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**Insured:** INTERNATIONAL BUSINESS MACHINES CORPORATION  
**Policy No:** XLUMB-00704  
**Endorsement No:** 1  
**Effective Date:** MAY 21, 1996

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**PROSPECTIVE POLICY SUBSTITUTION ENDORSEMENT**

1. It is hereby agreed that with effect from the effective date listed above ("Effective Date") the new policy issued herewith and described below ("New Policy") shall substitute for the old policy described below ("Old Policy").

2. Except as provided in paragraph 4 below, all occurrences for which a notice of occurrence or claim was given prior to the Effective Date shall be governed by the aggregate limit, the per occurrence limit, the per occurrence retention and terms, conditions and exclusions of coverage under the Old Policy as in effect at the time notice of such occurrence was first given pursuant to Section (d) of Article V of the Old Policy.

3. Except as provided in paragraphs 4 and 5 below, all Occurrences for which notice of Occurrence is first given pursuant to Article V of the New Policy at or subsequent to the Effective Date shall be governed by the aggregate limit, the per Occurrence limit, the per Occurrence retention and terms and conditions and exclusions of coverage under the New Policy as in effect at the time of such notice. The Inception Date(s) under the New Policy shall be as provided therein.

4. With respect to any Occurrence arising out of two or more units of a product:

   (a) if no notice of "batch occurrence" was given pursuant to Section V(d) of the Old Policy and if Notice of Integrated Occurrence is given under the New Policy, Section II.B of the New Policy shall operate so that such Integrated Occurrence under the New Policy shall encompass Personal Injury and/or Property Damage encompassed by occurrence(s) of which notice was given under the Old Policy attributable to the same event, condition, cause, defect or hazard or failure to warn of such, and appropriate adjustments shall be made as respects the affected annual period(s) under the Old Policy on the same basis as is provided in Section II.B of the New Policy; and

   (b) if notice of "batch occurrence" was given under the Old Policy, there shall be no Occurrence or Integrated Occurrence under the New Policy as respects Personal Injury and/or Property Damage attributable to the same event, condition, cause, defect or hazard or failure to warn of such.

Ref: XS4-063.01

CONT'D

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