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CONDITIONS AND STIPULATIONS Continued
<br />(continued from reverse side of Policy Face)
<br />defect, lien or encumbrance or other matter insured c yy this policy. The
<br />Company shall have the right to select counsel of its cnoice subject to the right
<br />of such insured to object for reasonable cause) to represent the insured as to
<br />those stated causes of action and shall not be liable for and will not pay the
<br />fees of any other counsel. The company will not pay any fees, costs or expenses
<br />incurred by an insured in the defense of those causes of action which allege
<br />matters not insured against by this policy.
<br />(b) The Company shall have the right, at its own cost, to institute and
<br />prosecute any action or proceeding or to do any other act which in its opinion
<br />may be necessary or desirable to establish the title to the estate or interest or
<br />the lien of the insured mortgage, as insured, or to prevent or reduce loss or
<br />damage to an insured. The Company may take any appropriate action under
<br />the terms of this policy, whether or not it shall be liable hereunder, and shall not
<br />thereby concede liability or waive any provision of this policy. If the Company
<br />shall exercise its rights under this paragraph, it shall do so diligently.
<br />(c) Whenever the Company shall have brought an action or interposed a
<br />defense as required or permitted by the provisions of this policy, the Company
<br />may pursue any litigation to final determination by a court of competent juris-
<br />diction and expressly reserves the right, in its sole discretion, to appeal from any
<br />adverse judgment or order.
<br />(d) In all cases where this policy permits or requires the Company to prose-
<br />cute or provide for the defense of any action or proceeding, an insured shall
<br />secure to the Company the right to so prosecute or provide defense in the action
<br />or proceeding, and all appeals therein, and permit the Company to use, at its
<br />option, the name of such insured for this purpose. Whenever requested by the
<br />Company, an insured, at the Company's expense, shall give the Company all
<br />reasonable aid (i) in any action or proceeding, securing evidence, obtaining
<br />witnesses, prosecuting or defending the action or proceeding, or effecting set-
<br />tlement, and (ii) in any other lawful act which in the opinion of the Company
<br />may be necessary or desirable to establish the title to the estate or interest or
<br />the lien of the insured mortgage, as insured. If the Company is prejudiced by
<br />the failure of an insured to furnish the required cooperation, the Company s
<br />obligations to such insured under the policy shall terminate, including any liabil-
<br />ity or obligation to defend, prosecute, or continue any litigation, with regard to
<br />the matter or matters requiring such cooperation.
<br />5. PROOF OF LOSS OR DAMAGE.
<br />In addition to and after the notices required under Section 3 of these Con-
<br />ditions and Stipulations have been Provided the Company, a proof of loss or
<br />damage signed and sworn to by each insured claimant shall be furnished to the
<br />Company within 90 days after the insured claimant shall ascertain the facts
<br />giving rise to the loss or damage. The proof of loss or damage shall describe the
<br />defect in, or lien or encumbrance on the title, or other matter insured against by
<br />this policy which constitutes the basis of loss or damage and shall state, to the
<br />extent possible, the basis of calculating the amount of the loss or damage. If the
<br />Company is prejudiced by the failure of an insured claimant to provide the
<br />required proof of loss or damage, the Company's obligations to such insured
<br />under the policy shall terminate, including any liability or obligation to defend,
<br />prosecute, or continue any litigation, with regard to the matter or matters
<br />requiring such proof of loss or damage.
<br />In addition, an insured claimant may reasonably be required to submit an
<br />examination under oath by any authorized representative of the Company and
<br />shall produce for examination, inspection and copying, at such reasonable times
<br />and places as may be designated by any authorized representative of the
<br />Company, all records, books, ledgers, checks, correspondence and memoranda,
<br />whether bearing a date before or after Date of Policy, which reasonably per-
<br />tain to the loss or damage. Further, if requested by any authorized representa-
<br />tive of the Company, the insured claimant shall grant its permission, in writing,
<br />for any authorized representative of the Company to examine, inspect and copy
<br />all records, books, ledgers, checks, correspondence and memoranda in the cus-
<br />tody or control of a third party, which reasonably pertain to the loss or damage.
<br />All information designated as confidential by an insured claimant provided to
<br />the Company pursuant to this Section shall not be disclosed to others unless, in
<br />the reasonable judgment of the Company, it is necessary in the administration
<br />of the claim. Failure of an insured claimant to submit for examination under
<br />oath, produce other reasonably requested information or grant permission to
<br />secure reasonably necessary information from third parties as required in this
<br />paragraph, unless prohibited by law or governmental regulation, shall termi-
<br />nate any liability of the Company under this policy as to that insured for that
<br />claim.
<br />b. OPTIONS TO PAY OR OTHERWISE SETTLE CLAIMS; TERMINATION
<br />OF LIABILITY.
<br />In case of a claim under this policy, the Company shall have the following
<br />additional options:
<br />(a) To Pay or Tender Payment of the Amount of Insurance or to Pur-
<br />chase the Indebtedness.
