EXHIBIT XI
As amended, restated, and combined
on July 27, 1993
IBM Board of Directors
Deferred Compensation and Equity Award Plan
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ARTICLE I. Purpose
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International Business Machines Corporation ("IBM") has
established, pursuant to resolutions adopted on July 27, 1993,
the Deferred Compensation and Equity Award Plan (the "Plan") to
amend, restate and combine the Deferred Compensation Plan
("DCP") and Restricted Equity Award Plan ("REAP") of the Board
of Directors, to enable members of the Board of Directors (the
"Board") who are not then IBM employees ("Outside Directors")
to defer receipt of compensation for the services of Outside
Directors to later years and to provide part of the
compensation for the services of Outside Directors in a promise
to deliver shares of IBM Capital Stock ("Shares").
ARTICLE II. Maintenance of Records
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IBM shall maintain three bookkeeping accounts for each Outside
Director, a Cash Account, a Promised Fee Shares Account, and a
Promised Award Shares Account, which shall be credited in
accordance with the terms of this Plan and the elections of
each Outside Director pursuant to this Plan.
ARTICLE III. Promised Award Shares
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(a) Initial Awards
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An Initial Award of a promise by IBM to deliver one
hundred Shares, pursuant to ARTICLE VII hereof, to an
Outside Director ("Promised Award Shares") shall be
made to any newly-elected Outside Director upon his
or her election to the Board.
(b) Annual Awards
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Each year, on the first day of the month following
the annual meeting of IBM stockholders held pursuant
to IBM's By-laws, each Outside Director who was
elected at such annual meeting (including
newly-elected Outside Directors) shall receive an
Annual Award of one hundred Promised Award Shares.
(c) Voting Rights
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Promised Award Shares do not have voting rights.
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(d) Promised Award Shares Account
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Promised Award Shares shall be credited to the
Promised Award Shares Account.
ARTICLE IV. Deferral of Fees
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(a) Eligibility and Election
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Any Outside Director may elect to defer receipt of
all or any portion of the other compensation for
services ("Fees") to be earned by such Outside
Director by indicating such election to the Secretary
of IBM on an Election Form supplied by the Secretary
("Deferral Election"). The Outside Director's
election must specify (i) the portion of the Fees to
be deferred, (ii) the "Deferral Period" (a minimum of
one "Election Term"), (iii) the choice of deferral in
cash or a promise by IBM to deliver Shares ("Promised
Fee Shares"), pursuant to ARTICLE VII hereof, and
(iv) the time(s) of payment or delivery. Each
Deferral Election is irrevocable with respect to the
Fees payable for the Deferral Period to which it
applies.
"Deferral Period" shall mean, with respect to a
Deferral Election, the period of Fee payments that
are being deferred pursuant to such Deferral
Election.
"Election Term" shall mean the period beginning on
the date an Outside Director is elected to the Board
and ending on the date of the next succeeding Annual
Meeting of IBM Stockholders.
(b) Credit for Amounts Deferred
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(i) The Cash Account will be credited with the
amount of Fees accrued during a Deferral Period
and deferred as cash (such credit to be made
when such Fees become payable), plus interest at
an annual rate equal to the average of the first
26-week Treasury Bill issued in January and July
of each year, computed from the date such Fees
would have been paid had they not been deferred.
(ii) The Promised Fee Shares Account will be
credited with the number of Shares, including
fractions, which could have been purchased had
the amount of the Fees accrued during a Deferral
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Period and deferred as Promised Fee Shares been
used to purchase Shares on the date such Fees
would have been paid had they not been deferred,
at a price equal to Fair Market Value on such
date.
(iii) "Fair Market Value" shall be the average
of the high and low prices of Shares on the New
York Stock Exchange on the date in question,
provided that if no sales of Shares were made on
said Exchange on that date, the average of the
high and low prices reported for the preceding
day on which sales of Shares were made on said
Exchange.
(iv) Promised Fee Shares do not have voting
rights.
