**Insured:** INTERNATIONAL BUSINESS MACHINES CORPORATION

**Policy No:** BM00024832LI10A

**Endorsement No:** 4

**Effective Date:** MAY 21, 2010

**Page 2 of 3**

## CHOICE OF LAW ENDORSEMENT – IV

**(ii)** "Punitive damages" will not be considered damages to which this insurance applies, and we will have no obligation with respect to such damages, if the damages are assessed against the Insured and arise out of the Insured's intentional, willful or wanton conduct. However, this limitation shall not apply if the award is assessed against the Named Insured and arises out of the intentional, willful or wanton conduct of an "employee" or agent of the Named Insured and the Named Insured had no knowledge of the "employee"s or agent's intentional, willful or wanton conduct.

**(iii)** Any award of "punitive damages" and compensatory damages arising out of the same judgment will be added together and the sum shall be used to determine whether or not the "retained limit" has been exhausted;

2. Pertains to regulation under New York Insurance Law, or regulations issued by the Insurance Department of the State of New York pursuant thereto, applying to insurers doing insurance business, or issuance, delivery or procurement of policies of insurance, within the State of New York or as respect risks or insured entities situated in the State of New York; or

3. Is inconsistent with any provision of this Policy, provided, however, that the provisions, stipulations, exclusions and conditions of this Policy are to be construed in an even handed fashion as between the Insured and the Company; where the language of this Policy is deemed to be ambiguous or otherwise unclear, the issue shall be resolved in the manner most consistent with the relevant provisions, stipulations, exclusions and conditions, (without regard to authorship of the language, without any presumption or arbitrary interpretation or construction in favour of either the Insured or the Company or reference to the "reasonable expectations" of either thereof or to contra proferentum and without reference to parol or other extrinsic evidence). Insofar as the substantive internal law of New York is inapplicable as provided herein or otherwise, and as respects arbitration procedure, the internal laws of England and Wales apply.

The following DEFINITIONS are added to this Policy:

"Punitive damages", which may also be called exemplary damages, means damages awarded by a court above and beyond the requirement for compensating a plaintiff for "bodily injury", "property damage" or "personal and advertising injury" and intended to reform or deter the defendant and similar persons from pursuing a course of action such as that which damaged the plaintiff. "Punitive damages" does not include civil or criminal fines or penalties imposed by any government authority.

Ref: XSBSF-021.01

Cont'd/...

XL INSURANCE