and shall be given the opportunity to associate with the insured or its underlying insurer or insurers, or with both, or all, in any one or more of the control, defense or trial of any claims, suits or proceedings which, in the opinion of the Company, involve or appear reasonably likely to involve the Company. If the Company avails itself of such right and opportunity, the insured and the Company shall cooperate in such control, defense or trial of such claims, suits or proceedings, so as to effect a final determination thereof.

The insured shall be solely responsible for the investigation, settlement, defense and final disposition of any claim made or suit brought or proceeding instituted against the insured to which this policy would apply and which no underlying insurer or insurers is obligated to defend. The insured shall use due diligence and prudence to settle all such claims and suits which in the exercise of sound judgment should be settled; provided, however, that the insured shall not make, or agree to, any settlement for any amount in excess of the underlying insurance without the approval of the Company.

The insured shall (a) cooperate with the underlying insurer or insurers as required by the terms of the underlying insurance, (b) comply with all the terms and conditions thereof and (c) enforce any right of contribution or indemnity against any person or organization which may be liable to the insured, because of liability with respect to which insurance is afforded under this policy and the underlying insurance.

**IV. DEFINITIONS**

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

"costs" means interest on judgments, and investigation, adjustment and legal expenses including taxed court costs and premiums on bonds, for which the insured is not covered by underlying insurance (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);

costs incurred by the insured with the written consent of the Company shall be apportioned as follows:

(a) in the event of claim or suit arising which appears likely to exceed the underlying insurance limit or limits of liability, no costs shall be incurred by the insured without the written consent of the Company;

(b) should such claim or suit be settled out of court for not more than the underlying insurance limit or limits of liability, then no costs shall be payable by the Company;

(c) should, however, the sum for which the claim or suit may be settled exceed the underlying insurance limit or limits of liability, 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 the ultimate net loss as finally adjusted bears to the total amount of such ultimate net loss.