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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**

5. Notwithstanding anything herein or in the Old Policy or the New Policy to the contrary, for no occurrence/Occurrence shall there be coverage under both the Old Policy and the New Policy. Without limiting the foregoing, if notice of any occurrence (other than an occurrence arising out of two or more units of a product) was given under the Old Policy prior to the Effective Date, no notice of Occurrence or Notice of Integrated Occurrence may be given subsequent to the Effective Date if such Occurrence or Integrated Occurrence would encompass Personal Injury, Property Damage or Advertising Liability included within such previously noticed occurrence.

6. In consideration of the substitution provided for hereunder, it is a condition precedent to the rights of any Insured under the New Policy with respect to any Occurrence or Ultimate Net Loss which is covered under the New Policy but would not have been covered under the Old Policy had notice of such occurrence been given immediately 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 of any Personal Injury, Property Damage or Advertising Liability included therein, irrespective of whether or not such person was aware that such occurrence was likely to involve this Policy.

7. If (a) the Effective Date is not the commencement of an Annual Period, and (b) the Company is first sent notices of different occurrences/Occurrences within the same Annual Period both before and after the Effective Date, then, subject to all other limitations, terms, exclusions and conditions of the Policy, each such occurrence/Occurrence shall be subject to the per occurrence limit, aggregate limit and per occurrence/Occurrence retention amount listed in Items 2(a) and (b) of the Declarations as in effect at the time notice of such Occurrence was first given to the Company; provided, however, that the aggregate limit of liability stated in Item 2(b) of the Declarations shall apply with respect to the entire Annual Period, and if such limit is increased or decreased by this endorsement, the aggregate limits within the Annual Period shall not be cumulative and the lower limit shall be included within the higher limit, i.e., the occurrences/Occurrences of which notice was first given during the portion of the period in which the lower limit was in effect shall be subject to such limit, and additionally all occurrences/Occurrences of which notice was first given during the entire Annual Period shall be subject to the higher limit.

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**Ref:** XS4-063.01  
CONT'D

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