such certificate.

(f) At the Closing Date, the Agents shall have received a letter, dated such date, of PricewaterhouseCoopers LLP ("PWC"), and Ernst & Young, LLP, as applicable, confirming that they are independent public accountants within the meaning of the Act and the Exchange Act and the respective applicable published Rules and Regulations thereunder, that the response, if any, to Item 10 of the Registration Statement is correct insofar as it relates to them and stating in effect that:

(i) in their opinion, the audited financial statements and schedules thereto included or incorporated in the Registration Statement and Prospectus and reported on by them comply as to form in all material respects with the applicable accounting requirements of the Exchange Act and the related published Rules and Regulations thereunder with respect to financial statements and financial statement schedules included or incorporated in annual reports on Form 10-K under the Exchange Act;

(ii) on the basis of a reading of the unaudited financial statements included or incorporated in the Registration Statement and Prospectus and of the latest unaudited financial statements made available by the Issuer and its subsidiaries; carrying out certain specified procedures (but not an examination in accordance with generally accepted auditing standards) which would not necessarily reveal matters of significance with respect to the comments set forth in such letter; a reading of the minutes of the Board of Directors of the Issuer and the Pricing Committee appointed by the Board of Directors of the Issuer, if any; and inquiries of certain officials of the Issuer who have responsibility for financial and accounting matters as to transactions and events subsequent to the date of the most recent financial statements included or incorporated in the Registration Statement and the Prospectus, nothing came to their attention that caused them to believe that:

(A) any unaudited financial statements included or incorporated in the Registration Statement and Prospectus do not comply as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect to financial statements included or incorporated in quarterly reports on Form 10-Q under the Exchange Act; or said unaudited financial statements are not fairly presented (except as permitted by Form 10-Q) in conformity with generally accepted accounting principles applied on a basis substantially consistent with that of the audited financial statements included or incorporated in the Registration Statement and Prospectus; or

(B) any unaudited capsule information included or incorporated in the Registration Statement and Prospectus does not agree with the amounts set forth in the unaudited consolidated financial statements from which it was derived or was not determined on a basis substantially consistent with that of the audited financial statements included or incorporated in the Registration Statement and Prospectus; and

(iii) they have performed certain other procedures as a result of which they determined that certain information of an accounting, financial or statistical nature (which is limited to accounting, financial or statistical information derived from the general accounting records of the Issuer) set forth in the Registration Statement and the Prospectus, including the information included or incorporated in Items 1 and 7 of the Issuer's Annual Report on Form 10-K incorporated therein or in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included or incorporated in any of the Issuer's Quarterly Reports on Form 10-Q incorporated therein, agrees with the accounting records of the Issuer and its subsidiaries, excluding any questions of legal interpretation.

References to the Registration Statement and the Prospectus in this subsection (f) are to such documents as amended and supplemented at the date of the letter.

(g) The Agents shall have received from Xxxxx Xxxx & Xxxxxxxx, counsel for the Agents, such opinion or opinions, dated the Closing Date, with respect to the validity of the Securities, the Registration Statement, the Prospectus and other related matters as they may require, and the Issuer shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters.

(h) With respect to any Security denominated in a currency other than the U.S. dollar, more than one currency or a composite currency or any Security the principal or interest of which is indexed to such currency, currencies or composite currency, there shall not have occurred a suspension or material limitation in foreign exchange trading in such currency, currencies or composite currency by a major international bank, a general moratorium on commercial banking activities in the country or countries issuing such currency, currencies or composite currency, the outbreak or escalation of hostilities involving, the occurrence of any material adverse change in the existing financial, political or economic conditions of, or the declaration of war or a national emergency by, the country or countries issuing such currency, currencies or composite currency or the imposition or proposal of exchange controls by any governmental authority in the country or countries issuing such currency, currencies or composite currency.

The obligation of each Agent, as agent of the Issuer, under this Agreement to solicit offers to purchase Securities at any time after the end of the Period is also subject to the delivery to the Agents before that date and thereafter, periodically as appropriate, of an opinion from either Issuer Counsel or Cravath, Swaine & Xxxxx, to the effect of subparagraph (d)(i)(E) above with respect to the Securities to be issued during the period set forth therein (which shall include the period of contemplated solicitation) and such other documents and certificates (including an opinion of Xxxxx Xxxx & Xxxxxxxx to the effect of subparagraph (g) above) as the Agents may reasonably request before that date and the Issuer shall have furnished to Xxxxx Xxxx & Xxxxxxxx such documents as they may reasonably request before that date for the purpose of enabling them to render such opinion.

The Issuer will furnish the Agents with such conformed copies of such opinions, certificates, letters and documents as they reasonably request.

6. Additional Covenants of the Issuer. The Issuer agrees that:

(a) Each acceptance by the Issuer of an offer for the purchase of Securities (whether through an Agent as agent or to one or more Agents as principal) and each delivery of Securities (whether through an Agent as agent or to one or more Agents as principal) shall be deemed to be an affirmation that its representations and warranties contained in this Agreement are true and correct at the time of such acceptance and a covenant that such representations and warranties will be true and correct at the time of delivery to the purchaser of the Securities relating to such acceptance as though made at and as of each such time, it being understood that such representations and warranties shall relate to the Prospectus as amended or supplemented at each such time. Each such acceptance by the Issuer of an offer for the purchase of Securities shall be deemed to constitute an additional representation, warranty and agreement by the Issuer that, as of the settlement date for the sale of such securities, after giving effect to the issuance of such Securities, of any other Securities to be issued on or prior to such settlement date and of any other Registered Securities to be issued and sold by the Issuer on or prior to such settlement date, the aggregate amount of Registered Securities (including any Securities) which have been issued and sold by the Issuer will not exceed the amount of Registered Securities registered pursuant to the Registration Statement.

(b) Each time that the Registration Statement or the Prospectus shall be amended or supplemented (other than by an amendment or supplement (i) that relates to an offering by the Issuer of Registered Securities other than the Securities or (ii) that solely specifies the terms of the

Securities) (each such time being herein referred to as a "Representation Date"), the Issuer shall, concurrently with such amendment or supplement, furnish the Agents with a certificate, dated the date of delivery thereof, of the President or any Vice President, and by the Treasurer, the Controller, the Secretary or any Assistant Treasurer, Assistant Controller or Assistant Secretary of the Issuer, in form satisfactory to the Agents, to the effect that the statements contained in the certificate covering the matters set forth in Section 5(e) hereof which was last furnished to the Agents are true and correct at the time of such amendment or supplement as though made at and as of such time (except that such statements shall be deemed to relate to the Registration Statement and the Prospectus as amended or supplemented at such time and except that the statements contained in the certificate covering the matters set forth in clause (ii) of Section 5(e) shall be deemed to relate to the time of delivery of such certificate) or, in lieu of such certificate, a certificate of the same tenor as the certificate referred to in Section 5(e), modified as necessary to relate to the Registration Statement and the Prospectus as amended or supplemented at the time of delivery of such certificate and, in the case of the matters set forth in clause (ii) of Section 5(e), to the time of delivery of such certificate; provided, however, that the Issuer shall deliver such certificate with respect to a Representation Date arising from the incorporation by reference into the Prospectus of a current report on Form 8-K or a quarterly report on Form 10-Q only upon the reasonable request of the Agents.

(c) At each Representation Date, the Issuer shall, if reasonably requested by the Agents, concurrently furnish the Agents with a written opinion or opinions, dated the date of such Representation Date, of Issuer Counsel or Cravath, Swaine & Xxxxx, in form satisfactory to the Agents, to the effect set forth in Section 5(d) hereof, but modified, as necessary, to relate to the Registration Statement and the Prospectus as amended or supplemented at such Representation Date; provided, however, that in lieu of such opinion or opinions, counsel may furnish the Agents with a letter or letters to the effect that the Agents may rely on a prior opinion delivered under Section 5(d) or this Section 6(c) to the same extent as if it were dated the date of such letter (except that statements in such prior opinion shall be deemed to relate to the Registration Statement and the Prospectus as amended or supplemented at such Representation Date).

