b) If a claim or suit is settled or a judgment rendered for not more than the limits of underlying insurance, no costs shall be payable by the Company;

(c) If the sum for which a claim or suit is settled or a judgment rendered exceeds the limits of underlying insurance, then the Company, if it approves such settlement or consents to the continuation of the proceedings, shall contribute to the costs incurred by the insured in the proportion which the amount of ultimate net loss as finally determined to be payable by the Company bears to the total amount paid on such claim or suit by all interests;

(d) If the insured elects not to appeal a judgment in excess of the limits of underlying insurance, the Company may elect to conduct such appeal at its cost and expense, and shall be liable for the taxable costs and disbursements and interest incidental thereto, but in no event shall the total liability of the Company exceed the limits of liability as stated in this policy, plus the cost and expense of such appeal;

(e) If a judgment is rendered in excess of the limits of underlying insurance and the Company is willing to contribute thereto but the underlying insurers elect to appeal such judgment, the duty of obtaining an appeal bond with respect to liability in excess of the limits of underlying insurance shall be that of the insured and its underlying insurers;

(f) If the aggregate limits of liability of underlying insurance are exhausted by payment of claims, then the Company shall contribute to the costs incurred by the insured with the written consent of the Company in the proportion which the Company's limits of liability bears to the total layer of limits of liability of which this policy is a part, but this obligation ceases when the Company's limits of liability are exhausted.

**VI. DEFINITIONS**

When used in this policy (including endorsements forming a part hereof):

- "Governing underlying insurance policy" means the insurance policy designated as such in Item 6 of the Declarations;
- "Costs" means interest on judgments, and investigation, adjustment and legal expenses including taxed court costs and premiums on bonds, (excluding, however, (a) all expenses for salaried employees and counsel on general retainer; (b) all office expenses of the insured; and (c) regular fees paid to counsel on general retainer);
- "First named insured" means the person or organization first named in Item 1 of the Declarations of this policy;
- "Insured" means any person or organization described as such in the "Persons Insured" provision of this policy;
- "Named insured" means the first named insured and any other person or organization named in Item 1 of the Declarations of this policy or in an endorsement amending such Item 1;

**Occurrence** means an accident or occurrence or happening or event or an act or a series of acts or offense or injury or damage covered by the governing underlying insurance policy designated in the Declarations;

"Ultimate net loss" means the total of all sums which the insured, or any organization as its insurer, or both, shall become legally obligated to pay, whether by reason of adjudication or settlement, because of an occurrence covered under the terms of the governing underlying insurance policy and to which this policy applies; but "ultimate net loss" shall not include

(a) the amount of any recoveries, salvages or other insurance (other than underlying insurance or insurance written specifically to apply in excess of this policy), whether collectible or not, or

(b) costs;

"Underlying insurance" means the primary or excess insurance policies contributing to the total limit stated in Item 5 of the Declarations (including any deductible amount, insured's participation or renewals or replacements thereof). The limits of such policies shall be deemed to be applicable regardless of

(1) any defense which the underlying insurer may assert,

(2) the insured's failure to comply with any condition of any such policy or

(3) the insolvency of the underlying insurer.

**VII. CONDITIONS**

1. **Premium**

The premium for this policy shall be as stated in the Declarations.

In the event of an additional insured being added to the coverage under the underlying insurance during currency hereof, as soon as practicable notice shall be given to the Company hereon and if an additional premium has been charged or will become payable for such addition to the underlying insurance, the Company shall be entitled to charge an appropriate additional premium hereon for adding such additional insured to this policy.

Payment of any return premium to the first named insured shall be deemed to be payment to the insured.

2. **Maintenance of Underlying Insurance**

Unless permission to the contrary is stated in the Declarations or by endorsement issued to form a part of this policy, policies affording in total the limits stated in Item 5 of the Declarations shall be maintained in full effect during the currency of this policy, except for the reduction of any aggregate limits contained therein solely by payment of claims with respect to an occurrence taking place during the period of this policy. Failure of the named insured to comply with the foregoing shall not invalidate this policy but in the event of such failure, the Company shall be liable only