(c) Advance Notice of Election
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Any Deferral Election with respect to Fees to be
earned during an Election Term shall be
delivered to the Secretary of IBM:
(i) in the case of Fees deferred and
to be recorded in the Cash Account, on or
before the date 30 days prior to the first
date of such Election Term or, with respect
to a new Outside Director, before the first
date of such Election Term; or
(ii) in the case of Fees deferred and
to be recorded in the Promised Fee Shares
Account, on or before the date six months
prior to the first date of such Election
Term or, with respect to a new Outside
Director, before the first date of such
Election Term.
(d) Duration of Election
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A Deferral Election may be made annually for the
succeeding Election Term or, at the Outside
Director's direction, shall continue from
Election Term to Election Term unless a written
request to modify or terminate that election for
subsequent Election Terms is submitted to the
Secretary of IBM on or before the date six
months prior to the first date of the first such
subsequent Election Term, provided that such
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six-month period may be reduced to 30 days if
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neither the Deferral Election being modified or
terminated nor the modified Deferral Election
provides for a deferral of Fees as Promised Fee
Shares during such first Election Term.
(e) Financial Hardship
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In the event that an Outside Director incurs a
severe financial hardship, the Outside
Director's deferral schedule with respect to his
or her Cash Account or Promised Fee Shares
Account shall be revised by the Board (or an
authorized Committee of the Board) to the extent
reasonably necessary to eliminate the severe
financial hardship. Such severe financial
hardship must be caused by an accident, illness,
or event beyond the control of the Outside
Director.
(f) Conversion of DCP Elections
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Ongoing elections under the DCP to defer Fees as
share units and/or cash shall be continued and
converted to elections to defer Fees into a
Promised Fee Shares Account and/or a Cash
Account, respectively, under the Plan, except to
the extent the Outside Director elects prior to
July 27, 1993 to change such an election to
defer Fees into share units into an election to
defer Fees into the Cash Account.
ARTICLE V. Dividends, Distributions and Adjustments
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Whenever a cash dividend or any other
distribution is paid with respect to Shares, the
Promised Fee Shares Account and Promised Award
Shares Account of each Outside Director shall be
credited with an additional number of Promised
Fee Shares or Promised Award Shares, as
applicable, equal to the number of Shares,
including fractional Shares, that could have
been purchased had such dividend or other
distribution been paid on each Promised Fee
Share in the Promised Fee Shares Account and
Promised Award Share in the Promised Award
Shares Account (on the record date for such
dividend or distribution) and the amount of such
dividend or value of such other distribution
been used to acquire additional Shares at the
Fair Market Value on the date such dividend or
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other distribution is paid. The value of any
such other distribution on or related to Shares
shall, at the option of the Board (or an
authorized Committee of the Board), be either
determined by the Board or independently
established.
The number of Promised Award Shares and Promised
Fee Shares shall be fully adjusted upon the
occurrence of any stock split, stock dividend,
combination or reclassification,
recapitalization, merger or similar event, and
shall be appropriately adjusted for the value
(determined in the manner provided above with
respect to distributions) of any right,
privilege or opportunity provided or offered by
IBM to holders of Shares.
ARTICLE VI. Conversion of REAP and DCP Shares Account
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Balances
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The amount in the account of an Outside Director as of July 27,
1993 under the DCP in units equivalent to a number of Shares
(including fractions of Shares) and payable in cash only
("units") shall be converted under the Plan as of July 27, 1993
to an amount in the same number of Shares (including fractions
of Shares) credited to the Outside Director's Promised Fee
Shares Account, unless the Outside Director elects prior to
July 27, 1993 to convert the units as of July 27, 1993 into
credits in the Cash Account.
The number of Shares in the escrow account of an Outside
Director as of July 27, 1993 under the REAP shall be converted
under the Plan as of July 27, 1993 to an equal number of
Promised Award Shares credited to the Outside Director's
Promised Award Shares Account.
An Outside Director's cash account balance under the DCP as of
July 27, 1993 will be converted to an equivalent balance under
the Outside Director's Cash Account under the Plan as of
July 27, 1993.