(d) At each Representation Date on which the Registration Statement or the Prospectus shall be amended or supplemented to include additional financial information as a result of filing of the Issuer's Annual Report on Form 10-K, and upon the reasonable request of the Agents, the Issuer shall cause PWC, and Ernst & Young, LLP, as applicable, concurrently to furnish the Agents with a letter, addressed jointly to the Issuer and the Agents and dated the date of such Representation Date, in form and substance satisfactory to the Agents, to the effect set forth in Section 5(f) hereof but modified to relate to the Registration Statement and the Prospectus as amended or supplemented at such Representation Date, with such changes as may be necessary to reflect changes in the financial statements and other information derived from the accounting records of the Issuer; provided, however, that if the Registration Statement or the Prospectus is amended or supplemented solely to include financial information as of and for a fiscal quarter, PWC, and Ernst & Young, LLP, as applicable, may limit the scope of such letter to the audited financial statements included in such amendment or supplement unless there is contained therein any other accounting, financial or statistical information that, in the reasonable judgment of the Agents, should be covered by such letter, in which event such letter shall also cover such other information and procedures as shall be agreed upon by the Agents.

(e) The Issuer agrees that any obligation of a person who has agreed to purchase Securities as the result of solicitation by any Agent pursuant hereto to make payment for and take delivery of such Securities shall be subject to (i) the accuracy, on the related settlement date fixed pursuant to the Procedures, of the Issuer's representation and warranty deemed to be made to the Agents pursuant to the last sentence of subsection (a) of this Section 6, and (ii) the satisfaction, on such settlement date, of each of the conditions set forth in Sections 5(a), (b) and (c), it being understood that under no circumstance shall any Agent have any duty or obligation to exercise the judgment permitted under Section 5(b) or (c) on behalf of any such person.

(f) The Issuer agrees to make generally available to its security holders "earning statements" satisfying the provisions of Section 11(a) of the Securities Act of 1933 and Rule 158 thereunder, which requirement is deemed satisfied under such Rule through the Issuer's timely filing of periodic reports under Section 13 or 15(d) of the Exchange Act of 1934.

7. Indemnification and Contribution.

(a) The Issuer agrees to indemnify and hold harmless each Agent and each person who controls such Agent within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject, under the Act, the Exchange Act or other Federal or State statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the registration statement relating to the Registered Securities as originally filed or in any amendment thereto, or in any preliminary prospectus or the Prospectus, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and agrees to reimburse each Agent for any legal or other expenses reasonably incurred by such Agent in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that (i) the Issuer will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any of such documents in reliance upon and in conformity with written information furnished to the Issuer by any Agent specifically for use in connection with the preparation thereof and (ii) such indemnity with respect to any preliminary prospectus or the Prospectus shall not inure to the benefit of any Agent (or any person controlling such Agent) through which the person asserting any such loss, claim, damage or liability purchased the Securities which are the subject thereof if such person did not receive a copy of the Prospectus (or the Prospectus as so amended or supplemented), excluding documents incorporated therein by reference, at or prior to the earlier of the confirmation of the sale of such Securities or the delivery of the Securities to such person in any case where such delivery is required by the Act and the untrue statement or omission of a material fact contained in any preliminary prospectus or the Prospectus was corrected in the Prospectus (or the Prospectus as amended or supplemented prior to the confirmation of the sale of such Securities to such person). This indemnity agreement will be in addition to any liability which the Issuer may otherwise have.

(b) Each Agent agrees to indemnify and hold harmless the Issuer, each of its directors, each of its officers who signed the Registration Statement or any amendment thereto, and each person who controls the Issuer within the meaning of either the Act or the Exchange Act, to the same extent as the foregoing indemnity from the Issuer to such Agent, but only with reference to written information relating to such Agent furnished to the Issuer by such Agent specifically for use in the preparation of the documents referred to in the foregoing indemnity. This indemnity agreement will be in addition to any liability which such Agent may otherwise have.

(c) Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 7, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under this Section 7. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent that it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof, with counsel satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 7 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by the Agents in the case of subparagraph (a), representing the indemnified parties under subparagraph (a) who are parties to such action), (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party; and except that, if clause (i) or (iii) is applicable, such liability shall be only in respect of the counsel referred to in such clause (i) or (iii).

(d) In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in paragraph (a) of this Section 7 is due in accordance with its terms but is for any reason held by a court to be unavailable from the Issuer on grounds of policy or otherwise, the Issuer and each Agent shall contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) to which the Issuer and such Agents may be subject in such proportion so that each Agent is responsible for that portion represented by the percentage that the sum of aggregate commissions received by such Agent pursuant to Section 3(c) hereof in connection with the sale of the Securities to which such loss, claim, damage or liability relates bears to the aggregate principal amount of such Securities, and the Issuer is responsible for the balance; provided, however, that (y) in no case shall any Agent be responsible for any amount in excess of the commissions received by it for such Securities to which such loss, claim, damage or liability relates, and (z) no person found liable for fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was found not liable for such fraudulent misrepresentation. For purposes of this Section 7, each person who controls any Agent within the meaning of either the Act or the Exchange Act shall have the same rights to contribution as such Agent, and each person who controls the Issuer within the meaning of either the Act or the Exchange Act, each officer of the Issuer who shall have signed the Registration Statement or any amendment thereto, and each director of the Issuer shall have the same rights to contribution as the Issuer, subject in each case to clause (y) of this paragraph (d). Any party entitled to

contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this paragraph (d), notify such party or parties from whom contribution may be sought, but the omission to notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have hereunder or otherwise than under this paragraph (d).

8. Status of each Agent. In soliciting offers to purchase the Securities from the Issuer pursuant to this Agreement and in assuming its other obligations hereunder (other than offers to purchase pursuant to Section 11 hereof), each Agent is acting solely as agent for the Issuer and not as principal. Each Agent will make reasonable efforts to assist the Issuer in obtaining performance by each purchaser whose offer to purchase Securities from the Issuer has been solicited by such Agent and accepted by the Issuer, but such Agent shall have no liability to the Issuer in the event any such purchase is not consummated for any reason. If the Issuer shall default on its obligations to deliver Securities to a purchaser who has agreed to purchase Securities as a result of solicitation by any Agent pursuant hereto, and whose offer the Issuer has accepted, the Issuer (i) shall hold the Agents harmless against any loss, claim or damages arising from or as a result of such default by the Issuer, and (ii) in particular, shall pay to the Agents any commission to which they would be entitled in connection with such sale.

9. Survival of Certain Representations and Obligations. The respective indemnities, agreements, representations, warranties and other statements of the Issuer or its officers and of the Agents set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf of any Agent, the Issuer or any of their respective representatives, officers or directors or any controlling person and will survive delivery of and payment for the Securities. If this Agreement is terminated pursuant to Section 10 or for any other reason, the Issuer shall remain responsible for the expenses to be paid or reimbursed by it pursuant to Section 4(g) and the obligations of the Issuer under Section 4(f) and Section 6(f) and the respective obligations of the Issuer and the Agents pursuant to Section 7 shall remain in effect. In addition, if any such termination shall occur either (i) at a time when any Agent shall own any of the Securities with the intention of reselling them as contemplated by Section 11 hereof or (ii) after the Issuer has accepted an offer to purchase Securities solicited by any Agent pursuant hereto and prior to the related settlement, the obligations of the Issuer under the last sentence of Section 4(b), under Sections 4(a), 4(c), 4(d), 4(e) and Section 6 and, in the case of a termination occurring as described in (ii) above, under Section 3(c) and under the last sentence of Section 8, shall also remain in effect.

10. Termination. This Agreement may be terminated for any reason at any time by the Issuer as to any Agent or, in the case of any Agent, by such Agent insofar as this Agreement relates to such Agent, upon the giving of one day's written notice of such termination to the other parties hereto. Any settlement with respect to Securities placed by an Agent occurring after termination of this Agreement shall be made in accordance with the Procedures and each Agent agrees, if requested by the Issuer, to take the steps therein provided to be taken by such Agent in connection with such settlement.

