# INTERNATIONAL BUSINESS MACHINES CORPORATION

**VII.** The Named Insured, listed in Item 1 of the Declarations, shall be responsible for and act on behalf of all Insureds with respect to the payment of any premiums and determination and receipt of payments of Loss due under this Policy.

**VIII.** The Insured warrants that the underlying aggregate limits, where applicable, as shown in Item 5b. of the Declarations shall be unimpacted as of the effective date of this Policy. In the event of non-concurrent policy periods between this Policy and any Underlying Insurance, only covered events taking place during the policy period of this Policy shall be considered in determining the extent of any erosion or exhaustion of the underlying aggregate limits, and the Insured shall retain any resulting gap.

**IX.** Cancellation provisions of this Policy shall follow the cancellation provisions of the Followed Policy except as provided by endorsement hereto.

**X.** Terms appearing in boldface type in this Policy are expressly defined below or elsewhere in this Policy as follows:

(1) "Defense Costs" shall have the same definition as such term or the equivalent term in the Followed Policy or, if not defined therein, shall mean reasonable and necessary expenses and costs incurred in investigating and/or defending against any claim, suit or other proceeding, and shall include, without limitation, attorneys' fees.

(2) "Insured" means each entity or person which is insured under all Underlying Insurance in the same capacity as which such insurance is afforded.

(3) "Loss" shall have the same definition as such term, "ultimate net loss" or the equivalent term in the Followed Policy or, if not defined therein, shall mean the total sum which the Insured shall become obligated to pay on account of liability which is, and/or but for the amount thereof would be, covered under the Followed Policy less any salvages or recoveries.

(4) "Occurrence" shall have the same definition as in the Followed Policy or, to the extent that term is not used in the Followed Policy as the basis for determining the application of limits of liability and/or retentions thereunder, then "Occurrence" shall have the same meaning as the term used for that purpose in the Followed Policy.

(5) "Underlying Insurance" means all of the insurance policies set forth on the Schedule of Underlying Policies attached hereto.

**XI.** Notwithstanding anything to the contrary in the Followed Policy, any dispute, controversy or claim arising out of or relating to this Policy or to the breach, cancellation, termination or validity of this Policy shall be finally and fully determined in London, England under the provisions of the Arbitration Act of 1996 ("Act") and/or any statutory modifications or amendments thereto, for the time being in force, by a Board composed of three arbitrators to be selected for each controversy as follows:

Any party may, in the event of such a dispute, controversy or claim, notify the other party or parties to such dispute, controversy or claim of its desire to arbitrate the matter, and at the time of such notification the party desiring arbitration shall notify any other party or parties of the name of the arbitrator selected by it. The other party or parties who has been so notified shall within thirty (30) calendar days thereafter select an arbitrator and notify the party dealing arbitration of the name of such second arbitrator. If the party or parties notified of a desire for arbitration shall fail or refuse to nominate the second

FORM XL XS-CC (11/03)