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Enclaves/FP-CS 950313KASM~R & KRAGE, L.L.P. ATTORNEYS AND COUNSELORS At LAW 2001 BRYAN TOWER SUITE 2700 DALLAS, TEXAS 75;~01-3059 214/969-? 500 TELECOPIEr 2i4/2 ~0-0~30 March 13, 1995 VIA TELECOPIER TO 278-8187 AND REGULAR MAIL Mr. David R. Blom President Parkway/Coppell Property Corporation c/o Wilbow Corporation Inc. 3960 Broadway - Suite 125, LB 19 Garland, Texas 75043 Acquisition by Parkway/Coppell Property Corporation from the Resolution Trust Corporation of that certain approximately 2.729 acre channel tract that is located in Coppell, Dallas County, Texas (hereinafter called the 'Channel Tract") Dear David: In connection with the acquisition of the Channel Tract by Park- way/Coppell Property Corporation, you will find enclosed herewith a copy of the Owner Policy of Title Insurance that was issued by Stewart Title Guaranty Company, Owner Policy Number 0-5841-21935 dated Febru- ary 3, 1995 (hereinafter called the "Owner Policy of Title Insurance"). By copy of this letter, I am delivering a copy of the Owner Policy of Title Insurance to Robert L. Dillard, III, Esq., counsel to the City of Cop- pell, and mailing copies of the Owner Policy of Title Insurance to Jim Witt, City Manager of the City of Coppell, and Bill Anderson with Dow- dey, Anderson and Associates, Inc. Please call me if you have any questions concerning this matter. Very truly yours, CDK/dgh Enclosure Cyril D. Kasmir KASMIR & KRAgE, L.L.P. Mr. David R. Blom March 13, 1995 Page 2 CC: Robert L. Dillard, III, Esq. Nichols, Jackson, Dillard, Hager & Smith, L.L.P. (Via hand delivery) (With enclosure) Mr. Jim Witt City Manager City of Coppell (Via regular mail) (With enclosure) William A. Anderson, P.E. Dowdey, Anderson and Associates, Inc. (Via regular mail) (With enclosure) ws3 \ 1085 OWNER POLICY OF TITLE INSURANCE ISSUED BY S T E ¥ART TITLE GUARANTY COMPANY SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE CONTAINED IN SCHEDULE B AND THE CONDITIONS AND STIPULATIONS, STEWART TITLE GUARANTY COMPANY, a Texas corporation, herein called the Company, insures, as of Date of Policy shown in Schedule A, against loss or damage, not exceeding the Amount of Insurance stated in Schedule A, sustained or incurred by the insured by reason of: 1. Title to the estate or interest described in Schedule A being vested other than as stated therein; 2. Any defect in or lien or encumbrance on the title; 3. Any statutory or constitutional mechanic's, contractor's, or materialman's lien for labor or material having its inception on or before Date of Policy; 4. Lack of a right of access to and from the land; 5. Lack of good and indefeasible title. The Company also will pay the costs, attorneys' fees and expenses incurred in defense of the title, as insured, but only to the extent provided in the Conditions and Stipulations. IN WITNESS WHEREOF, Stewart T~tle Guaranty Company has caused this policy to be signed and sealed by its duly authorized officers as of the Date of Policy shown in Schedule A. Chairman or,he Board / Countersigned by: Authorized Signatory Company City, State ~ T E WA R T T I T L E' L President OUARANTY COMPANY EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from [ne coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: 1. (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to (i) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking that has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. 3. Defects, liens, encumbrances, adverse claims or other matters: (a) created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; (c) resulting in no loss or damage to the insured claimant: (d) attaching or created subsequent to Date of Policy; or (e) resulting in loss or damage which woutd not have been sustained if the insured claimant had paid value for the estate or interest insured by this policy. 4. The refusal of any person to purchase, lease or lend money on the estate or interest covered hereby in the land described in Schedule A because of unmarketability of the title. 5. Any claim, which arises out of the transaction vesting in the person named in paragraph 3 of Schedule A the estate or interest insured by this policy, by reason of the operation of federal bankruptcy, state insolvency, or other state or federal creditors' rights laws, that is based on either (i) the transaction creating the estate or interest Insured by this Policy being deemed a fraudulent conveyance or fraudulent transfer or a voidable distribution or voidable dividend; (ii) the subordination or recharacterization of the estate or interest insured by this Policy as a result of the application of the doctrine of equitable subordination; or (iii) the transaction creating the estate or interest insured by this Policy being deemed a preferential transfer except where the preferential transfer results from the failure of the Company or its ~ssuing agent to timely file for record the instrument of transfer to the insured after delivery or the of such recordation to impart notice to a purchaser for value or a judgment or lien creditor. ~ ~ ,e~ ~ ~ ~ ~..,.