ARTICLE VII. Delivery
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Delivery of amounts from the Cash Account and Shares from the
Promised Award Shares Account and Promised Fee Shares Account
will be made to an Outside Director in accordance with his or
her applicable Deferral Elections or, if no election applies,
promptly after the date on which the Outside Director ceases to
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be a member of the Board; provided, that when an Outside
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Director terminates service on account of any act of (i) fraud
or intentional misrepresentation or (ii) embezzlement,
misappropriation or conversion of assets or opportunities of
IBM or any direct or indirect majority-owned subsidiary of IBM,
Promised Award Shares credited to such Outside Director's
Promised Award Shares Account shall be forfeited.
In the event of an Outside Director's death, such Outside
Director's estate or beneficiary, as appropriate, shall be paid
the amount credited to his or her Cash Account and an amount
equal to the Fair Market Value on the date of death of the
Promised Award Shares and Promised Fee Shares credited to his
or her Promised Award Shares Account and Promised Fee Shares
Account.
Upon becoming entitled to receive Shares, an Outside Director
may elect to receive in lieu thereof a cash payment. In the
case of Shares to be delivered pursuant to a Deferral Election,
the cash payment shall be equal to the Fair Market Value of the
Shares on the delivery date specified in the Deferral Election.
In the case of shares to be delivered promptly after the date
on which a Director ceases to be a member of the Board, the
cash payment shall be equal to the Fair Market Value of the
Shares on the first day after such date. In any case when
Shares are to be delivered, a cash payment will be so made in
lieu of delivering a fractional Share.
ARTICLE VIII. Source of Shares
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45,000 Shares as of July 27, 1993, plus an additional 20,000
Shares as of May 1, 1994, and as of each May 1 thereafter,
shall be reserved and authorized for delivery under the Plan
from time to time. These Shares may be provided from
newly-issued or repurchased Shares. If any change is made in
the number of Shares outstanding or in the rights of such
outstanding Shares (such as by stock split, stock dividend,
combination or reclassification, recapitalization, merger or
similar event), the Board (or an authorized Committee of the
Board) may make such adjustments in the number of or rights
relating to Shares authorized to be delivered pursuant to the
Plan as the Board (or such Committee) determines is equitable
to preserve the respective rights of the participants in the
Plan. Shares forfeited under the Plan or settled in cash in
lieu of delivery shall not reduce the number of Shares
authorized under the Plan and shall not be deemed to have been
delivered under the Plan; provided, that the number of Shares
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settled in cash in lieu of delivery shall not exceed the
cumulative number of Shares authorized for delivery under the
Plan (without deduction for Shares delivered).
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ARTICLE IX. Alienability
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No amount due or payable under the Plan or any interest in the
Plan, shall be subject in any manner to alienation, sale,
transfer, assignment, pledge, attachment, garnishment, lien,
levy or like encumbrance. No such amount shall in any manner
be liable for or subject to the debts or liability of any
Outside Director. Prior to delivery of Shares by IBM pursuant
to Article VII, no director shall have any right to transfer or
assign any Share, or any right to receive any Share, credited
to him under this Plan. Any purported assignment shall be null
and void.
ARTICLE X. Outside Director's Rights Unsecured
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The right of an Outside Director to receive any cash payment or
Shares hereunder shall rank as an unsecured claim against IBM.
Assets that may be set aside for IBM's convenience with respect
to the Plan shall not in any way be held in trust for, or be
subject to any prior claim by, an Outside Director or
beneficiary.
ARTICLE XI. Effective Date
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The Plan shall become effective on July 27, 1993.
ARTICLE XII. Amendment and Termination
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The Board or any authorized Committee of the Board may at any
time terminate, and may at any time and from time to time and
in any respect amend, the Plan for any reason; provided that
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the Plan may not be amended more than once every six months,
other than to comport with changes in the Internal Revenue Code
of 1986, as amended, the Employee Retirement Income Security
Act of 1974, or the rules thereunder.
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