11. Purchases as Principal. From time to time, any Agent may agree with the Issuer to purchase Securities from the Issuer as principal. In such case the purchasing Agent and the Issuer may, in their discretion, set forth the terms of such purchase in a separate agreement (a "Purchase Agreement") to be entered into between such Agent and the Issuer in the form attached hereto as Exhibit C. Upon acceptance by the Issuer of an offer to purchase Securities, unless the Issuer and the purchasing Agent otherwise agree in writing, any such Purchase Agreement or other written confirmation or communication transmitted by the purchasing Agent to the Issuer or, in the absence of a Purchase Agreement or other written confirmation or communication from the purchasing Agent, the oral agreement with respect to the terms of the Securities and of their offer and sale evidenced by the offer

communicated by the purchasing Agent and accepted by the Issuer, in each case together with the provisions of this Agreement, shall constitute an agreement between the purchasing Agent and the Issuer for the sale and purchase of such Securities (whether or not any Purchase Agreement or other written confirmation or communication shall have been executed by the Issuer or the purchasing Agent). In connection with any resale of Securities so purchased, such Securities may be resold by such Agent at varying prices from time to time or at a fixed public offering price or that such Agent may use a selling or dealer group. Such Agent may reallow to any broker or dealer any portion of the discount or commission payable pursuant hereto. A Purchase Agreement, to the extent set forth therein, may incorporate by reference specified provisions of this Agreement.

12. Notices. Except as otherwise provided herein, all notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Except as otherwise provided in the Procedures, notices to the Issuer, International Business Machines Corporation, shall be directed to:

IBM Assistant Treasurer, Operations
Xxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Assistant Treasurer
Fax: 000-000-0000

with a copy to:

IBM Corporate Legal Department
New Orchard Road
Mail Stop 329
Xxxxxx, XX 00000
Attention: Senior Counsel, Securities Law
Fax: 000-000-0000.

Notices to the Agents shall be directed to:

ABN AMRO, Incorporated
00 Xxxx 00xx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: MTN Desk
Fax: 000-000-0000
Tel: 000-000-0000

Banc of America Securities LLC
0 Xxxx 00^xx Xxxxxx
XX0-000-0X-00
Xxx Xxxx, XX 00000
Attn: Transaction Management
Fax: 000-000-0000
Tel: 000-000-0000

Banc One Capital Markets, Inc.
1 Bank Xxx Xxxxx
Xxxxx XX0-0000, 0xx Xxxxx
Xxxxxxx, XX 00000
Attn: Structuring & Execution
Fax: 000-000-0000
Tel: 000-000-0000

BNP Paribas Securities Corp.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Fixed Income Syndicate
Fax: 000-000-0000
Tel: 000-000-0000

BNY Capital Markets, Inc.
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
Attn: MTN Desk
Fax: 000-000-0000
Tel: 000-000-0000

Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: MTN Desk
Fax: 000-000-0000
Tel: 000-000-0000

Credit Suisse First Boston LLC
00 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Short Term Products Group
Fax: 000-000-0000
Tel: 000-000-0000

Deutsche Bank Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: MTN Desk
Fax: 000-000-0000
Tel: 000-000-0000

Xxxxxxx, Xxxxx & Co.
00 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx
Fax: 000-000-0000
Tel: 000-000-0000

HSBC Securities (USA) Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: MTN Desk
Fax: 000-000-0000
Tel: 000-000-0000

X. X. Xxxxxx Securities Inc.
000 Xxxx Xxxxxx, 0^xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: MTN Desk
Fax: 000-000-0000
Tel: 000-000-0000

Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: MTN Desk
Fax: 000-000-0000
Tel: 000-000-0000

Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
4 World Financial Xxxxxx
Xxxxx 00
Xxx Xxxx, XX 00000
Attn: Transaction Management Group
Fax: 000-000-0000
Tel: 000-000-0000

Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Legal Department
Fax: 000-000-0000

Tel: 000-000-0000

UBS Securities LLC
000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
Attn: Fixed Income Syndicate
Fax: 000-000-0000
Tel: 000-000-0000

In the case of any party hereto, alternatively notice may be directed to such other address or person as such party shall specify to each other party by a notice given in accordance given in accordance with the provisions of this Section 12. Any such notice shall take effect at the time of receipt.

13. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto, their respective successors, the officers and directors and controlling persons referred to in Section 7 and, to the extent provided in Section 6(e), any person who has agreed to purchase Securities from the Issuer as the result of solicitation by any Agent pursuant hereto, and no other person will have any right or obligation hereunder.

14. Governing Law; Counterparts. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without giving effect to the conflicts of laws principles thereof. This Agreement may be executed in counterparts and the executed counterparts shall together constitute a single instrument.

15. Entire Agreement. This Agreement incorporates the entire agreement between the parties hereto with respect to the transactions contemplated herein. All prior negotiations and agreements between the parties are merged in, and superseded by, this Agreement and there are no agreements, representations or warranties between the parties other than those set forth or provided for herein.

If the foregoing correctly sets forth our agreement, please indicate your acceptance hereof in the space provided for that purpose below.

		Very truly yours,
		INTERNATIONAL BUSINESS MACHINES CORPORATION
		By:	/s/ XXXXXX X. XXXXX Title: Assistant Treasurer

CONFIRMED AND ACCEPTED, as of the
date first above written:


ABN AMRO Incorporated
By:	/s/ XXXX X. XXXXXX
Title: Director
Banc of America Securities LLC
By:	/s/ XXXXX X. XXXXXXX
Title: Vice President

Banc One Capital Markets, Inc.
By:	/s/ XXXX X. XXXXXXXX
Title: Managing Director
BNP Paribas Securities Corp.
By:	/s/ XXXXXXX X. XXXX
Title: Managing Director
BNY Capital Markets, Inc.
By:	/s/ XXXX XXXXXXXX
Title: Vice President
Citigroup Global Markets Inc.
By:	/s/ XXXX X. XXXXXXXXX
Title: Director
Credit Suisse First Boston LLC
By:	/s/ XXXXXX X. XXXXXXX
Title: Director
Deutsche Bank Securities Inc.
By:	/s/ XXXXXXX XXXXXXXX
Title: Director
Xxxxxxx, Xxxxx & Co.
By:	/s/ XXXXXX X. XXXXXXX
Title: Vice President
HSBC Securities (USA) Inc.
By:	/s/ XXXXXX XXXXXX
Title: Senior Vice President
X. X. Xxxxxx Securities Inc.
By:	/s/ XXXX XXXXXXX, XX.
Title: Vice President
Xxxxxx Brothers Inc.

By:	/s/ XXXXXX XXXXXXXX
Title: Senior Vice President
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
By:	/s/ XXXXX XXXXX
Title: Vice President
Xxxxxx Xxxxxxx & Co. Incorporated
By:	/s/ XXXXXXX XXXXX
Title: Vice President
UBS Securities LLC
By:	/s/ XXXXX X. XXXXXX
Title: Managing Director
and
	/s/ XXXX XXXXXXX
Title: Director

EXHIBIT A

The Issuer agrees to pay the relevant Agent a commission which will be no more than the following percentage of the principal amount of Securities sold to purchasers solicited by such Agent:

Term		Commission Rate (as a percentage of principal amount)
12 months to less than 18 months		.15
18 months to less than 24 months		.20
24 months to less than 30 months		.25
30 months to less than 3 years		.30
3 years to less than 4 years		.35
4 years to less than 5 years		.45
5 years to less than 7 years		.50
7 years to less than 10 years		.55
10 years to less than 15 years		.625
15 years to less than 20 years		.700
20 years to 30 years		.750
More than 30 years		as negotiated between the Company and the relevant Agent at the time of sale

EXHIBIT B

Administrative Procedures

The Medium-Term Notes Due One Year or More from Date of Issue (the "Notes") are to be offered on a continuing basis by International Business Machines Corporation (the "Issuer"). ABN AMRO Incorporated, Banc of America Securities LLC, Banc One Capital Markets, Inc., BNP Paribas Securities Corp., BNY Capital Markets, Inc., Citigroup Global Markets Inc., Credit Suisse First Boston LLC, Deutsche Bank Securities Inc., Xxxxxxx, Xxxxx & Co., HSBC Securities (USA) Inc., X. X. Xxxxxx Securities Inc., Xxxxxx Brothers Inc., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, Xxxxxx Xxxxxxx & Co. Incorporated and UBS Securities LLC, as agents (each individually an "Agent" and collectively the "Agents"), have agreed to use reasonable efforts to solicit purchases of the Notes pursuant to an Agency Agreement dated as of August 21, 2003 (the "Agency Agreement"), among the Issuer and the Agents. No Agent will be obligated to purchase Notes for its own account. The Notes will be issued pursuant to an Indenture, dated as of October 1, 1993 between the Issuer and JPMorgan Chase Bank, as trustee (the "Trustee"), as supplemented by the First Supplemental Indenture thereto dated as of December 1, 1995 (collectively, the "Indenture"). The Notes will rank equally with all other unsecured and unsubordinated indebtedness of the Issuer and have been registered with the Securities and Exchange Commission (the "Commission").

