B. We shall not pay any expenses except as follows:

(1) If the Insured is legally liable for interest which accrues on a judgment after the entry of the judgment and before We have paid, offered 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 expense.

(3) If a payment for damages is made under this policy, then We will pay related prejudgment interest for which the Insured is legally liable, provided:
(a) all Underlying Insurance pays prejudgment interest, and
(b) Our share of prejudgment interest shall not exceed the proportion that payment for damages under this policy bears to the total damages determined by final judgment or settlement.

C. Subject to all of the foregoing:
(1) If defense expense payments are included within the limit of insurance of any Underlying Insurance by the terms of that policy, then any such expense payment We make shall reduce the Limit of Insurance of this policy.
(2) If none of the Underlying Insurance includes defense expense payments within their limit of insurance by the terms of those policies, then any such expense payment We make shall not reduce the Limit of Insurance of this policy.

**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, including their Extended Reporting Period(s), if provided.

**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 premises You own, rent or occupy;
(2) At or from any site or location used by or for You or others for the handling, storage, disposal, processing or treatment of waste;
(3) Which are at any time transported, handled, stored, treated, disposed of, or processed as waste by or for You or any person or organization for whom You may be legally responsible;
(4) At or from any site or location on which You or any contractors or subcontractors working directly or indirectly on Your behalf are performing operations:
(a) if the pollutants are brought on or to the 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 the pollutants; or

III. LIMITS OF INSURANCE.
A. The Limit of Insurance stated in Item 4 of the Declarations as applicable to "each occurrence" shall be the total limit of Our liability for all loss sustained as the result of any one occurrence.
B. The Limit of Insurance stated in Item 4 of the Declarations as "aggregate" shall be the total limit of Our liability for all losses covered by this policy and sustained during each annual period of this policy; and for which any Underlying Insurance provides coverage that is subject to an aggregate limit.
C. This insurance shall apply only as excess of the Underlying Insurance Limits shown in Item 5 of the Declarations; provided, however:
(1) If the "first Underlying Insurance" provides coverage on a claims-made basis, and if the Underlying Insurance Limit shown in Item 5 of Our Declarations has been reduced or exhausted because of payments for claims first made against the Insured during Our policy period (or an Extended Reporting Period provided by this policy) for an occurrence which took place after Our Retroactive Date and prior to termination of this policy, then this policy shall apply as excess of such reduced limit of the Underlying Insurance.
(2) If the "first Underlying Insurance" provides coverage on other than a claims-made basis, and if the Underlying Insurance Limit shown in Item 5 of Our Declarations has been reduced or exhausted because of payments for an occurrence which took place during Our policy period, then this policy shall apply as excess of such reduced limit of the Underlying Insurance.