=,,m.'.~-.~ Page ~ of . . .o,,c. 0-5841- 21935 .ooooooo 581 (Rev 1-1-93l CONDITIONS AND STIPULATIONS 1. DEFINITION OF TERMS. The following terms when used in this policy mean: , ',a~ "insured": the insured named in Schedule A, and, subject to any rights or defenses the Company would have had against the named insured, those who succeed to the interest of the named insured by operation of law as distinguished from purchase including, but not limited to, heirs, distributees, devisees, survivors, personal representatives, next of kin, or corporate, partnership or fiduciary suc- cessors, and specifically, without limitation, the following: (ii The successors in interest to a corporation resulting from merger or consolidation or the distribution of the assets of the corporation upon partial or complete liquidation; (ii) The partnership successors in interest to a general or limited part- nership which dissolves but does not terminate; (iii) The successors in interest to a general or limited partnership result- ing from the distribution of the assets of the general or limited partnership upon partial or complete liquidation; (iv) The successors in interest to a joint venture resulting from the distri- bution of the assets of the joint venture upon partial or complete liquidation; Iv) The successor or substitute trustee{s) of a trustee named in a written trust instrument; or (vi) The successors in interest to a trustee or trust resulting from the dis- tribution of all or part of the assets of the trust to the beneficiaries thereof. (b) "insured claimant": an insured claiming loss or damage. (c) "knowledge" or "known": actual knowledge, not constructive knowledge or notice that may be imputed to an insured by reason of the public records as defined in this policy or any other records which impart constructive notice of matters affecting the land. (d) "land": the land described or referred to in Schedule A, and improve- ments affixed thereto that by law constitute real property. The term "land" does not incl0de any property beyond the lines of the area described or referred to in Schedule A, nor any right, title, interest, estate or easement in abutting streets, roads, avenues, alleys, lanes, ways or waterways, but nothing herein shall modify or limit the extent to which a right of access to and from the land is insured by this policy. (e) "mortgage": mortgage, deed of trust, trust deed, or other security instrument. (f) "public records": records established under state statutes at Date of Policy for the purpose of imparting constructive notice of matters relating to real property to purchasers for value and without knowledge. With respect to Section l(a)(iv) of the Exclusions From Coverage, "public records" also shall include environmental protection liens filed in the records of the clerk of the United States district court for the district in which the land is located. (g) "Access"'. legal right of access to the land and not the physical condition of access. The coverage provided as to access does not assure the adequacy of access for the use intended. 2. CONTINUATION OF INSURANCE AFTER CONVEYANCE OF TITLE. The coverage of this policy shall continue in force as of Date of Policy in favor of an insured only so long as the insured retains an estate or interest in the land, or holds an indebtedness secured by a purchase money mortgage given by a purchaser from the insured, or only so long as the insured shall have liability by reason of covenants of warranty made by the insured in any transfer or convey- ance of the estate or interest. This policy shall not continue in force in favor of any purchaser from the insured of either (il an estate or interest in the land, or (ii) an indebtedness secured by a purchase money mortgage given to the insured. 3. NOTICE OF CLAIM TO BE GIVEN BY INSURED CLAIMANT. The insured shall notify the Company promptly in writing (il in case of any litigation as set forth in Section 4(al below, or (ii) in case knowledge shall come to an insured hereunder of any claim of title or interest that is adverse to the title to the estate or interest, as insured, and that might cause loss or damage for which the Company may be liable by virtue of this policy. If prompt notice shall not be given to the Company, then as to the insured all liability of the Company shall terminate with regard to the matter or matters for which prompt notice is required; provided, however, that failure to notify the Company shaft in no case prejudice the rights of any insured under this policy unless the Company shall be prejudiced by the failure and then only to the extent of the prejudice. When, after the Date of the