**INSURED:**
INTERNATIONAL BUSINESS MACHINES CORPORATION

**POLICY NO:** XLUMB-00704

**ENDORSEMENT NO:** 12

**EFFECTIVE DATE:** MAY 21, 1997

**Page 1 of 3**

**RETROACTIVE COVERAGE ENDORSEMENT (I)**

It is hereby agreed that the Retroactive Coverage Date for the layer $100,000,000 excess of $245,000,000 is MAY 21, 1986, and such retroactive coverage became effective at the Effective Date listed above ("Effective Date").

It is a condition precedent to the rights of any Insured under this Policy with respect to any Occurrence in such layer as respects such retroactive coverage (i.e., Personal Injury, Property Damage and/or Advertising Liability taking place prior to the Effective Date) that, except as specifically agreed to in writing by the Company and the Named Insured, the Named Insured was not aware of such Occurrence at the Effective Date. The Named Insured shall be deemed to have been aware of an Occurrence if any Executive Officer was aware, in the case of an Occurrence under subparagraph (a) of paragraph (1) of Section (V) of Article III, of any of the event, exposure to conditions, Personal Injury, Property Damage or Advertising Liability as respects such Occurrence or, in the case of subparagraph (b) of such paragraph, of any of the Personal Injury or Property Damage as respects such Occurrence, in each case irrespective of whether or not such person was aware that such Occurrence was likely to involve this Policy.

It is hereby agreed that the extension of coverage pursuant to this Endorsement shall not apply to, and the Company shall have no liability hereunder to the Insured in respect of, any Personal Injury, Property Damage or Advertising Liability arising out of the products, services, operations, activities, risks, defects, hazards, alleged defects or hazards, failure to warn of any of the foregoing, and/or any other matter, described below:

1) The fire on December 31, 1986 at the DuPont Hotel in San Juan, Puerto Rico.
2) The explosion at the Hoechst Celanese plant in Pampa, Texas on November 14, 1987.
3) The explosion and fire at the Shell Oil Refinery in Norco, Louisiana on May 5, 1988.
4) The fire and explosions at the Pacific Engineering & Production Company on May 5, 1988.
5) The fire at the First Interstate Bank, Los Angeles, on May 4, 1988.
6) The explosion and fire on the Piper Field platform in the North Sea on July 6, 1988.

Ref: XS4-069.01

(Cont'd...)