# INSURING AGREEMENTS

## 1. COVERAGE.

Subject to the other provisions of this policy, we will indemnify the insured for the insured's ultimate net loss if such loss results from an occurrence which takes place during our policy period and is insured by all of the policies designed in the policy schedule shown in the underlying insurance policy, in effect at the inception date of this policy, apply to this coverage unless they are inconsistent with the provisions of this policy, apply to premium, subrogation, or relate to preemption, suspension, cancellation of any insurance, payment of expenses, investigation and defense, the amount of limits of insurance, cancellation of any renewal agreement, and (b) only after all underlying insurance has been exhausted by payment of the limits of such insurance.

The definitions, terms, conditions, exclusions, and warranties of the "first underlying insurance" policy, in effect at the inception date of this policy, shall apply (a) only in excess of all insurance; however, the insurance afforded by this policy shall apply (b) only after all underlying insurance has been exhausted by payment of the limits of such insurance.

Notwithstanding anything to the contrary contained above, if any underlying insurance does not pay a loss, for reasons other than exhaustion of an aggregate limit of insurance, then we shall not pay such loss.

We shall not be obligated to assume charge of or participate in the settlement of defense of any claim made, out of brought, or proceedings instituted against the insured. However, we shall have the right and opportunity to be associated with the insured in the defense of any claim, suit or proceeding which, in our opinion, may create liability under the terms of this policy. If we assume such right and opportunity under the defense of any claim, suit or proceeding, we shall continue to defend or participate in the defense of any claim, suit or proceeding under the terms of this policy.

We shall not pay any expenses except as follows:

B. We shall not pay any expenses except as follows: of suit after the applicable limit of this policy has been exhausted.

A. We shall not be obligated to assume charge of or participate in the settlement of defense of any claim.

(1) If the insured is legally liable for interest accruing on a judgment after the entry of the judgment and before we have paid, referred to pay, or deposited in court the amount of the judgment to which this policy applies, then we will pay the interest on the amount of the judgment to which this policy applies.

(2) If an expense is incurred directly by us and solely at our discretion, then we will pay such expenses.