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1. DEFINITION OF TERMS.
<br />The following terms when used in the Guarantee mean:
<br />(a) the "Assured": the party or parties named as the Assured in this Guarantee,
<br />or on a supplemental writing executed by the Company.
<br />(b) "land": the land described or referred to in Schedule (A) (C) or in Part 2, and
<br />improvements affixed thereto which by law constitute real property. The term
<br />"land" does not include any property beyond the lines of the area described or
<br />referred to in Schedule (A) (C) or in Part 2, nor any right, title, interest, estate or
<br />easement in abutting streets, roads, avenues, alleys, lanes, ways, or waterways.
<br />(c) "mortgage": mortgage, deed of trust, trust deed, or other security instrument.
<br />(d) "public records": records established under state statutes at Date of Guarantee
<br />for the purpose of imparting constructive notice of matters relating to real
<br />property to purchasers for value and without knowledge.
<br />(e) "date": the effective date.
<br />2. EXCLUSIONS FROM COVERAGE OF THIS GUARANTEE.
<br />The Company assumes no liability for loss or damage by reason of the following:
<br />(a) Taxes or assessments which are not shown as existing liens by the records of
<br />any taxing authority that levies taxes or assessments on real property or by the
<br />public records.
<br />(b) (1) Unpatented mining claims; (2) reservations or exceptions in patents or in
<br />Acts authorizing the issuance thereof, (3) water fights, claims or title to water:
<br />whether or not the matters excluded by (1), (2) or (3) are shown by the public
<br />records.
<br />(c) Assurances to title to any property beyond the lines of the land expressly
<br />described in the description set forth in the Schedule (A)(C) or in Part 2 of this
<br />Guarantee, or title to streets, roads, avenues, lanes, ways or waterways in which
<br />such land abuts, or the right to maintain therein vaults, tunnels, ramps orany other
<br />structure or improvement, or any rights or easements therein unless such
<br />property, fights or easements are expressly and specifically set forth in said
<br />description.
<br />(d) (1) Defects, liens, encumbrances oradverseclaims against the title, if assurances
<br />are provided as to such title, and as limited by such assurances. (2)Defects,
<br />liens, encumbrances, adverse claims or other matters (a) whether or not shown
<br />by the public records, and which are created, suffered, assumed or agreed to by
<br />one or more of the Assureds; (b) which result in no loss to the Assured; or (c)
<br />which do no result in the invalidity or potential invalidity of any judicial or non -
<br />judicial proceeding which is within the scope and purpose of assurances
<br />provided.
<br />3. NOTICE OF CLAIM TO BE GIVEN BY ASSURED CLAIMANT.
<br />An Assured shall notify the Company promptly in writing in case knowledge
<br />shall come to an Assured hereunder of any claim of title or interest which is adverse
<br />to the title to the estate or interest, as stated herein, and which might cause loss or
<br />damage for which the Company may be liable by virtue of this Guarantee. If prompt
<br />notice shall not be given to the Company, then all liability of the Company shall
<br />terminate with regard to the matter or matters for which prompt notice is required;
<br />provided, however, that failure to notify the Company shall in no case prejudice the
<br />rights of any Assured under this Guarantee unless the Company shall be prejudiced
<br />by the failure and then only to the extent of the prejudice.
<br />4. NO DUTY TO DEFEND OR PROSECUTE.
<br />The Company shall have no duty to defend or prosecute any action or proceeding
<br />to which the Assured is a party, notwithstanding the nature of any allegation in
<br />such action or proceeding.
<br />5. COMPANY'S OPTION TO DEFEND OR PROSECUTE ACTIONS;
<br />DUTY OF ASSURED CLAIMANT TO COOPERATE.
<br />Even though the Company has no duty to defend or prosecute as set forth in
<br />Paragraph 4 above:
<br />(a) The Company shall have the tight, at its sole option and cost, to institute and
<br />prosecute any action or proceeding, interpose a defense, as limited in (b), or to
<br />do any other act which in its opinion may be necessary or desirable to establish
<br />the title to the estate or interest as stated herein, or to establish the lien rights of
<br />the Assured, or to prevent orreduce loss or damage to the Assured. The Company
<br />may take any appropriate action under the terms of this Guarantee, whether or
<br />not it shall be liable hereunder, and shall not thereby concede liability or waive
<br />any provision of this Guarantee. If the Company shall exercise its rights under
<br />this paragraph, it shall do so diligently.
<br />(b) If the Company elects to exercise its options as stated in Paragraph 5 (a) the
<br />Company shall have the right to select counselafjts choice (subject to the right
<br />of such Assured to object forreasonable cause dwresent the Assured and shall
<br />not be liable for and will not pay the fees of any other counsel, nor will the
<br />!c
<br />Company pay any fees, costs or expenses incurred by an Assured in the defense
<br />of those causes of action which allege matters not covered by this Guarantee.
