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<br />in the above paragraph, unless prohibited by law or
<br />governmental regulation, shall terminate any liability of
<br />the Company under this Guarantee to the Assured for
<br />that claim.
<br />6. Options to Pay or Otherwise Settle Claims:
<br />Termination of Liability.
<br />In case of a claim under this Guarantee, the
<br />Company shall have the following additional options:
<br />(a) To Pay or Tender Payment of the Amount of
<br />Liability or to Purchase the Indebtedness.
<br />The Company shall have the option to pay or settle
<br />or compromise for or in the name of the Assured any
<br />claim which could result in loss to the Assured within
<br />the coverage of this Guarantee, or to pay the full amount
<br />of this Guarantee or, if this Guarantee is issued for the
<br />benefit of a holder of a mortgage or a lienholder, the
<br />Company shall have the option to purchase the indebt-
<br />edness secured by said mortgage or said lien for the
<br />amount owing thereon, together with any costs, reason-
<br />able attorneys' fees and expenses incurred by the
<br />Assured claimant which were authorized by the
<br />Company up to the time of purchase.
<br />Such purchase, payment or tender of payment of
<br />the full amount of the Guarantee shall terminate all lia-
<br />bility of the Company hereunder. In the event after
<br />notice of claim has been given to the Company by the
<br />Assured the Company offers to purchase said indebted-
<br />ness, the owner of such indebtedness shall transfer and
<br />assign said indebtedness, together with any collateral
<br />security, to the Company upon payment of the purchase
<br />price.
<br />Upon the exercise by the Company of the option
<br />provided for in Paragraph (a)•the Company's obligation
<br />to the Assured under this Guarantee for the claimed loss
<br />or damage, other than to make the payment required in
<br />that paragraph, shall terminate, including any obligation
<br />to continue the defense or prosecution of any litigation
<br />for which the Company has exercised its options under
<br />Paragraph 4, and the Guarantee shall be surrendered to
<br />the Company for cancellation.
<br />(b) To Pay or Otherwise Settle With Parties Other
<br />Than the Assured or With the Assured Claimant.
<br />To pay or otherwise settle with other parties for or
<br />in the name of an Assured claimant any claim assured
<br />against under this Guarantee, together with any costs,
<br />attorneys' fees and expenses incurred by the Assured
<br />claimant which were authorized by the Company up to
<br />the time of payment and which the Company is obligat-
<br />ed to pay.
<br />Upon the exercise by the Company of the option
<br />provided for in Paragraph (b) the Company's obligation
<br />to the Assured under this Guarantee for the claimed loss
<br />or damage, other than to make the payment required in
<br />that paragraph, shall terminate, including any obligation
<br />to continue the defense or prosecution of any litigation
<br />for which the Company has exercised its options under
<br />Paragraph 4.
<br />7. Determination and Extent of Liability.
<br />This Guarantee is a contract of Indemnity against
<br />actual monetary loss or damage sustained or incurred
<br />by the Assured claimant who has suffered loss or dam-
<br />age by reason of reliance upon the assurances set forth
<br />in this Guarantee and only to the extent herein
<br />described, and subject to the Exclusions From Coverage
<br />of This Guarantee.
<br />The liability of the Company under this Guarantee
<br />he Assured shall not exceed the least of:
<br />(a) the amount of liability stated in Schedule A or
<br />in Part 2;
<br />(b) the amount of the unpaid principal indebted-
<br />ness secured by the mortgage of an Assured mortgagee,
<br />as limited or provided under Section 6 of these
<br />Conditions and Stipulations or as reduced under Section
<br />9 of these Conditions and Stipulations, at the time the
<br />loss or damage assured against by this Guarantee
<br />occurs, together with interest theron; or
<br />(c) the difference between the value of the estate
<br />or interest covered hereby as stated herein and the value
<br />of the estate or interest subject to any defect, lien or
<br />encumbrance assured against by this Guarantee.
<br />. Limitation of Liability.
<br />(a) If the Company establishes the title, or
<br />removes the alleged defect, lien or encumbrance, or
<br />cures any other matter assured against by this
<br />Guarantee in a reasonably diligent manner by any
<br />method, including litigation and the completion of any
<br />appeals therefrom, it shall have fully performed its
<br />obligations with respect to that matter and shall not be
<br />liable for any loss or damage caused thereby.
