2. The Limit of Liability shown in the Declarations as the Aggregate Limit with respect to the sum of all damages to which the First Underlying Policy applies an Aggregate Limit. The Aggregate Limit of this policy will apply in the same manner as the Aggregate Limit in the First Underlying policy.

B. The Limits of Liability of this policy apply in excess of the Underlying Limits shown in the Declarations and any other insurance or retentions per the terms and conditions of the First Underlying policy.

C. If the applicable limits of insurance of the Scheduled Underlying Insurance are reduced or exhausted by payment of damages for occurrences to which this insurance applies, whether such payments are made by Underlying Insurers or the Insured, this policy, subject to its terms and conditions, shall:

1. In the event of reduction pay in excess of the reduced Underlying Limits; or
2. In the event of exhaustion, continue in force as the applicable lead underlying insurance policy.

D. If the Limits of Insurance afforded by the First Underlying Policy are reduced by the payment of defense costs or expenses, then any payment of defense costs or expenses incurred by us for any claim or suit or proceeding for which we assume charge of the settlement or defense will reduce the Limits of Liability of this policy in the same manner.

SECTION III. DEFENSE

A. We are not obligated to defend any insured against or participate in the settlement or defense of and claim or suit or proceedings initiated until we have the right and duty to defend based on the provision below. However, we shall have the right to associate with the Insured and any Underlying Insurer in the defense of any claim made, suit brought or proceeding initiated which in our opinion may create liability under this policy.

B. Notwithstanding provision A. above, we will assume the right and duty to defend any Insured against any suit seeking damages to which this policy applies after the amount of the Underlying Limits have been exhausted by payment of damages to which this insurance applies.

C. Our duty to defend ends when we have exhausted the applicable Limits of Insurance under our policy.

SECTION IV. CONDITIONS

A. Maintenance of Underlying Insurance
1. You agree to maintain in full force and effect the Scheduled Underlying Policies, or renewals or replacements thereof, except for the reduction in limits due to the payment of damages.
2. If you fail to maintain the Scheduled Underlying Policies, this policy shall apply as if the Scheduled Underlying Policies had been so maintained.

B. Cancellation
1. You may cancel this policy by mailing or delivering advance written notice stating when cancellation is to take effect.
2. We may cancel this policy by sending written notice of when cancellation is to take effect to you by first class mail, certified mail or by such other delivery method as may be approved by the state of jurisdiction. Such notice shall be no less than:
a. Ten (10) days advance notice with respect to cancellation for non-payment of premium;

AGRL-XS 2335 (02-16)
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