This endorsement modifies the insurance as is afforded by the provisions of the policy, relating to the following:

**POLICY NO. CGL**
**32-78-678-02**

**EFFECTIVE DATE**
**6-30-86**

**AGENCY NO.**
**50-515-810**

**ADD'L PREMIUM**
**$ INCL.**

**RETURN PREMIUM**
**$**

**Named Insured**
**IBM CORPORATION**
**ARMONK, N.Y. 10504**

This endorsement is issued by that company named in the Declarations of the policy designated above as the insurer under such policy issued to the Named Insured and forms a part of said policy as of the effective date hereof, at the hour stated in such Declarations.

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**EMPLOYEE BENEFITS – LIABILITY COVERAGE**

**Limits of Liability**

* **2,000,000 Thousand Dollars each claim**
* **2,000,000 Thousand Dollars aggregate**

*Each claim subject to a $1,000 deductible*

**Rates per Employee**

* **$ INCL. IN COMPOSITE First 5,000**
* **$ INCL. IN COMPOSITE Next 5,000**
* **$ INCL. IN COMPOSITE Over 10,000**

**Premium Basis**

**Estimated No. of Employees**

**IF ANY**

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It is agreed, in consideration of the premium and in reliance upon the statements in the application and subject to the terms of this endorsement and of the policy to which this endorsement is attached as follows:

I. **COVERAGE**: The Company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages on account of any claim made against the insured by any employee, former employee, or the beneficiaries or legal representatives thereof, for injury caused by any negligent act, error or omission of the insured, or any other person for whose acts the insured is legally liable, arising out of the administration of employee benefits as defined herein.

II. **DEDUCTIBLE**: $1,000 shall be deducted from the amount of each claim covered under the terms of this endorsement, and the Company shall be liable for loss only in excess of that amount. The Company may at its option investigate, negotiate, or settle any claim, and the insured agrees, if the Company undertakes to negotiate or settle any such claim, to join the Company in such negotiation or settlement to the extent of the amount to be deducted as herein provided or to reimburse the Company for such deductible amount, if and when such claim is paid by the Company.

III. The defense, settlement, supplementary payments and provisions of the policy shall apply as respects the coverage hereby afforded.

IV. **POLICY PERIOD AND TERRITORY**: This insurance applies only to claims brought against the Named Insured during the policy period within the United States of America, its territories or possessions or Canada, resulting from negligent acts, errors or omissions in the administration of Employee Benefits, provided the Named Insured, at

**JOHNSON & HIGGINS**
**JJ:SG 7/16/86**

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**DEFINITIONS**

1. “INSURED”: The unqualified word “Insured” wherever used in relation to the insurance afforded hereby, includes not only the Named Insured, but also any partner, executive officer, director, stockholder or employee, provided such employee is authorized to act in the administration of the Employee Benefits.
2. “EMPLOYEE BENEFITS”: The term “Employee Benefits” shall mean group life insurance, group accident and health insurance, profit sharing plans, pension plans, employee stock subscription plans, workmen’s compensation, unemployment insurance, social security and disability benefits insurance.
3. “ADMINISTRATION: As respects the insurance afforded hereby, the unqualified word “Administration”, wherever used shall mean:
   (a) Giving counsel to employees with respect to the Employee Benefits;
   (b) Interpreting Employee Benefits;
   (c) Handling of records in connection with Employee Benefits;
   (d) Effecting enrollment, termination or cancellation of employees under Employee Benefit Programs;
   performed by a person authorized by the Named Insured to do such acts.

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Countersigned

Duly authorized agent

Form U-GL-109