<br />(c) Whenever the Company shall have brought an action or interposed a defense
<br />as permitted by the provisions of this Guarantee, the Company may pursue any
<br />litigation to final determination by a court of competent jurisdiction and
<br />expressly reserves the right, in its sole discretion , to appeal from an adverse
<br />judgment or order.
<br />(d) In all cases where this Guarantee permits the Company to prosecute or provide
<br />for the defense of any action or proceeding, an Assured shall secure to the
<br />Company the right to so prosecute or provide for the defense of any action or
<br />proceeding, and all appeals therein, and permit the Company to use, at its option,
<br />the name of such Assured for this purpose. Whenever requested by the
<br />Company, an Assured, at the Company's expense, shall give the Company all
<br />reasonable aid in any action orproceeding, securing evidence, obtaining witnesses,
<br />prosecuting or defending the action or lawful act which in the opinion of the
<br />Company may be necessary or desirable to establish the title to the estate or
<br />interest as stated herein, or to establish the lien rights of the Assured. If the
<br />Company is prejudiced by the failure of the Assured to furnish the required
<br />cooperation, the Company's obligations to the Assured under the Guarantee shall
<br />terminate.
<br />6. PROOF OF LOSS OR DAMAGE.
<br />In addition to and after the notices required under Section 3 of these Conditions
<br />and Stipulations have been provided to the Company, a proof of loss or damage
<br />signed and sworn to by the Assured shall be furnished to the Company within ninety
<br />(90) days after the Assured shall ascertain the facts giving rise to the loss or damage.
<br />The proof of loss or damage shall describe the matters covered by this Guarantee
<br />which constitute the basis of loss or damage and shall state, to the extent possible,
<br />the basis of calculating the amount of the loss or damage. If the Company is
<br />prejudiced by the failure of the Assured to provide the required proof of loss or
<br />damage, the Company's obligation to such assured under the Guarantee shall
<br />terminate. In addition, the Assured may reasonably be required to submit to
<br />examination under oath by any authorized representative of the Company and shall
<br />produce for examination, inspection and copying, at such reasonable times and
<br />places as may be designated by any authorized representative of the Company, all
<br />records, books, ledgers, checks, correspondence and memoranda, whether bearing
<br />a date before or after Date of Guarantee, which reasonably pertain to the loss or
<br />damage. Further, if requested by any authorized representative of the Company, the
<br />Assured shall grant its permission, in writing, for any authorized representative of
<br />the Company to examine, inspect and copy all records, books, ledgers, checks,
<br />correspondence and memoranda in the custody or control of a third party, which
<br />reasonably pertain to the loss or damage. All information designated as confidential
<br />by the Assured provided to the Company pursuant to this Section shall not be
<br />disclosed to others unless, in the reasonable judgment of the Company, it is
<br />necessary in the administration of the claim. Failure of the Assured to submit for
<br />examination under oath, produce other reasonably requested information or grant
<br />permission to secure reasonably necessary information from third parties as required
<br />in the above paragraph, unless prohibited by law or governmental regulation, shall
<br />terminate any liability of the Company under this Guarantee to the Assured for that
<br />claim.
<br />7. OPTIONS TO PAY OR OTHERWISE SETTLE CLAIMS:
<br />TERMINATION OF LIABILITY.
<br />In case of a claim under this Guarantee, the Company shall have the following
<br />additional options:
<br />(a) To Pay or Tender Payment of the Amount of Liability, or to Purchase the
<br />Indebtedness.
<br />The Company shall have the option to pay or settle or compromise for or in
<br />the name of the Assured any claim which could result in loss to the Assured
<br />within the coverage of this Guarantee, or to pay the full amount of this Guarantee
<br />or, if this Guarantee is issued for the benefit of a holder of a mortgage or a
<br />lienholder, the Company shall have the option to purchase the indebtedness
<br />secured by said mortgage or said lien for the amount owing thereon, together with
<br />any costs, reasonable attorneys' fees and expenses incurred by the Assured
<br />claimant which were authorized by the Company up to the time of purchase.
<br />Such purchase, payment or tenderof payment of the full amount of the Guarantee
<br />shall terminate all liability of the Company hereunder. In the event after notice
<br />of claim has been given to the Company by the Assured the Company offers to
<br />purchase said indebtedness, the owner of such indebtedness shall transfer and
<br />assign said indebtedness, together with any collateral security, to the Company
<br />upon payment of the
<br />hale price.
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