Each Note will be represented initially by a global security in the form of a Master Note registered in the name of a nominee of The Depository Trust Company, as Depositary ("DTC") (a "Book-Entry Note") or a certificate issued in definitive form (a "Certificate Note"). It is currently contemplated that both Fixed Rate Notes (as defined below) and Floating Rate Notes (as defined below) may be issued as Book-Entry Notes. The Master Note representing the Book-Entry Notes will be issued only in fully registered form without coupons. The Master Note will be registered in the name of Cede & Co., as nominee for DTC, on the securities register maintained under the Indenture.

Administrative procedures and specific terms of the Notes and the offering, to the extent Notes are offered and sold through the Agents, are explained below. Administrative and record-keeping responsibilities will be handled for the Issuer by competent personnel assigned to such tasks in its Treasury Department. The Issuer will advise each Agent in writing of those persons handling administrative responsibilities with whom each Agent is to communicate regarding offers to purchase Notes and the details of their delivery. To the extent that the following procedures conflict with the provisions of the Notes, the Indenture or the Letter (as defined below), the relevant provisions of the Note, the Indenture or the Letter shall control.

I. CERTIFICATE NOTES AND GENERAL TERMS

Unless otherwise agreed by the Issuer and the relevant agent, the following administrative procedures and specific terms are applicable to Certificate Notes and, except to the extent otherwise specified under II below, Book-Entry Notes, which Book-Entry Notes shall, unless otherwise required by DTC, be understood to include all Notes issued under the Medium-Term Master Note. As set forth under item II, infra, the Medium-Term Master Note representing the Book-Entry Notes will be issued only in fully registered form without coupons. The Medium-Term Master Note will be registered in the name of Cede & Co., as nominee for DTC, on the securities register maintained under the Indenture.

Original Issue Date:		Each Note will be dated the date of its authentication. Each Note will also bear an original issue date which, with respect to any Note (or portion thereof), shall mean the date of its original issuance and shall be specified therein. The original issue date shall remain the same for all Notes subsequently issued upon transfer, exchange or substitution of a Note, regardless of their dates of authentication.

Maturities:		Each Note will mature on a date, selected by the purchaser and agreed to by the Issuer, which will be at least twelve months after the date of issue; provided, however, that each Floating Rate Note will mature on an Interest Payment Date (as defined below) for such Note.
Redemption:		The Floating Rate Notes will not be redeemable prior to maturity, unless otherwise specified in the applicable Pricing Supplement. The Fixed Rate Notes either (i) will not be redeemable prior to maturity, or (ii) will be redeemable at the option of the Issuer on or after a specified date prior to maturity at par or at prices which will decline annually by a fixed percentage from a specified initial premium to par. Unless otherwise specified in the applicable pricing supplement, Redemption Dates for redeemable Fixed Rate Notes will correspond with the Interest Payment Dates for such Notes.
Price to Public:		Each Note will be issued at 100% of principal amount, unless otherwise agreed between the Issuer and the relevant Agent.
Denominations:		Unless otherwise agreed between the Issuer and the relevant Agent, the denominations of the Notes will be $100,000 and any amount in excess thereof which is $1,000 or any multiple thereof. The denominations of Notes denominated in currencies or currency units other than U.S. dollars will be as agreed between the Issuer and the relevant Agent.
Registration:		Notes will be issued only in fully registered form.
Interest Payment:		Unless otherwise specified in a Pricing Supplement, each Note will bear interest from and including its original issue date or, in the case of Notes issued upon replacement, transfer or exchange, from the most recent Interest Payment Date to which interest has been paid or provided for, to but excluding the maturity date of such Note; provided, however, that a Floating Rate Note which has a rate of interest that is reset weekly will bear interest from and including its original issue date or the day following the most recent Record Date (as defined below) for the most recent Interest Payment Date to which interest on such Note has been paid or provided for. Each Note will bear interest (i) in the case of Notes bearing interest at a Fixed Rate (the "Fixed Rate Notes"), at the annual rate stated on the face thereof, payable semiannually in arrears on April 1 and October 1 (each an "Interest Payment Date" with respect to such Fixed Rate Note) and at maturity and (ii) in the case of Notes bearing interest at a rate or rates determined by reference to an interest rate formula (the "Floating Rate Notes"), at a rate determined pursuant to the formula stated on the face thereof, payable in arrears on such dates as are specified therein and in the related Pricing Supplement (each an "Interest Payment Date" with respect to such Floating Rate Note). Interest payable on a Fixed Rate Note (including payments for partial periods) will be calculated and paid on the basis of a 360-day year of 12 30-day months. Interest payable on a Floating Rate Note will be calculated and paid on the basis of the actual number of days elapsed in the interest period and a year of 360 days; provided, however, that interest payable on a Floating Rate Note which has a rate of interest determined in accordance with the Treasury Rate will be calculated on the basis of the actual number of days in the year. Interest will be payable on each Interest Payment Date to the person in whose name the Note is registered at the close of business 15 calendar days prior to such Interest Payment Date whether or not such day is a Business Day (as defined in the Indenture) (the "Record Date") except that (a) on any Note originally issued after a Record Date and prior to the next succeeding Interest Payment Date, the first payment of interest on such Note will be made on the Interest Payment Date following the next succeeding Regular Record Date to the registered owner on such next Regular Record Date and (b) interest payable at maturity (or, in the case of a Fixed Rate Note, upon redemption) will be payable to the person to whom principal shall be payable. With respect to Fixed Rate Notes, each payment of interest shall include interest accrued to but excluding the date of such payment. All interest payments (excluding interest payments made at maturity) will be made by check mailed to the person entitled thereto as provided above.

Acceptance of Offers:		Each Agent will promptly advise the Issuer of each reasonable offer to purchase Notes received by it, other than those rejected by such Agent. Each Agent may, in its discretion reasonably exercised, without notice to the Issuer, reject any offer received by it, in whole or in part. The Issuer will have the sole right to accept offers to purchase Notes and may reject any such offer, in whole or in part. If the Issuer rejects an offer solicited by an Agent, the Issuer will promptly notify the Agent involved.
Settlement:		All offers accepted by the Issuer will be settled on the third Business Day next succeeding the date of acceptance unless otherwise agreed by any purchaser and the Issuer. Prior to 3:00 p.m., New York City time, on the Business Day next preceding the settlement date, the Issuer will instruct the Trustee to authenticate and deliver the Notes no later than 2:15 p.m., New York City time, on the settlement date.
Details for Settlement:		For each offer solicited by an Agent that is accepted by the Issuer, the Agent who presented the offer (the "Presenting Agent") shall communicate to the Issuer's Treasury Department by telephone, facsimile transmission or other acceptable means the following information (the "Purchase Information"):

		1. Exact name in which the Note or Notes are to be registered ("registered owner").
		2. Exact address of registered owner.
		3. Taxpayer identification number of registered owner.
		4. Principal amount of each Note to be delivered to the registered owner.
		5. Issue price, interest rate if fixed or initial interest rate if floating, interest rate basis, spread or spread multiplier, maximum or minimum interest rates, index maturity, Interest Determination Dates, Interest Reset Dates (as such terms are defined in the applicable Prospectus Supplement) interest reset period, interest payment period and Interest Payment Dates of Notes, in each case, to the extent applicable.
		6. The currency, currencies, currency unit or currency units in which the Note or Notes are to be denominated and (if not the same) payable.
		7. Maturity date of Notes.
		8. Initial redemption date of Notes, if any.
		9. Optional redemption price (including the fixed percentage by which the premium, if any, annually declines) of Notes, if any.
		10. Original issue date of Notes.
		11. Settlement date for Notes.
		12. Presenting Agent's commission (to be paid in the form of a discount from the proceeds remitted to the Issuer upon settlement).
		The original issue date of, and the settlement date for, Notes will be the same. Before accepting any offer to purchase Notes to be settled in less than three days, the Issuer shall verify that the Trustee will have adequate time to prepare and authenticate the Notes. After receiving the details for each offer from the Presenting Agent, the Issuer will, after recording the details and any necessary calculations, communicate the Purchase Information by telephone, facsimile transmission or other acceptable means, to the Trustee.
		Special provisions relating to Certificate Notes denominated or payable in a currency, currencies, a currency unit or currency units other than U.S. dollars may be agreed by the Issuer and the Agents at a later time.

