policy limit in a "controlling underlying policy."

d. Subject to a, b, and c above, the limit of liability, if any, stated in Item 4c. of the declarations as "Policy aggregate" is the total limit of our liability under this policy for all "loss." The limits of this policy apply separately to each consecutive annual period and to any remaining period of less than 12 months, starting with the beginning of the policy period shown in the Declarations, unless the policy period is extended after issuance for an additional period of less than 12 months. In that case, the additional period will be deemed part of the last preceding period for purposes of determining the Limits of Liability.

7. PAYMENT OF "COSTS":

"Costs" incurred directly by the insured with our written consent and for which the insured is not covered by the underlying insurers because of the exhausting of the underlying limits, shall be apportioned as follows:

a. Should any claim or claims be settled or reduced to judgment for an amount in excess of the limits of "underlying policies," then we shall contribute to the "costs" incurred by the insured in the ratio our proportion of the "loss" as finally adjusted bears to the whole amount of such "loss." Our contribution to "costs" ends when we have used up the applicable limit of liability in the payment of judgments or settlements under the terms of this policy.

b. In the event that the insured elects not to appeal a judgment in excess of the underlying limit, we may elect to conduct such appeal at our own "cost" and expense, and shall be liable for the taxable court "costs" and interest incidental thereto, but in no event shall our total liability exceed the limits of liability as stated above, plus the expense of such appeal.

8. DEFINITIONS:

a. "Loss." "Loss" means the sum paid in settlement of damages for which the insured is liable after making deductions for all recoveries, salvages, and other insurance (other than recoveries under the "underlying policies"), whether such other insurance is recoverable or not.