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Political Expenditures and Public Policy Matters

IBM's core values include a commitment to trust and personal responsibility and a pursuit of innovation that matters to our company and the world. Consistent with these principles, IBM is committed to leading on public policy issues that are relevant to IBM and the world. IBM Governmental Programs, a globally integrated function, provides worldwide leadership and expertise in advocating and advancing the public policy interests of IBM, its shareholders and employees with governments.

IBM's values also reflect the corporation's long-standing policy against political contributions of any kind, even when permitted by law. Therefore, IBM does not have a Political Action Committee (PAC). If employees chose to participate in political activity, they do so on their own time as individuals and not company representatives.

Below are the key IBM policies and positions regarding political expenditures and public policy advocacy.

Political campaign contributions and expenditures

IBM has a long-standing policy not to make contributions of any kind (money, employee time, goods or services), directly or indirectly, to political parties or candidates, including through intermediary organizations, such as political action committees, campaign funds, or trade or industry associations. This policy applies equally in all countries and all levels of government, even where such contributions are permitted by law. This policy is reflected in IBM's Business Conduct Guidelines, Section 5.3.

Contributions which are not permissible either as direct IBM payments or employee expense reimbursements include:

Because of IBM's policy on political contributions and expenditures, IBM does not have a Political Action Committee and does not engage in independent expenditures or electioneering communications as defined by law.

Periodically, IBM Governmental Programs reports to the IBM Board of Directors about the company's policies and practices in connection with governmental relations, public policy, and related expenditures.

Trade and industry associations

Our policy restricts trade and industry associations from using IBM funds to engage in political expenditures. IBM has procedures to ensure that IBM payments to trade or industry associations comply with this policy. These procedures include IBM providing written communication of IBM's restrictions to the association.

IBM joins trade and industry associations that add value to IBM, its stockholders and employees. These groups have many members from a wide variety of industries, and cover very broad sets of public policy and industry issues. As a result, there may be occasions where the views of a particular association on one or more specific issues are different than IBM's views.

Public policy expenditures and lobbying

IBM may make expenditures to support or advocate particular viewpoints on public policy issues, including expenditures for intermediaries that advocate on IBM's behalf. In addition, IBM occasionally may seek the participation of IBM employees, on a voluntary basis, in conveying the IBM position to public officials when (i) the issue may have a significant impact on IBM or its employees and (ii) participation is in IBM's best interest. Public policy advocacy involving expenditures or the participation of IBM employees requires the prior approval of IBM Governmental Programs and appropriate legal counsel.

IBM engages in lobbying activities in accordance with applicable law and the requirements in IBM's Business Conduct Guidelines under Section 4.5. All IBM lobbying activities require the prior approval of IBM Governmental Programs. IBM files periodic reports with the Secretary of the U.S. Senate and the Clerk of the U.S. House of Representatives detailing its U.S. federal lobbying activities and expenditures. These reports are available at: http://www.senate.gov/legislative/Public_Disclosure/LDA_reports.htm. IBM also files lobbying reports with U.S. state and municipal governments, where required.

Public policy positions

IBM Governmental Programs is a globally integrated corporate function responsible for managing IBM's public policy issues and government relations worldwide. With dedicated resources in the Americas, Europe, Africa, and Asia, IBM Governmental Programs pursues mutual objectives of global consistency and local relevancy in supporting IBM's growth and business operations. IBM Governmental Programs works with governments on key economic, governmental, and societal issues, helping them solve problems and create strategies for the future. An overview of IBM's key policy positions is available at www.ibm.com/ibm/governmentalprograms/.

Employee public service and political activity

If IBM employees choose to participate in political activity, they do so as individuals and not company representatives. IBM will make reasonable accommodations for employees to take vacation or reasonable time off without pay to pursue such activity. Because IBM does business with many levels of government, we have instituted policies and procedures designed to avoid conflict of interest situations for IBM employees engaged in public service, as described in Section 5 of IBM's Business Conduct Guidelines.