1. after all applicable limits of liability of Underlying Policy(ies) have been exhausted by actual payment of damages whether payment of such limits by underlying insurers or the Insurer (or any loss(es) covered by this policy; and

2. if the terms and conditions of all Underlying Policy(ies) and Quota Share Policy(ies) would have obligated all underlying insurers to assume the defense or settlement of such claim or suit, but for the exhaustion (or settlement) of their applicable limits of liability.

(b) If paragraph 2.(a) above is not applicable, the Company shall have the right but not the duty to assume charge of the defense of any suit or settlement of any claim against the Insured upon exhaustion of the applicable limits of liability of the Underlying Policy(ies) by payments of 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 an 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 to the address of 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.