Policy, the insured notifies the Company as required herein of a lien, encumbrance, adverse claim or other defect in title to the estate or interest in the land insured by this policy that is not excluded or excepted from the coverage of this policy, the Company shall promptly investi- gate the charge to determine whether the lien, encumbrance, adverse claim or defect is valid and not barred by law or statute. The Company shall notify the insured in writing, within a reasonable time, of its determination as to the validity or invalidity of the insured's claim or charge under the policy. If the Company concludes that the lien, encumbrance, adverse claim or defect is not covered by this policy, or was otherwise addressed in the closing of the transac- tion in connection with which this policy was issued, the Company shall specifically advise the insured of the reasons for its determination. If the Company concludes that, the lien, incumbrance, adverse claim or defect is valid, the Company shall take one of the following actfons: fi) institute the necessary proceedi'~gs to dear the lien, encumbrance, adverse claim or defect from the title *o the estate ~s insured; (ii)indemnify the insured as provided in this policy; t~ii} upon ~ay~'ent of appropriate premium and charges therefor, issue to the insured da~man? or to a subsequent owner, mortgagee or holder of the estate or interest in the !ana insured by this policy, a policy of title insurance without except,on for the hen, encumbrance, adverse claim or defect, said policy to be in an amount equal to the current value of the property or, if a mortgagee policy, the amount of the loan; (iv) indemnify another title insurance company in connection with its issu- ance of a policy(ies) of title insurance without exception for the lien, encum- brance, adverse claim or defect; (v) secure a release or other document discharg- ing the lien, encumbrance, adverse claim or defect; or (vi) undertake a combination of (i) through (v) herein. 4. DEFENSE AND PROSECUTION OF ACTIONS: DUTY OF INSURED CLAIMANT TO COOPERATE. (al Upon written request by the insured and subject to the options contained in Section 6 of these Conditions and Stipulations, the Company, at its own cost and without unreasonable delay, shall provide for the defense of an insured in litigation in which any third party asserts a claim adverse to the title or interest as insured, but only as to those stated causes of action alleging a defect, lien or encumbrance or other matter insured against by this policy. The Company shall have the right to select counsel of its choice (subject to the right of the insured to object for reasonable cause) to represent the insured as to those stated causes of action and shall not be liable for and will not pay the fees of any other counsel. The Company will not pay any fees, costs or expenses incurred by the insured in the defense of those causes of action that allege matters not insured against by this policy. (b) The Company shall have the right, at its own cost, to institute and prose- cute any action or proceeding or to do any other act that in its opinion may be necessary or des rah e to establish the title to the estate or interest, as insured, or to prevent or reduce loss or damage to the insured. ?he Company may take any appropriate action under the terms of this policy, whether or not it shall be liable hereunder, and shall not thereby concede liability or waive any provision of this policy. If the Company shall exercise its rights under this paragraph, it shall do so diligently. (c) Whenever the Company shall have brought an action or interposed a defense as required or permitted by the provisions of this policy, the Company may pursue any litigation to final determination by a court of competent jurisdic- tion and expressly reserves the right, in its sole discretion, to appeal from any adverse judgment or order. (d) In all cases where this policy permits or requires the Company to prose- cute or provide for the defense of any action or proceeding,, the insured shall secure to the Company the right to so prosecute or provide defense in the action or proceeding, and all appeals therein, and permit the Company to use, at its option, the nome of the insured for this purpose. Whenever requested by the Company, the insured, at the Company's expense, shall give the Company all reasonable aid (il in any action or proceeding, securing evidence, obtaining wit- nesses, prosecuting or defending the action or proceeding, or effecting settle- ment, and (ii) in any other lawful act that in the opinion of the Company may be necessary or desirable to establish the title to the estate or interest as insured. If the Company is prejudiced by the failure of the insured to furnish the required cooperation, the Company's obligations to the insured under the policy shall ter- minate, including any ~iability or obligation to defend, prosecute, or continue any litigation, with regard to the matter or matters requiring such cooperation. 