Confirmation:		For each accepted offer solicited by an Agent, the Presenting Agent will issue a confirmation to the purchaser, with a copy to the Issuer's Treasury Department and the Trustee, setting forth the Purchase Information and delivery and payment instructions.
Note Deliveries and Cash Payment:		Upon the receipt of appropriate documentation and instructions, which may be by telephone to be confirmed in writing from the Issuer, and verification thereof, the Trustee will cause the Notes to be prepared and authenticated and hold the Notes for delivery against payment.
		The Trustee will deliver the Notes, in accordance with instructions from the Issuer, to the Presenting Agent, as the Issuer's agent, for the benefit of the purchaser only against delivery of a receipt therefor.
		Agents' Addresses for the Delivery of Notes:
		ABN AMRO Incorporated 00 Xxxx 00^xx Xxxxxx 0xx Xxxxx Xxx Xxxx, XX 00000 Attn: MTN Desk
		Banc of America Securities LLC 0 Xxxx 00^xx Xxxxxx XX0-000-0X-00 Xxx Xxxx, XX 00000 Attn: Transaction Management
		Banc One Capital Markets, Inc. 1 Bank Xxx Xxxxx Xxxxx XX0-0000, 0xx Xxxxx Xxxxxxx, XX 00000 Attn: Structuring & Execution
		BNP Paribas Securities Corp. 000 Xxxxxxx Xxxxxx, 0xx Xxxxx Xxx Xxxx, XX 00000 Attn: Fixed Income Syndicate
		BNY Capital Markets, Inc. 000 Xxxxxxxxxx Xxxxxxx Xxxxxxxx, XX 00000 Attn: MTN Desk
		Citigroup Global Markets Inc. 000 Xxxxxxxxx Xxxxxx Xxx Xxxx, XX 00000 Attn: MTN Desk
		Credit Suisse First Boston LLC 00 Xxxxxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000 Attn: Short Term Products Group

		Deutsche Bank Securities Inc. 00 Xxxx Xxxxxx Xxx Xxxx, XX 00000 Attn: MTN Desk
		Xxxxxxx, Xxxxx & Co. 00 Xxxxx Xxxxxx 00xx Xxxxx Xxx Xxxx, Xxx Xxxx 00000 Attn: Xxxxxx Xxxxxx
		HSBC Securities (USA) Inc. 000 Xxxxx Xxxxxx, 00xx Xxxxx Xxx Xxxx, XX 00000 Attn: MTN Desk
		X. X. Xxxxxx Securities Inc. 000 Xxxx Xxxxxx, 0^xx Xxxxx Xxx Xxxx, Xxx Xxxx 00000 Attn: MTN Desk
		Xxxxxx Brothers Inc. 000 Xxxxxxx Xxxxxx Xxx Xxxx, XX 00000 Attn: MTN Desk
		Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated 4 World Financial Xxxxxx, Xxxxx 00 Xxx Xxxx, XX 00000 Attn: Transaction Management Group
		Xxxxxx Xxxxxxx & Co. Incorporated 0000 Xxxxxxxx Xxx Xxxx, XX 00000 Attn: Legal Department
		UBS Securities LLC 000 Xxxxxxxxxx Xxxxxxxxx Xxxxxxxx, XX 00000 Attn: Fixed Income Syndicate
Fails:		In the event that a purchaser shall fail to accept delivery of and make payment for a Note on the settlement date, the Presenting Agent will notify the Trustee and the Issuer by telephone, confirmed in writing. If the Note has been delivered to the Presenting Agent, as the Issuer's agent, the Presenting Agent shall return such Note to the Trustee. If funds have been advanced by the Presenting Agent for the purchase of such Note, the Issuer will, immediately upon receipt of such notice, refund the payment previously made to it by the Presenting Agent in immediately available funds. Such payments will be made on the settlement date, if possible, and in any event not later than the Business Day following the settlement date. If such failure shall have occurred for any reason other than the failure of the Presenting Agent to provide the Purchase Information to the Issuer or to provide a confirmation to the purchaser, the Issuer will reimburse the Presenting Agent on an equitable basis for its loss of the use of funds during the period when they were credited to the account of the Issuer.

		Immediately upon receipt of the Note in respect of which the failure occurred, the Trustee will cause the Security Registrar to make appropriate entries to reflect the fact that the Note was never issued and will destroy the Note.
Procedure for Rate Changes:		The Issuer and the Agents will discuss from time to time the rates to be borne by the Notes that may be sold as a result of the solicitation of offers by the Agents. Once any Agent has recorded any indication of interest in Notes upon certain terms, and communicated with the Issuer, if the Issuer plans to accept an offer to purchase Notes upon such terms, it will prepare a pricing sticker reflecting the terms of such Notes and, after approval from the Agents, will arrange to have the required number of copies of the sticker filed with the Commission within two Business Days following such acceptance and will supply at least five copies of such sticker to the Presenting Agent. No settlements with respect to Notes upon such terms may occur prior to such filing and the Agents will not, prior to such filing, mail confirmations to customers who have offered to purchase Notes upon such terms. After such filing, sales, mailing of confirmations and settlements may occur with respect to Notes upon such terms, subject to the provisions of "Delivery of Prospectus" below.
		If the Issuer decides to "post" fixed interest rates and a decision has been reached to change interest rates, the Issuer will promptly notify each Agent. Each Agent will forthwith suspend solicitation of purchases. At that time, the Agents will recommend and the Issuer will establish fixed interest rates to be so posted. Following establishment of posted fixed interest rates and prior to the filing of the pricing sticker described in the preceding paragraph, the Agents may only record indications of interest in purchasing Fixed Rate Notes at the posted fixed interest rates. After such filing, sales, mailing of confirmations and settlements at the posted rates may resume, subject to the provisions of "Delivery of Prospectus" below.
		Outdated stickers, and copies of the Prospectus to which they are attached (other than those retained for files), will be destroyed.
Suspension of Solicitation Amendment or Supplement:		As provided in the Agency Agreement, the Issuer may suspend Amendment or solicitation of purchases at any time and, upon receipt of notice from the Issuer, each Agent will forthwith suspend solicitation until such time as the Issuer has advised them that solicitation of purchases may be resumed.

		If the Agents receive the notice from the Issuer contemplated by Section 4(b) of the Agency Agreement, they will promptly suspend solicitation and will only resume solicitation as provided in the Agency Agreement. If the Issuer decides to amend or supplement the Registration Statement or the Prospectus relating to the Notes (other than by an amendment or supplement that (i) only specifies the terms of the Securities or (ii) relates to an offering by the Issuer of Registered Securities other than the Securities), it will promptly advise each Agent and will furnish each Agent with the proposed amendment or supplement in accordance with the terms of the Agency Agreement. The Issuer will promptly file or mail to the Commission for filing such amendment or supplement, provide the Agents with copies of any such amendment or supplement, confirm to the Agents that such amendment or supplement has been filed with the Commission and advise the Agents that solicitation may be resumed.
		Any such suspension shall not affect the Issuer's obligations under the Agency Agreement; and in the event that at the time the Issuer suspends solicitation of offers to purchase Notes there shall be any offers already accepted by the Issuer outstanding for settlement, the Issuer will have the sole responsibility for fulfilling such obligations. The Issuer will in addition promptly advise the Agents and the Trustee if such offers are not to be settled and if copies of the Prospectus as in effect at the time of the suspension may not be delivered in connection with the settlement of such offers.
Delivery of Prospectus:		With respect to each purchase resulting from a solicitation by any Agent, a copy of the Prospectus, as most recently amended or supplemented on the date of delivery thereof (except as provided below), but excluding materials incorporated by reference therein, must be delivered to a purchaser prior to or together with the earlier of delivery of (i) the written confirmation provided for above, and (ii) any Note purchased by such purchaser as a result of such solicitation. The Issuer shall ensure that the Presenting Agent receives the required number of copies of the Prospectus and each amendment or supplement thereto (including appropriate pricing stickers), but excluding materials incorporated by reference therein, by telecopy or overnight express (for delivery not later than 11:00 a.m. on the Business Day next following the trade date) to enable the Presenting Agent to deliver such confirmation or Note to such purchaser as contemplated by these procedures and in compliance with the preceding sentence. If, since the date of acceptance of such purchaser's offer, the Prospectus shall have been supplemented solely to reflect any sale of Notes on terms different from those agreed to between the Issuer and such purchaser or a change in posted rates not applicable to such purchaser, such purchaser shall not receive the Prospectus as supplemented by such new supplement, but shall receive the Prospectus as supplemented to reflect the terms of the Notes being purchased by such purchaser and otherwise as most recently amended or supplemented on the date of delivery of the Prospectus.

