coverage hereunder shall not be invalid, but shall apply to the same extent that it would have applied had there been compliance with this condition.

2. DEFENSE, ASSISTANCE AND COOPERATION

a. The Company shall have the right and duty to defend any claim, suit, or proceeding against the Insured seeking damages to which this Policy applies if both of the following requirements are satisfied:

1. All applicable Underlying Limits as stated in Item 5. of the Declarations have been exhausted by actual payment of loss(es) covered by this Policy, whether payment of such limits is by Underlying Insurers and/or the Insured; and

2. The terms and conditions of all "Underlying Policy(ies)" and Quota Share Policy(ies) (as stated in Item 3.c. of the Declarations and hereinafter referred to as "Quota Share Policy(ies)") obligate such insurers to assume the defense or settlement of such claim, suit, or proceeding, but for the exhaustion of their applicable limits of liability.

b. If paragraph 2.a. above is not applicable and if the terms and conditions of all "Underlying Policy(ies)" and "Quota Share Policy(ies)" give such insurers the right but not the duty to assume charge of the defense or settlement of any claim, suit, or proceeding against the Insured, then the Company shall have the right but not the duty to assume charge of the defense or settlement of any claim, suit, or proceeding against the Insured upon exhaustion of the applicable limits of liability of the "Underlying Policy(ies)", whether by payment of such limits by Underlying Insurers and/or the Insured.

c. If the Company does not exercise the right to assume charge of such defense or settlement, or if the applicable limits of liability of the "Underlying Policy(ies)" are not exhausted or settled, the Company shall have the right and shall be given the opportunity to associate with the Insured or the Underlying Insurer(s) or both, in the defense and control of any claim, suit, or proceeding likely to involve this Policy.

d. With respect to any claim, suit, or proceeding encompassed by 2.a. or 2.b. above, the Insured and the Company shall cooperate in the defense of such claim, suit, or proceeding.

e. The Insured shall not settle any claim, suit, or proceeding for an amount within the Company's Limit of Liability without the Company's consent, and such consent shall not be unreasonably delayed or withheld.

If the Company assumes the duty to defend under either paragraph 2.a. or 2.b. above, that duty shall end once the Company has paid out the applicable Limits of Liability of this Policy as stated in Item 4. of the Declarations.

3. CANCELLATION

The cancellation provisions of this Policy will follow the cancellation provisions of the "Followed Policy" except as provided by endorsement to this Policy.

Notwithstanding any other provision in this Policy, in the event that the Company's financial strength rating is issued (1) below "A-" (A minus) by A.M. Best Co., or (2) below "BBB" by Standard & Poor's Ratings Services, (hereinafter "Credit Rating Downgrade"), this Policy may be canceled by the Named Insured by mailing written notice to the Company or by surrender of this Policy to the Company or its authorized agent. If this Policy is canceled by the Named Insured after such "Credit Rating Downgrade", the Company shall retain the pro rata proportion of the premium herein.

Payment or tender of any unearned premium by the Company shall not be a condition precedent to the effectiveness of cancellation but such payment shall be made as soon as practicable.

4. NOTICE OF OCCURRENCE

Whenever the Insured has information from which they may reasonably conclude that an occurrence, claim, or suit covered hereunder involves injuries or damages which, in the event that the Insured should be held liable, is likely to involve this Policy, notice shall be sent to the Company at the address stated in Item 6.a. of the Declarations as soon as practicable.

5. NON FOLLOW FORM

Notwithstanding the terms, definitions, conditions, or exclusions of the Policy, in no event shall this Policy follow the terms, definitions, conditions, or exclusions of the "Followed Policy" with respect to or as a result of any liberalization clause, or coverage that is subject to a sublimit of liability provided by the "Followed Policy" unless coverage for such sublimit of liability is specifically endorsed to this Policy.

6. BUSINESS CONTINUITY

Notwithstanding anything to the contrary, if communications internally within the Named Insured's organization, or between the Named Insured and the Company, or internally within the Producer's organization, or between the Producer and the Named Insured and/or the Company are materially impeded or prevented by natural disaster or

MGEC 4008 01 19
USXS (Ed. 06/18)
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