5. PROOF OF LOSS OR DAMAGE. In addition to and after the notices required under Section 3 of these Condi- tions and Stipulations have been provided the Company, a proof of loss or dam- age signed and sworn to by the insured claimant shall be furnished to the Com- pany within 91 days after the insured claimant shall ascertain the facts giving rise to the loss or damage. The ~roof of loss or damage shall describe the defect in, or lien or encumbrance on the title, or other matter insured against by this policy that constitutes the basis of loss or damage and shall state, to the extent possi- ble, the basis of calculating the amount of the loss or damage. If the Company is prejudiced by the failure of the, insured claimant to provide the required proof of loss or damage, the Company s obligations to the insured under the policy shall terminate, including any liability or obligation to defend, prosecute, or continue any litigation, with regard to the matter or matters requiring such proof of loss or damage. In addition, the insured claimant may reasonably be required to submit to examination under oath by any authorized representative of the Company and shall produce for examination, inspection and copying, at such reasonable times and places as may be designated by any authorized representative of the Com- pany, all records, books, ledgers, checks, correspondence and memoranda, whether bearing a date before or after Date of Policy, which reasonably pertain to the loss or damage. Further, if requested by any authorized representative of the Company, the insured claimant shall grant its permission, in writing, for any authorized representative of the Company to examine, inspect and copy all (continued and concluded on last page of this policy) IMPORTANT NOTICE TO OBTAIN INFORMATION OR MAKE A COMPLAINT: YOU MAY CALL STEWART TITLE GUARANTY COMPANY'S TOLL FREE TELEPHONE NUMIIER FOR INFO~TION OR TO MAKE A COMPLAINT AT 1-800-729-1902 YOU MAY ALSO WRITE TO STEWART TITLE GUARANTY COMPANY AT: P.O. BOX 2029 HOUSTON, TX 77252-2029 YOU MAY CONTACT THE TEXAS DEPARTMENT OF INSURANCE TO OBTAIN INFORMATION ON COMPANIES, COVERAGES, RIGHTS OR COMPLAINTS AT 1-800-252-3439 YOU MAY WRITE THE TEXAS DEPARTMENT OF INSURANCE P.O.BOX 149104 AUSTIN, TX 78714-9104 FAXg (512) 475-1771 PREMIUM OR CLAIM DESPUTES: SHOULD YOU HAVE A DISPUTE CONCERNING YOUR PREMIUM OR ABOUT A CLAIM YOU SHOULD CONTACT THE COMPANY FIRST. IF THE DISPUTE IS NOT RESOLVED, YOU MAY CONTACT THE TEXAS DEPARTMENT OF INSURANCE. ATTACH THIS NOTICE TO YOUR POLICY: THIS NOTICE IS FOR INFORMATION ONLY AND DOES NOT BECOME A PART OR CONDITION OF THE ATTACHED DOCUMENT. Note: Attach this notice as the first, second or third page of the policy. T-1 Owners Policy Schedules - Form Prescribed by Texas Department of Insurance - Revised SCHEDULE A GF NO. 94304956 Owner Policy No. O-5841-21935 Date of Policy: February 03, 1995 Amount of Insurance DOLLARS ONE HUNDRED THOUSAND & 00/100 - ($100,000.00) - 1. Name of Insured: PARKWAY/COPPELL PROPERTY CORPORATION, a Texas corporation 2. The estate or interest in the land that is covered by this policy is: FEE SIMPLE 3. Title to the estate or interest in the land is insured as vested in: PARKWAY/COPPELL PROPERTY CORPORATION, a Texas corporation 4. The land referred to in this policy is described as follows: SEE EXHIBIT "A" EXHIBIT A BEING a tract of land situated in the CLARINDA SQUIRES SURVEY, ABSTRACT No. 1327, in the City of Coppell, Dallas County, Texas, and being a part of a tract of land as described in a deed from Good Financial Corporation to M. Douglas Adkins, Trustee, as recorded in Volume 76188, Page 2355 of the Deed Records of Dallas County, Texas and being more particularly described as follows: BEGINNING at a 1/2" iron rod found for corner on the south line of Parkway Boulevard (an 88 foot right-of-way) said point being the northwest corner of Lot 1, in Block 4 of Parkview Addition, an addition to the City of Coppell as recorded in Volume 88081, Page 1944 of the Deed Records of Dallas County, Texas, said point also being 90.04 feet west of the intersection of the said south line of Parkway Boulevard with the west line of Alex Drive (a 50 foot right-of-way); THENCE S 00 deg. 56 min. 25 sec. E, 646.78 feet along the West line of the said Parkview Addition to a 1/2" iron rod found for corner; THENCE N 89 deg. 03 min. 35 sec. E, 230.00 feet along the south line of the said Parkview Addition to a 1/2" iron rod found for corner, said point being the beginning of a curve to the right having a central angle of 14 deg. 29 min. 32 sec. a radius of 435.00 feet and a chord bearing of S 83 deg. 41 min. 39 sec. E; THENCE along said curve, and continuing along the said south line of Parkview Addition, 110.03 feet to the end of said curve, a 1/2" iron