		ABN AMRO Incorporated 00 Xxxx 00xx Xxxxxx 0xx Xxxxx Xxx Xxxx, XX 00000 Attn: MTN Desk Fax: 000-000-0000
		Banc of America Securities LLC 0 Xxxx 00^xx Xxxxxx XX0-000-0X-00 Xxx Xxxx, XX 00000 Attn: Transaction Management Fax: 000-000-0000
		Banc One Capital Markets, Inc. 1 Bank Xxx Xxxxx Xxxxx XX0-0000, 0xx Xxxxx Xxxxxxx, XX 00000 Attn: Structuring & Execution Fax: 000-000-0000
		BNP Paribas Securities Corp. 000 Xxxxxxx Xxxxxx, 0xx Xxxxx Xxx Xxxx, XX 00000 Attn: Fixed Income Syndicate Fax: 000-000-0000
		BNY Capital Markets, Inc. 000 Xxxxxxxxxx Xxxxxxx Xxxxxxxx, XX 00000 Attn: MTN Desk Fax: 000-000-0000
		Citigroup Global Markets Inc. 000 Xxxxxxxxx Xxxxxx Xxx Xxxx, XX 00000 Attn: MTN Desk Fax: 000-000-0000
		Credit Suisse First Boston LLC 00 Xxxxxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000 Attn: Short Term Products Group Fax: 000-000-0000

		Deutsche Bank Securities Inc. 00 Xxxx Xxxxxx Xxx Xxxx, XX 00000 Attn: MTN Desk Fax: 000-000-0000
		Xxxxxxx, Xxxxx & Co. 00 Xxxxx Xxxxxx 00xx Xxxxx Xxx Xxxx, Xxx Xxxx 00000 Attn: Xxxxxx Xxxxxx Fax: 000-000-0000
		HSBC Securities (USA) Inc. 000 Xxxxx Xxxxxx, 00xx Xxxxx Xxx Xxxx, XX 00000 Attn: MTN Desk Fax: 000-000-0000
		X. X. Xxxxxx Securities Inc. 000 Xxxx Xxxxxx, 0^xx Xxxxx Xxx Xxxx, Xxx Xxxx 00000 Attn: MTN Desk Fax: 000-000-0000
		Xxxxxx Brothers Inc. 000 Xxxxxxx Xxxxxx Xxx Xxxx, XX 00000 Attn: MTN Desk Fax: 000-000-0000
		Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated 4 World Financial Xxxxxx, Xxxxx 00 Xxx Xxxx, XX 00000 Attn: Transaction Management Group Fax: 000-000-0000
		Xxxxxx Xxxxxxx & Co. Incorporated 0000 Xxxxxxxx Xxx Xxxx, XX 00000 Attn: Legal Department Fax: 000-000-0000
		UBS Securities LLC 000 Xxxxxxxxxx Xxxxxxxxx Xxxxxxxx, XX 00000 Attn: Fixed Income Syndicate Fax: 000-000-0000
Authenticity of Signatures:		The Issuer will cause the Trustee to furnish the Agents from time to time with the specimen signatures of each of the Trustee's officers, employees or agents who have been authorized by the Trustee to authenticate Notes, but the Agents will have no obligation or liability to the Issuer or the Trustee in respect of the authenticity of the signature of any officer, employee or agent of the Issuer or the Trustee on any Note.

Advertising:

The Issuer will determine with the Agents the amount of advertising, if any, that may be appropriate in offering the Notes.

II. BOOK-ENTRY NOTES

The following procedures supplement and, to the extent inconsistent therewith, replace the procedures set forth above with respect to the offering of Book-Entry Notes. In connection with the qualification of the Book-Entry Notes for eligibility in the book-entry system maintained by DTC, the Trustee will perform the custodial, document control and administrative functions described below, in accordance with its respective obligations under a Letter of Representation (the "Letter") from the Issuer and the Trustee to be entered into with DTC and a Medium-Term Note Certificate Agreement between the Trustee and DTC dated as of December 2, 1988, and its obligations as a participant in DTC, including DTC's Same-Day Funds Settlement System ("SDFS"). Both Fixed Rate Notes and Floating Rate Notes may be issued in book-entry form. Unless otherwise required by DTC, each Book-Entry Note shall be issued under the Medium-Term Master Note dated as of August 21, 2003 (the "Master Note"). The Master Note representing the Book-Entry Notes will be issued only in fully registered form without coupons. The Master Note will be registered in the name of Cede & Co., as nominee for DTC, on the securities register maintained under the Indenture.

Issuance:		On or before any settlement for one or more Book-Entry Notes represented by the Master Note, the Issuer will deliver one or more Pricing Supplements (with a Prospectus and a Prospectus Supplement attached thereto, unless previously delivered to the Trustee) to the Trustee identifying each issue of Book-Entry Notes that have the same maturity date, redemption provisions, if any, repayment provisions, if any, Interest Payment Dates, interest rate basis, spread or spread multiplier, maximum or minimum interest rates, index maturity, Interest Determination Dates, Interest Reset Dates (as such terms are defined in the applicable Prospectus Supplement), interest reset period, original issue date and original issue discount provisions, and other items in each case, to the extent applicable (collectively, the "Terms"). Each Pricing Supplement shall be accompanied by a letter from the Issuer advising the Trustee that the Issuer has issued Notes pursuant to the Indenture having the Terms specified in such Pricing Supplement, and confirming that such Notes are debt obligations which are referred to and evidenced by the Master Note. Upon receipt of such items from the Issuer, the Trustee will make an appropriate entry identifying such debt obligations on the records of the Issuer maintained by the Trustee. Each Book-Entry Note will be deemed to have been dated and issued as of the settlement date, which date shall be the Original Issue Date. With respect to any Book-Entry Notes which are not issued pursuant to the Master Note, such Book-Entry Notes will be represented by one or more Global Securities. On any date of settlement (as defined under "Settlement" below) for one or more Book-Entry Notes, the Issuer will deliver one or more Global Securities in fully registered form without coupons representing up to $500,000,000 principal amount of all such Notes that have the same maturity date, redemption provisions, if any, repayment provisions, if any, Interest Payment Dates, interest rate basis, spread or spread multiplier, maximum or minimum interest rates, index maturity, Interest Determination Dates, Interest Reset Dates (as such terms are defined in the applicable Prospectus Supplement), interest reset period, original issue date and original issue discount provisions, and other items in each case to the extent applicable (collectively, the "Terms"), with the Terms for each Global Security set forth on the applicable Pricing Supplement relating to such issuance. Each Global Security will be issued as of the date of its authentication by the Trustee. No Global Security will represent any Certificated Note.

Exchanges:		The Trustee may deliver to DTC and the CUSIP Service Bureau at any time a written notice of consolidation (a copy of which shall be attached to the Global Security resulting from such consolidation) specifying (i) the CUSIP numbers of two or more Pricing Supplements that represent Book-Entry Notes having the same Terms (other than original issue date) and for which interest has been paid to the same date, (ii) a date, occurring at least 30 days after such written notice is delivered and at least 30 days before the next Interest Payment Date for such Book-Entry Notes and (iii) a new CUSIP number to be assigned to such issues of Book-Entry Notes having the same terms. Upon receipt of such a notice, DTC will send to its Participants (including the Trustee) a written reorganization notice to the effect that such exchange will occur on such date. Prior to the specified exchange date, the Trustee will deliver to the CUSIP Service Bureau a written notice setting forth such exchange date and the new CUSIP number and stating that, as of such exchange date, the CUSIP numbers of the relevant issues of Book-Entry Notes will no longer be valid. On the specified exchange date, the relevant issues of Book-Entry Notes will, in accordance with CUSIP Service Bureau procedures, be canceled and not immediately reassigned. Proper notation of such events will be made on the books and records of the Trustee.
Notice of Repayment Terms:		With respect to each Book-Entry Note that is repayable at the option of the Holder, the Trustee will furnish DTC on or not more than 60 days prior to the settlement date pertaining to such Book-Entry Note a notice setting forth the terms of such repayment option. Such terms shall include the start date and end dates of the first exercise period, the purchase date following such first exercise period, the frequency that such exercise periods occur (i.e., quarterly, semiannually, annually, etc.) and, if the repayment option expires before maturity, the same information (except frequency) concerning the last exercise period. It is understood that the exercise period shall be at least 15 calendar days long and that the purchase date shall be at least 7 calendar days after the last day of the exercise period.

