# TERMS AND CONDITIONS

## I. INSURING AGREEMENT

The Insured, the Underlying Insurer, and the Underlying Limits are as specified in the Declarations.

## II. DEFINITIONS

Ultimate Net Loss: as used herein, is the amount paid by reason of adjudication or settlement which the Insured is liable after deducting any amounts recoverable from the Underlying Insurer, Subrogee, and other responsible parties under the Underlying Insurance, including any policies specified in Item 5 of the Declarations whether recoverable or not, and the costs thereof except when they are included within the liability by the terms of the Underlying Insurance as set forth in Item 5 of the Declarations.

Costs: as used herein, shall mean all reasonable investigation, adjustment and legal expenses including court costs and premiums on bonds but exclude all expenses for salaried employees and on retainer and all office expenses of the Insured.

Underlying Insurance: the policy as stated in Item 1 of the Declarations and any other insurance providing the Underlying Limits.

Underlying Insurer: the insurer specified in Item 2 of the Declarations and any other insurer providing the Underlying Limits.

Underlying Limits: the limits as specified in Item 3 of the Declarations.

## III. MAINTENANCE OF UNDERLYING INSURANCE

The Insured warrants that the Underlying Insurance and Underlying Limits specified in the Declarations shall be maintained in full force and effect during the period of this policy except for reduction of the aggregate limits solely by reason of payment of claims resulting from occurrences happening during the period of the policy.

Failure to maintain the Underlying Insurance shall constitute a breach of the terms and conditions of this policy by the Insured and shall automatically terminate this policy without notice unless Greater consent thereto by endorsement issued to form part of this policy. Premium adjustment shall be made as soon as practicable thereafter but payment or tender of unearned premium is not a condition of termination.

## IV. NOTICE OF OCCURRENCE

## V. ASSISTANCE, COOPERATION, AND DEFENSE

## VI. RIGHT OF APPEAL

In the event the Underlying Insurer or the Underlying Limits do not appeal a judgment in excess of the Underlying Limits, the Insured may elect to conduct such defense and shall be liable therefor for such expenses incurred in the conduct of the actual including court costs, witness fees, etc.