# DEFINITIONS

1. **ULTIMATE NET LOSS** means all sums actually paid, or which the Insured is legally obligated to pay, as damages in settlement or satisfaction of claims or suits for which insurance is afforded under this policy, after proper deduction for all recoveries or salvage.
Ultimate Net Loss shall include defense expense payments made by insurers of the Underlying Insurance, provided that such expenses are included within the limit of insurance of the respective Underlying Insurance by the terms of that policy.

2. **UNDERLYING INSURANCE** means the policy or policies of insurance scheduled in Item 7 of the Declarations period.

## EXCLUSIONS

Regardless of whether or not such coverage is afforded by any Underlying Insurance, this policy does not apply:

1. **INTANGIBLE PROPERTY DAMAGE** — To injury, damage, loss, destruction, or reduction in financial value of intangible property, including loss of use thereof.

2. **NUCLEAR** — To Nuclear Energy Exposures per the Nuclear Energy Liability Exclusion on the reverse side of the Declarations page.

3. ** POLLUTION**

A. To injury or damage arising out of the actual, alleged or threatened discharge, dispersal, release or escape of pollutants:
(1) At or from any premises, site or location which is or was at any time owned or occupied by, or rented or loaned to, any Insured;
(2) At or from any premises, site or location used which is or was at any time used by or for any Insured or others for the handling, storage, disposal, processing or treatment of waste;
(3) Which are or were at any time transported, handled, stored, treated, disposed of, or processed as waste;
(4) At or from any premises, site or location on which any Insured or any contractors or subcontractors working directly or indirectly on any Insured’s behalf are performing operations:
(a) If the pollutants are brought on or to such premises, site or location in connection with such operations; or

B. If the operations are to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of pollutants; or
(5) For which any Insured become liable solely because of a contract or agreement entered into by any Insured.
Subparagraphs (1) and (4)(a) do not apply to injury or damage arising out of heat, smoke or fumes from a hostile fire. As used in this exclusion, a hostile fire means one which becomes uncontrollable or breaks out from where it was intended to be.

B. Any loss, cost, or expense arising out of any request, demand or order issued or made pursuant to any environmental protection or environmental liability statutes or regulations that any Insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of pollutants.
Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.

4. **ASBESTOS** — To injury or damage arising, in whole or in part, out of or in any way related to asbestos.
As used in this exclusion, the term “asbestos” includes, but is not limited to, asbestos, asbestos products, asbestos fibers, asbestos dust, and asbestos contained in products or materials.

## CONDITIONS

1. **MAINTENANCE OF UNDERLYING INSURANCE.**
(A) You agree to maintain all Underlying Insurance in full force and effect as scheduled in the Declarations at the inception of this policy and during Our policy period, except for reduction of aggregate limits of insurance from payment of losses. If any Underlying Insurance is not maintained in full effect by the Insured, or if there is any material change in the scope of coverage of any Underlying Insurance, the insurance afforded by this policy shall apply in the same manner as though such Underlying Insurance had been in full effect, so maintained and unchanged.
(B) Notwithstanding anything to the contrary in (A) above, in the event of cancellation or termination of any Underlying Insurance, this policy shall cease to apply at the same time without notice to the Insured.
(C) You agree to notify Us promptly if any Underlying Insurance is cancelled or terminated.

2. **APPEAL.** In the event You or any underlying insurer elect not to appeal a judgment in excess of the amount of the Underlying Insurance, We may elect to appeal at Our expense. In such case, We will be liable for the expenses applicable thereto, but in no event will Our liability for Ultimate Net Loss exceed the amount set forth in this policy plus the expenses applicable to such appeal.

3. **BANKRUPTCY OF THE UNDERLYING INSURER.** In the event of the bankruptcy or insolvency of the insurer of any Underlying Insurance, the insurance afforded by this policy shall not replace such Underlying Insurance, but shall apply in the same manner as though such Underlying Insurance were available and collectible.

4. **CANCELLATION.**
(A) The first Named Insured shown in the Declarations may cancel this policy by mailing or delivering to Us or any