Notice of Interest Payment and Regular Record Dates:		On the first Business Day of January, April, July and October of each year, the Trustee will deliver to the Issuer and DTC a written list of Regular Record Dates and Interest Payment Dates that will occur with respect to Book-Entry Notes during the six-month period beginning on such first Business Day. Promptly after each Interest Determination Date or Calculation Date, as applicable (as defined in the applicable Note) for Floating Rate Notes, the Company, upon receiving notice thereof, will notify Standard & Poor's Corporation of the interest rate determined on such Interest Determination Date or Calculation Date, as applicable.
Payments of Principal and Interest:		Payments of Interest Only—Promptly after each Regular Record Date, the Trustee will deliver to the Issuer and DTC a written notice specifying by CUSIP number the amount of interest to be paid on each Book-Entry Note on the following Interest Payment Date (other than an Interest Payment Date coinciding with maturity) and the total of such amounts. The Issuer will confirm with the Trustee the amount payable on each Book-Entry Note on such Interest Payment Date. DTC will confirm the amount payable on each Book-Entry Note on such Interest Payment Date by reference to the daily or weekly bond reports published by Standard & Poor's Corporation. The Issuer will pay to the Trustee the total amount of interest due on such Interest Payment Date (other than at maturity), and the Trustee will pay such amount to DTC at the times and in the manner set forth below under "Manner of Payment". If any Interest Payment Date for a Book-Entry Note is not a Business Day, the payment due on such day shall be made on the next succeeding Business Day and no interest shall accrue on such payment for the period from and after such Interest Payment Date.

		Payments at Maturity—On or about the first Business Day of each month, the Trustee will deliver to the Issuer and DTC a written list of principal and interest to be paid on each Book-Entry Note maturing either at stated maturity or on a redemption or repayment date in the following month. The Issuer, the Trustee and DTC will confirm the amounts of such principal and interest payments with respect to each such Book-Entry Note on or about the fifth Business Day preceding the maturity of such Book-Entry Note. The Issuer will pay to the Trustee, as the paying agent, the principal amount of such Book-Entry Note, together with interest due at such maturity. The Trustee will pay such amounts to DTC at the times and in the manner set forth below under "Manner of Payment". If any maturity of a Book-Entry Note is not a Business Day, the payment due on such day shall be made on the next succeeding Business Day and no interest shall accrue on such payment for the period from and after such maturity. Promptly after payment to DTC of the principal and interest due at the maturity of a Book-Entry Note represented by a Global Security, the Trustee will cancel and destroy such Global Security in accordance with the terms of the Indenture and deliver a certificate of destruction to the Issuer.
		Manner of Payment—The total amount of any principal and interest due on Book-Entry Notes on any Interest Payment Date or at Maturity shall be paid by the Issuer to the Trustee in funds available for use by the Trustee as of 9:30 a.m. (New York City time), or as soon as practicable thereafter on such date. The Issuer will make such payment on such Book-Entry Notes by wire transfer to the Trustee. The Issuer will confirm instructions regarding payment in writing to the Trustee. Prior to 10:00 a.m. (New York City time) on each maturity date or as soon as possible thereafter, following receipt of such funds from the Issuer, the Trustee will pay by separate wire transfer (using Fedwire message entry instructions in a form previously specified by DTC) to an account at the Federal Reserve Bank of New York previously specified by DTC, in funds available for immediate use by DTC, each payment of principal (together with interest thereon) due on Book-Entry Notes on any maturity date. On each Interest Payment Date, interest payment shall be made to DTC in same-day funds in accordance with existing arrangements between the Trustee and DTC. Thereafter, on each such date, DTC will pay, in accordance with its SDFS operating procedures then in effect, such amounts in funds available for immediate use to the respective Participants in whose names the Book-Entry Notes are recorded in the book-entry system maintained by DTC. Neither the Issuer nor the Trustee shall have any direct responsibility or liability for the payment by DTC to such Participants of the principal of and interest on the Book-Entry Notes.

	Withholding Taxes—The amount of any taxes required under applicable law to be withheld from any interest payment on a Book-Entry Note will be determined and withheld by the Participant, indirect participant in DTC or other Person responsible for forwarding payments and materials directly to the beneficial owner of such Note.
Settlement:	The receipt by the Issuer of immediately available funds in payment for a Book-Entry Note and the receipt by the Trustee of a properly completed Pricing Supplement shall constitute "settlement" with respect to a Book-Entry Note. In the case of a Book-Entry Note represented by one or more Global Securities, authentication and issuance of the Global Security or Global Securities representing such Note shall constitute "settlement" with respect to such Note. All orders accepted by the Issuer will be settled on the third Business Day from the date of the sale pursuant to the timetable for settlement set forth below unless the Issuer and the purchaser agree to settlement on another day.
Settlement Procedures:	Settlement Procedures with regard to each Book-Entry Note sold by the Issuer through a Presenting Agent as agent shall be as follows:
	A.	The Presenting Agent shall communicate to the Issuer's Treasury Department by telephone, facsimile transmission or other acceptable means the Purchase Information.
	B.	After receiving the details for each offer from the Presenting Agent, the Issuer will, after recording the details and any necessary calculations, communicate the Purchase Information by telephone, facsimile transmission or other acceptable means, to the Trustee.
	C.	The Trustee will assign a CUSIP number to the Book-Entry Note and will telephone the Issuer and advise the Issuer of such CUSIP number. The Trustee will enter a pending deposit message through DTC's Participant Terminal System, providing the following settlement information to DTC (which shall route such information to Standard & Poor's Corporation and Interactive Data Services) and the Presenting Agent:
		1.	The applicable information set forth in Settlement Procedure "A".
		2.	Identification as a Fixed Rate Book-Entry Note or a Floating Rate Book-Entry Note.
		3.	Interest payment period.

	4.	Initial Interest Payment Date for such Note, number of days by which such date succeeds the related DTC record date (which, in the case of Floating Rate Notes which reset weekly shall be the date five calendar days immediately preceding the applicable Interest Payment Date and in the case of all other Notes shall be the Regular Record Date as defined in the Note) and amount of interest payable on such Interest Payment Date per $1,000 principal amount of Notes.
	5.	Participants' account numbers maintained by DTC on behalf of the Trustee and the Presenting Agent.
	6.	CUSIP number of the Book-Entry Note.
	7.	Whether such CUSIP number will represent any other Book-Entry Note (to the extent known at such time).
D.	The Issuer will deliver to the Trustee a Pricing Supplement for each Book-Entry Note, to the extent it has not already done so.
E.	To the extent a Book-Entry Note is to be represented by a Global Security, the Trustee will complete and authenticate the Global Security in its books and records Prior to finalizing the terms of the Global Security for delivery, the Trustee will confirm the Purchase Information by telephone with the Presenting Agent.
F.	DTC will credit such Book-Entry Notes to the Trustee's participant account at DTC.
G.	The Trustee will enter an SDFS deliver order through DTC's Participant Terminal System instructing DTC to (i) debit such Note to the Trustee's participant account and credit such Note to the Presenting Agent's participant account and (ii) debit the Presenting Agent's settlement account and credit the Trustee's settlement account for an amount equal to the price of such Note less the Presenting Agent's commission. The entry of such a delivery order shall constitute a representation and warranty by the Trustee to DTC that (i) such Book-Entry Notes have been executed, delivered and authenticated and (ii) the Trustee is holding the Master Note (or Global Security) pursuant to the Medium-Term Note Certificate Agreement between the Trustee and DTC.

