loss(es) covered by this policy, whether by payment of such limits by underlying insurers or the Insured. If the Company has exercised such right, it may withdraw from the defense and tender the defense to the Insured upon exhaustion of the applicable Limits of Liability under this Policy. If the Company does not exercise the right to assume charge of such defense or settlement, or if the applicable limits of the Underlying Policy(ies) are not exhausted or settled, the Company shall have the right and shall be given the opportunity to associate effectively with the Insured or the underlying insurer(s) or both, in the defense and control of any claim or suit likely to involve this Policy.

(c) With respect to any claim or suit encompassed by (a) or (b) above, the Insured, the underlying insurer(s) and the Company shall cooperate in the defense of such claim or suit.

(d) The Insured shall not settle any claim or suit for an amount within the Company's limit of liability without the Company's prior written consent which consent shall not be unreasonably delayed or withheld.

When the Company assumes charge of the defense or settlement of any suit or claim under paragraph 2 a) above AND the Followed Policy includes an insurer's right to settle claims, the Company will have the same right to settle claims under this Policy as are conferred to the insurer under the Followed Policy.

If the Company assumes the duty to defend under either paragraph 2 a) or b) above, that duty shall end once the Company has paid out the applicable limits of liability of this policy.

3. CANCELLATION -

This Policy may be canceled by the first Named Insured listed in Item 1. a) of the Declarations of this Policy by mailing or delivering to the Company at the address set forth in Item 7(b) of the Declarations of this Policy advance written notice of cancellation. This Policy may be canceled by or on behalf of the Company by delivering to the first Named Insured or by mailing to the first Named Insured, by registered, certified, or other first class mail, at the first Named Insured's address set forth in Item 1. b) of the Declarations of this Policy, written notice stating when thereafter, not less than fifteen (15) days in the event any premium is not paid when due, and not less than sixty (60) days in all other cases, cancellation shall be effective. Proof of mailing of such notice as aforesaid shall be sufficient proof of notice. It is agreed that the first Named Insured shall act on behalf of all Insureds with respect to giving and receiving notice of cancellation. The Policy Period terminates at the date and hour specified in such notice, but in case of notice of cancellation by the first Named Insured, in no event prior to the date such notice is received by the Company.

If this Policy shall be canceled by the first Named Insured, the Company shall return ninety percent (90%) of the unearned portion of the premium calculated on a pro rata basis unless there is a Minimum Earned Premium set forth in Item 8. (b) of the Declarations of this Policy, in which case the Company will retain the Minimum Earned Premium and return the difference, if any, between the Minimum Earned Premium and the unearned portion of the premium calculated on a pro rata basis.

If this Policy shall be canceled by the Company, the Company shall return to the first Named Insured the unearned portion of the premium calculated on a pro rata basis.

Notwithstanding any other provision in this Policy, in the event that a financial strength rating is issued (1) below "A-" (A minus) by A.M. Best Co., or (2) below "BBB" by Standard & Poor's

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BSF03 (03/14)