<br />(b) In the event of any litigation by the Company or
<br />with the Company's consent, the Company shall have
<br />no liability for loss or damage until there has been a final
<br />determination by a court of competent jurisdiction, and
<br />disposition of all appeals therefrom, adverse to the title,
<br />as stated herein.
<br />(c) The Company shall not be liable for loss or
<br />damage to any Assured for liability voluntarily assumed
<br />by the Assured in settling any claim or suit without the
<br />prior written consent of the Company.
<br />9. Reduction of Liability or Termination of
<br />Liability.
<br />All payments under this Guarantee, except pay-
<br />ments made for costs, attorneys' fees and expenses
<br />pursuant to Paragraph 4 shall reduce the amount of
<br />liability pro tanto.
<br />10. Payment of Loss.
<br />(a) No payment shall be made without producing
<br />this Guarantee for endorsement of the payment unless
<br />the Guarantee has been lost or destroyed, in which case
<br />proof of loss or destruction shall be furnished to the
<br />satisfaction of the Company.
<br />(b) When liability and the extent of loss or damage
<br />has been definitely fixed in accordance with these
<br />Conditions and Stipulations, the loss or damage shall be
<br />payable within thirty (30) days thereafter.
<br />11. Subrogation Upon Payment or Settlement.
<br />Whenever the Company shall have settled and
<br />paid a claim under this Guarantee, all right of subroga-
<br />tion shall vest in the Company unaffected by any act of
<br />the Assured claimant.
<br />The Company shall be subrogated to and be
<br />entitled to all rights and remedies which the Assured
<br />would have had against any person or property in
<br />respect to the claim had this Guarantee not been issued.
<br />If requested by the Company, the Assured shall transfer
<br />to the Company all rights and remedies against any per-
<br />son or property necessary in order to perfect this right
<br />of subrogation. The Assured shall permit the Company
<br />to sue, compromise or settle in the name of the Assured
<br />and to use the name of the Assured in any transaction
<br />or litigation involving these rights or remedies.
<br />If a payment on account of a claim does not fully
<br />er the loss of the Assured the Company shall be
<br />subrogated to all rights and remedies of the Assured
<br />after the Assured shall have recovered its principal,
<br />interest, and costs of collection.
<br />Unless prohibited by applicable law, either the
<br />Company or the Assured may demand arbitration pur-
<br />suant to the Title Insurance Arbitration Rules of the
<br />American Arbitration Association. Arbitrable matters
<br />may include, but are not limited to, any controversy or
<br />claim between the Company and the Assured arising out
<br />of or relating to this Guarantee, any service of the
<br />Company in connection with its issuance or the breach
<br />of a Guarantee provision or other obligation. All arbitra-
<br />ble matters when the Amount of Liability is $1,000,000
<br />or less shall be arbitrated at the option of either the
<br />Company or the Assured. All arbitrable matters when
<br />the amount of liability is in excess of $1,000,000 shall
<br />be arbitrated only when agreed to by both the Company
<br />and the Assured. The Rules in effect at Date of
<br />Guarantee shall be binding upon the parties. The award
<br />may include attorneys' fees only if the laws of the state
<br />in which the land is located permits a court to award
<br />attorneys' fees to a prevailing party. Judgment upon the
<br />award rendered by the Arbitrator(s) may be entered in
<br />any court having jurisdiction thereof.
<br />The law of the situs of the land shall apply to an
<br />arbitration under the Title Insurance Arbitration Rules.
<br />A copy of the Rules may be obtained from the
<br />Company upon request.
<br />13. Liability Limited to This Guarantee;
<br />Guarantee Entire Contract.
<br />(a) This Guarantee together with all endorsements,
<br />if any, attached hereto by the Company is the entire
<br />Guarantee and contract between the Assured and the
<br />Company. In interpreting any provision of this
<br />Guarantee, this Guarantee shall be construed as a
<br />whole.
<br />(b) Any claim of loss or damage, whether or not
<br />based on negligence, or any action asserting such
<br />claim, shall be restricted to this Guarantee.
<br />(c) No amendment of or endorsement to this
<br />Guarantee can be made except by a writing endorsed
<br />hereon or attached hereto signed by either the
<br />President, a Vice President, the Secretary, an Assistant
<br />Secretary, or validating officer or authorized signatory of
<br />the Company.
<br />14. Notices, Where Sent.
<br />All notices required to be given the Company and
<br />any statement in writing required to be furnished the
<br />Company shall include the number of this Guarantee
<br />and shall be addressed to the Company at 114 East Fifth
<br />Street, Santa Ana, California 92701.
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