		Settlement Procedure		Time
		A		11:00 a.m. on the sale date
		B		12:00 noon on the sale date
		C		2:00 p.m. on the sale date
		D		3:00 p.m. on the day before settlement date
		E		9:00 a.m. on settlement date
		F		10:00 a.m. on settlement date
		G-H		2:00 p.m. on settlement date
		I		4:45 p.m. on settlement date
		J-K		5:00 p.m. on settlement date

		If the purchase price for any Book-Entry Note is not timely paid to the Participants with respect to such Note by the beneficial purchaser thereof (or a Person, including an indirect participant in DTC, acting on behalf of such purchaser), such Participants and, in turn, the Presenting Agent may enter SDFS deliver orders through DTC's Participant Terminal System reversing the orders entered pursuant to Settlement Procedures "H" and "G", respectively. Thereafter, the Trustee will deliver the withdrawal message and take the applicable related actions described in the preceding paragraph. If such failure shall have occurred for any reason other than the failure of the Presenting Agent to provide the Purchase Information to the Issuer or to provide a confirmation to the purchaser, the Issuer will reimburse the Presenting Agent on an equitable basis for its loss of the use of funds during the period when they were credited to the account of the Issuer.
		Notwithstanding the foregoing, upon any failure to settle with respect to a Book-Entry Note, DTC may take any actions in accordance with its SDFS operating procedures then in effect.
Periodic Statements from the Trustee:		The Trustee will send the Issuer, upon the reasonable request of the Issuer, periodic statements setting forth the principal amount of all Book-entry Notes outstanding as of that date.

EXHIBIT C

[Official Letterhead of Purchaser]

PURCHASE AGREEMENT

, 200

International Business Machines Corporation
Xxxxxx xx xxx Xxxxxxxxx
Xxx Xxxxxxx Xxxx
Xxxxxx, XX 00000

Ladies and Gentlemen:

The undersigned agrees to purchase the following principal amount of the Securities described in the Agency Agreement dated August 21, 2003 (the "Agency Agreement"):

Principal Amount	$

Interest Rate

Maturity Date		, 20

Discount		% of Principal Amount

Price to be paid
to Issuer
(in immediately
available funds)	$

Settlement Date

Except as otherwise expressly provided herein, all terms used herein which are defined in the Agency Agreement shall have the same meanings as in the Agency Agreement. The terms Agent or Agents, as used in the Agency Agreement, shall be deemed to refer to the undersigned for purposes of this Agreement.

This Agreement incorporates by reference Sections 3(c), 4, 6, 7, 12 and 13 of the Agency Agreement, the first and last sentences of Section 9 thereof and, to the extent applicable, the Procedures. You and we agree to perform, to the extent applicable, our respective duties and obligations specifically provided to be performed by each of us in the Procedures.

Our obligation to purchase Securities hereunder is subject to the accuracy on the above Settlement Date of your representations and warranties contained in Section 2 of the Agency Agreement (it being understood that such representations and warranties shall relate to the Registration Statement and the Prospectus as amended at such Settlement Date) and to your performance and observance of all covenants and agreements contained in Sections 4 and 6 thereof. Our obligation hereunder is also subject to the following conditions:

(a) the satisfaction, at such Settlement Date, of each of the conditions set forth in subsections (a) and (b) and (d) through (g) of Section 5 of the Agency Agreement (it being understood that each document so required to be delivered shall be dated such Settlement Date and that each such condition and the statements contained in each such document that relate to the Registration Statement or the Prospectus shall be deemed to relate to the Registration Statement or the Prospectus, as the case may be, as amended or supplemented at the time of settlement on such Settlement Date and except that the opinion described in Section 5(d) of the Agency Agreement shall be modified so as to state that the Securities being sold on such Settlement Date, when delivered against payment therefor as provided in the Indenture and this Agreement, will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Issuer enforceable in accordance with their terms, subject only to the exceptions as to enforcement set forth in clause (ii)

of Section 5(d) of the Agency Agreement, and will conform to the description thereof contained in the Prospectus as amended or supplemented at such Settlement Date); and

(b) there shall not have occurred (i) any change, or any development involving a prospective change, in or affecting particularly the business or properties of the Issuer or its subsidiaries which, in our judgment, materially impairs the investment quality of the Securities; (ii) any downgrading in the rating of the Issuer's debt securities or public announcement that such debt securities are under surveillance or review, with possible negative implications, by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act); (iii) any suspension or limitation of trading in securities generally on the New York Stock Exchange, or any setting of minimum prices for trading on such exchange, or any suspension of trading of any securities of the Issuer on any exchange or in the over-the-counter market; (iv) any banking moratorium declared by Federal or New York State authorities; or (v) any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress or any other substantial national or international calamity, emergency or pestilence if, in our reasonable judgment, the effect of any such substantial national or international outbreak, escalation, declaration, calamity, emergency or pestilence makes it impractical or inadvisable to proceed with completion of the sale of and payment for the Securities.

[Optional, for select MTN issuances]

[In further consideration of our agreement hereunder, you agree that between the date hereof and the above Settlement Date, you will not offer or sell, or enter into any agreement to sell, any Debt Securities of the Issuer, other than sales of securities outside the United States, borrowings under your revolving credit agreements and lines of credit, so-called private placement of securities and issuances of your commercial paper, whether pursuant to Section 3(a)(3), 4(2) Regulation S or otherwise.]

If for any reason our purchase of the above Securities is not consummated, you shall remain responsible for the expenses to be paid or reimbursed by you pursuant to Section 4 of the Agency Agreement and the respective obligations of you and the undersigned pursuant to Section 7 shall remain in effect. If for any reason our purchase of the above Securities is not consummated other than because of our default or a failure to satisfy a condition set forth in clause (iii), (iv) or (v) of paragraph (b) above, you shall reimburse us, severally, for all out-of-pocket expenses reasonably incurred by us in connection with the offering of the above Securities and not otherwise required to be reimbursed pursuant to Section 4 of the Agency Agreement.

This Agreement shall be governed by and construed in accordance with the laws of the State of New York. This Agreement may be executed in counterparts and the executed counterparts shall together constitute a single instrument.

		[Full Legal Name of the Purchaser]
		By	(Authorized Officer)
		Title:

CONFIRMED AND ACCEPTED, as of
the date first above written:

International Business Machines Corporation

By:

Title:

QuickLinks

August 21, 2003
[Official Letterhead of Purchaser]

Identification Numbers:

The Issuer will arrange with the CUSIP Service Bureau of Standard & Poor's Corporation (the "CUSIP Service Bureau") for the reservation of a series of CUSIP numbers, consisting of approximately 50 CUSIP numbers relating to Global Securities representing Book-Entry Notes. The Issuer will obtain from the CUSIP Service Bureau a written list of such series of reserved CUSIP numbers and will deliver to the Trustee and DTC a written list of CUSIP numbers of such series. The Trustee will assign CUSIP numbers to Global Securities as described below under Settlement Procedure "C". DTC will notify the CUSIP Service Bureau periodically of the CUSIP numbers that the Trustee has assigned to Global Securities. The Trustee will notify the Issuer at any time when fewer than 25 of the reserved CUSIP numbers remain unassigned to Global Securities, and if it deems necessary, the Issuer will reserve additional CUSIP numbers for assignment to Global Securities representing Book-Entry Notes. Upon obtaining such additional CUSIP numbers, the Issuer shall deliver a list of such additional CUSIP numbers to the Trustee and DTC.

Registration:

The Master Note, representing the Book-Entry Notes, will be registered in the name of Cede & Co., as nominee for DTC, on the Securities Register maintained under the Indenture. The beneficial owner of a Book-Entry Note (or one or more indirect participants in DTC designated by such owner) will designate one or more participants in DTC (with respect to such Note, the "Participants") to act as agent or agents for such owner in connection with the book-entry system maintained by DTC, and DTC will record in book-entry form, in accordance with instructions provided by such Participants, a credit balance with respect to such Note in the account of such Participants. The ownership interest of such beneficial owner in such Note will be recorded through the records of such Participants or through the separate records of such Participants and one or more indirect participants in DTC.

Transfers:

Transfers of a Book-Entry Note will be accomplished by book entries made by DTC and, in turn, by Participants (and, in certain cases, one or more indirect participants in DTC) acting on behalf of beneficial transferors and transferees of such Note.