# ENDORSEMENT # 5

This endorsement, effective May 21, 2012 (at 12:01 a.m. Prevailing Time at the address shown in Item 1 of the Declarations)

forms a part of Policy No. 60703940 issued to International Business Machines Corporation by Chartis Excess Limited

## CHOICE OF LAW ENDORSEMENT – II

It is hereby agreed that this Policy and any dispute, controversy or claim arising out of or relating to this Policy, shall be governed by and construed in accordance with the substantive internal law (i.e., excluding procedural and choice-of-law rules) of the State of New York, except insofar as such law: (1) may prohibit payment in respect of punitive damages hereunder; (2) pertain 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) are 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 proferentem and without reference to parol or other extrinsic evidence).

Notwithstanding the restrictive as Intervening Policy(ies) Condition, but subject to the restrictive as Quota Share Policy(ies) Condition, if any or all Underlying Policy(ies) do not pay or indemnify for punitive damages, then a separate per Occurrence, Claim or Loss "Punitive Damages Retention" will apply to such punitive damages and the Company will only pay or indemnify for those punitive damages that are in excess of the Punitive Damages Retention subject to the applicable limit(s) of this Policy, or the remaining limit(s) of this Policy where the applicable limit(s) have been eroded by payment of a covered Occurrence, Claim or Loss. The Punitive Damages Retention applicable to each Occurrence, Claim or Loss shall be equal to the limits remaining in the Underlying Policy(ies) without regard to whether such Underlying Policy(ies) cover punitive damages.

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.

All other terms, conditions and exclusions remain unchanged.

**AUTHORIZED REPRESENTATIVE**

106116(8/10) Page 1 of 1

**CHARTIS EXCESS LIMITED**

Head Office: 30 North Wall Quay, Dublin 1 Ireland

Branch Office, Bermuda - 29 Richmond Road, Pembroke, HM08

Branch Office, U.K. - 58 Fenchurch Street, London, EC3M 4AB

Chartis Excess Limited is incorporated and registered in The Republic of Ireland, Registration No. 279452, and is regulated by The Central Bank of Ireland.

© Chartis, Inc. All rights reserved.