**X.L. INSURANCE COMPANY, LTD.**

**CUMBERLAND HOUSE**
**ONE VICTORIA STREET**
**P.O. BOX HM 2245**
**HAMILTON HM JX BERMUDA**
**FAX: (809) 295-7524**
**TELEX: 3626 XL BA**
**TELEPHONE: (809) 292-8515**

**WITHOUT PREJUDICE**

June 6, 1995

**J.J. Conerty**
**International Business Machines Corporation**
**Armonk, New York 10504-1783**
**U.S.A.**

Dear Mr. Conerty:

**NAMED INSURED:** International Business Machines Corporation  
**X.L. POLICY NO.:** XLUMB-00704  
**CLAIM:** Various - Repetitive Stress Claims  
**D.O.L.:** May 21, 1990  
**X.L. FILE NO.:** 00704-94-0001-001 (U1949)

This will acknowledge your letter dated May 10, 1995, together with enclosures, constituting first notice to X.L. of this batch occurrence. As such, the limit, retention, terms and conditions of the X.L. policy are as in effect at that date. The materials forwarded with your notice letter indicate that this loss is not likely to involve the X.L. policy, and X.L. does not intend to conduct an investigation into the circumstances of these claims. Nonetheless, we wish to bring to your attention certain coverage issues that are immediately apparent.

First, pursuant to Definition III (e)(ii), coverage is only afforded in respect of loss arising from the use of the insured's products for injury taking place on or after the inception date, or if applicable the Retroactive Date. The policy Inception Date is December 21, 1991, and the Retroactive Date is December 21, 1990, effective at December 21, 1992. The materials forwarded clearly indicate that many of the claimed injuries took place prior to either of these dates, and accordingly, no coverage is afforded for injuries taking place prior to the earlier of these applicable dates.

Further and again with reference to Definition III(e), please be advised that no coverage is afforded with respect to injury, damage or liability which is expected or intended by the insured. Also, we direct your attention to the following language contained within Definition III (e):

*Where certain actual or alleged injury, damage or liability is expected or intended by the Insured or the Insured has historically experienced a level or rate of actual or alleged injury, damage or liability associated with given products or operations and actual or alleged injury, damage or liability fundamentally different in nature or vastly greater in order of magnitude occurs, such actual or alleged injury, damage or liability shall not by virtue of such expectation, intent or historical experience be deemed expected or intended to the extent and only to the extent it is different or incrementally greater.*

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**2.01**