# Punitive Damages Endorsement

**End 007-5/02**
**Form OCC01**
**Page 1 of 1**
**ADDITIONAL/RETURN PREMIUM: NIL**

## PUNITIVE DAMAGES ENDORSEMENT

1. It is hereby agreed that, notwithstanding any provision of the Followed Policy, the Policy or any applicable State law to the contrary (and for the purposes of the coverage afforded by this Endorsement, the internal laws of England and Wales shall apply), the Insured's liability for Punitive Damages as a consequence of an Occurrence shall be covered under this Policy in the same circumstances and to the same extent as the Insured's liability for compensatory damages attributable to such Occurrence would be covered by this Policy.

2. The coverage afforded by this Endorsement is included within, and does not increase, the Limits of Liability set forth in Item (2) of the Declarations.

3. Nothing in this Endorsement shall be construed to reduce the attachment point(s) as set forth in Item (3) of the Declarations and as provided in Item (12); to the extent that any of the Underlying Policies do not cover Punitive Damages, the Insured shall be self-insured as respects Punitive Damages in the layers of such Underlying Policies, and the coverage provided by this Policy and this Endorsement shall not drop down on a difference-in-conditions basis; provided, however, that where the full limits of Underlying Insurance are exhausted by actual payment of compensatory damages (and/or Punitive Damages) in respect of an Occurrence (and/or the Insured has paid any gaps in Underlying Insurance in respect of Punitive Damages), coverage under this Endorsement of Punitive Damages shall apply as provided in Item (12) of the Policy on the same basis as for further compensatory damages.

4. "Punitive Damages" means punitive or exemplary damages, or the multiplied portion of any multiple damage award, for which the Insured is legally liable, but only (i) as determined by final adjudication by a court, arbitration or other tribunal having jurisdiction over the Insured, or (ii) as respects any settlement, such amount of any settlement in respect of any claims for punitive, exemplary or multiplied damages which exceeds (a) in the case of a settlement after a non-final adjudication by a court, arbitration or other tribunal having jurisdiction over the Insured, the compensatory damages awarded in such adjudication, or (b) in the absence of such an adjudication, the compensatory damages demanded by the claimant at arm's length (i.e., without knowledge of the coverage for Punitive Damages afforded by this Endorsement and without discussion between representatives of the claimant and of the Insured, or underlying insurers, as to allocation of any demand or settlement between compensatory and punitive damages).

Nothing herein contained shall be held to vary, alter, waive, or extend any of the terms, conditions, exclusions or limitations of the Policy referenced below, except as expressly stated herein.

---

The effective date of this endorsement is **May 21, 2008**
All other terms and conditions remain unchanged.
This endorsement is attached to and made a part of Policy No. **IBM-0054/OCC01**
of ACE Bermuda Insurance Ltd.

Issued to:
**International Business Machines Corp. (IBM Corp.)**

Date of Issue: **May 19, 2008**
By **Authorized Representatives**

End No. 4