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.

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

**Premium Basis**
- **Estimated No. of Employees** IF ANY

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 form negligent acts, errors or omissions in the administration of Employee Benefits, provided the Named Insured, at

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

**Countersigned**  
**Duly authorized agent**

Form U-GL-109

MM 009737