<br />(i) to pay or tender payment of the amount of insurance under this
<br />policy together with any costs, attorneys' fees and expenses incurred by the
<br />insured claimant, which were authorized by the Company, up to the time of
<br />payment or tender of payment and which the Company is obligated to pay; or
<br />(ii) in case los age is claimed under this policy by the owner of
<br />the indebtedness secured by the insured mortgage, to purchase the indebted-
<br />ness secured by the insured mortgage for the amount owing thereon together
<br />with any costs, attorneys' fees and expenses incurred by the insured claimant
<br />which were authorized by the Company up to the time of purchase and which
<br />the Company is obligated to pay.
<br />If the Company offers to purchase the indebtedness as herein provided,
<br />the owner of the indebtedness shall transfer, assign, and convey the indebted-
<br />ness and the insured mortgage, together with any collateral security, to the
<br />Company upon payment therefor.
<br />Upon the exercise by the Company of the option provided for in para-
<br />graph a(i), all liability and obligations to the insured under this policy, other
<br />than to make the payment required in that paragraph, shall terminate, includ-
<br />ing any liability or obligation to defend, prosecute, or continue any litigation,
<br />and the policy shall be surrendered to the Company for cancellation.
<br />Upon the exercise by the Company of the option provided for in paragraph
<br />a(ii) the Company's obligation to an insured Lender under this policy for the
<br />claimed loss or damage, other than the payment required to be made, shall
<br />terminate, including any liability or obligation to defend, prosecute or continue
<br />any litigation.
<br />(b)) To Pay or Otherwise Settle With Parties Other than the Insured or
<br />With the Insured Claimant.
<br />(i) to pay or otherwise settle with other parties for or in the name of
<br />an insured claimant any claim insured against under this policy, together with
<br />any costs, attorneyys' fees and expenses incurred by the insured claimant which
<br />were authorized by the Company up to the time of payment and which the
<br />Company is obligated to pay; or
<br />(ii) to pay or otherwise settle with the insured claimant the loss or
<br />damage provided for under this policy, together with any costs, attorneys' fees
<br />and expenses incurred by the insured claimant which were authorized by the
<br />Company up to the time of payment and which the Company is obligated to
<br />pay.
<br />Upon the exercise by the Company of either of the options provided for in
<br />paragraphs b(i) or b(ii), the Company's obligations to the insured under this
<br />policy for the claimed loss or damage, other than the payments required to be
<br />made, shall terminate, including any liability or obligation to defend, prosecute
<br />or continue any litigation.
<br />7. DETERMINATION AND EXTENT OF LIABILITY.
<br />This policy is a contract of indemnity against actual monetary loss or dam-
<br />age sustained or incurred by the insured claimant who has suffered loss or
<br />damage by reason of matters insured against by this policy and only to the
<br />extent herein described.
<br />(a) The liability of the Company under this policy to an insured lender shall
<br />not exceed the least of:
<br />(i) the Amount of Insurance stated in Schedule A, or, if applicable,
<br />the amount of insurance as defined in Section 2 (c) of these Conditions and
<br />Stipulations;
<br />(ii) the amount of the unpaid principal indebtedness secured by the
<br />insured mortgage as limited or provided under Section 8 of these Conditions
<br />and Stipulations or as reduced under Section 9 of these Conditions and Stipula-
<br />tions, at the time the loss or damage insured against by this policy occurs,
<br />together with interest thereon; or
<br />(iii) the difference between the value of the insured estate or interest
<br />as insured and the value of the insured estate or interest subject to the defect,
<br />lien or encumbrance insured against by this policy.
<br />(b) In the event the insured lender has acquired the estate or interest in the
<br />manner described in Section 2(a) of these Conditions and Stipulations or has
<br />conveyed the title, then the liability of the Company shall continue as set forth in
<br />Section 7(a) of these Conditions and Stipulations.
<br />(c) The liability of the Company under this policy to an insured owner of
<br />the estate or interest in the land described in Schedule A shall not exceed the
<br />least of:
<br />(i) the Amount of Insurance stated in Schedule A; or,
<br />(ii) the difference between the value of the insured estate or interest
<br />as insured and the value of the insured estate or interest subject to the defect,
<br />lien or encumbrance insured against by this policy.
<br />(d) The Company will pay only those costs, attorneys' fees and expenses
<br />incurred in accordance with Section 4 of these Conditions and Stipulations.
<br />8. LIMITATION OF LIABILITY.
<br />(a) If the Company establishes the title, or removes the alleged defect, lien
<br />or encumbrance, or cures the lack of a right of access to or from the land, or
<br />cures the claim of unmorketability of title, or otherwise establishes the lien of the
<br />insured mortgage, all as insured, in a reasonably diligent manner by any
<br />method, including litigation and the completion of any appeals therefrom, it
<br />shall have fully performed its obligations with respect to that matter and shall not
<br />be liable for any loss or damage caused thereby.
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