# Zurich-American Insurance Group

## DEDUCTIBLE AGREEMENT
SELF-INSURER: IBM CORPORATION

### 4. Computation of Letter of Credit Amount.

For each policy period subject to this Agreement, the amount of the Letter of Credit shall be amended annually beginning with incurred losses valued as of eighteen (18) months after the inception date of that policy period, the Amended Letter of Credit to be deposited with the Company within thirty (30) days of receipt of its demand therefore. The Company shall compute the Amended Letter of Credit Amount as follows:

a. Fixed Fee, plus

b. Losses Subject to the Deductible Amounts, including an allowance for losses incurred but not reported, but no more than the Deductible Aggregate Amount, where applicable, times the Variable Fee Factor, plus

c. Excess Loss Premiums for Deductible Aggregate Amount Limitation, plus

d. Contingencies, plus

e. Other obligations of the Self-Insurer, minus

f. Total Payments received by the Company.

### 5. Draws on Letter(s) of Credit.

The Company may, without further notice or demand, draw on the Letter(s) of Credit:

a. To pay any sum under this Agreement which is beyond its due date; or

b. To pay any amount or obligation which is due or may become due in the event that:

1.) A petition in bankruptcy or declaration of insolvency is filed by or against the Self-Insurer, or

2.) An action or proceeding for dissolution is instituted by or against the Self-Insurer, or

3.) A receiver or trustee is appointed for the Self-Insurer, or

4.) The Self-Insurer makes an assignment for the benefit of creditors, or

5.) Any other proceeding or arrangement of like nature; or

**Form DUDA Edition 4 (12/89)**

**IBM 063078**

**26-Mar-91**