rod found for corner, said point being the beginning of a curve to the left having a central angle of 05 deg. 49 min. 42 sec., a radius of 665.00 feet and a chord bearing of S 79 deg. 21 min. 44 sec. E; THENCE along said curve, and continuing along the said south line of Parkview Addition, 67.64 feet to the end of said curve, a 1/2" iron rod found for corner on the west line of said Parkview Addition; THENCE S 00 deg. 56 min. 25 sec. E, 22.59 feet along the said west line of Parkview Addition to an "x" cut in concrete found for corner, said point being on the north line of Pecan Hollow, an addition to the City of Coppell as recorded in Volume 90139, page 2914 of the Deed Records of Dallas County, Texas; THENCE S 89 deg. 03 min. 35 sec. W, 930.55 feet along the said north line of Pecan Hollow to a 1/2" iron rod found for corner, said point being on the east line of Parks of Coppell, Section One, an addition to the City of Coppell as recorded in Volume 93093, Page 1531 of the Deed Records of Dallas County, Texas; THENCE N 00 deg. 52 min. 32 sec. W, 62.55 feet along the said Continued on next page east line of Parks of Coppell to a point for corner; THENCE N 88 deg. 57 min. 16 sec. E, 102.81 feet leaving the said east line of Parks of Coppell to a 1/2" iron rod found for ~corner; THENCE N 88 deg. 59 min. 40 sec. E, 124.31 feet to a 1/2" iron rod found for corner; THENCE N 88 deg. 31 min. 31 sec. E, 130.07 feet to a 1/2" iron rod found for corner; THENCE N 86 deg. 55 min. 17 sec. E, 47.53 feet to a 1/2" iron rod found for corner; THENCE N 19 deg. 59 min. 26 sec. E, 29.37 feet to 1 1/2" iron rod found for corner; THENCE N 05 deg. 57 min. 56 sec. E, 95.82 feet to a 1/2" iron rod found for corner; THENCE N 08 deg. 22 min. 40 sec. W, 144.35 feet to a 1/2" iron rod found for corner; THENCE N 02 deg. 36 min. 12 sec. E, 124.02 feet to a 1/2" iron rod found for corner; THENCE N 03 deg. 06 min. 37 sec. E, 113.98 feet to a 1/2" iron rod found for corner; THENCE N 03 deg. 10 m~n. 34 sec. E, 123.82 feet to a 1/2" iron rod found for corner; THENCE N 03 deg. 13 min. 47 sec. W, 2.55 feet to a 1/2" iron rod found for corner on the said south line of Parkway Boulevard, said point also being in a curve to the right running in an easterly direction and having a central angle of 02 deg. 28 min. 07 sec., a radius of 2156.00 feet and a chord bearing of N 88 deg. 00 min. 16 sec. E; THENCE along said curve, and along the said south line of Parkway Boulevard, 92.89 feet to the Point of Beginning and containing 2.729 acres (118,881 square feet) of land. Owners Policy Schedules - Form Prescribed by Texas Department of Insurance - Revfsed 1993 GF No. 94304956 OWNER POLICY SCHEDULE B owner Policy No. O-5841-21935 EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage (and the Company will not pay costs, attorney's fees or expenses) that arise by reason of the terms and conditions of the leases or easements insured, if any, shown in Schedule A and the following matters: 2. Any discrepancies, conflicts, or shortages in area or ~oundary lines, or any encroachments or protrusions, or any overlapping of improvements. 3. Homestead or community property or survivorship rights, if any, of any spouse of any insured. 4e Any titles or rights asserted by anyone, including, but not limited to, persons, the public, corporations, governments or other entities, a. to tidelands, or lands comprising the shores or beds perennial rivers and streams, lakes, bays, gulfs or oceans, b. to lands beyond.the line of the harbor or bulkhead lines as changed by any government, or c. to filled-in lands, or artificial islands, or d. to statutory water rights, including riparian rights, or e. to the area extending from the line of mean low tide to the line of vegetation, or the right of access to that area or easement along and across that area. of navigable or or established or Standby fees, taxes and assessments by any taxing authority for the year 1~5 and subsequent years, and subsequent taxes and assessments by any taxing authority for prior years due to change in land usage or ownership. The following matters evidence of the matters exception.): and all terms of the documents creating or offering (The Company must insert matters or delete this Drainage Improvement Easement granted to Pecan Hollow Joint Venture, a Texas Joint Venture, by instrument dated 2/13/91, filed 3/6/91, recorded in Volume 91045, Page 3797, Real Property Records, Dallas County, Texas, as shown on survey dated 12-28-94, revised 1-10-95, prepared by Jack M. Crawford, R.P.L.S. No. 4059. 8. Mutual Drainage Easement by and between ABQ Federal Savings Bank and Pecan Hollow Joint Venture, dated 2/13/91, filed 3/6/91, recorded in Volume 91045, Page 3808, Real Property Records, Dallas County, Texas, as shown on survey dated 12-28-94, revised Countersigned: Continued on next page Authorized Countersignature GF No. 94304956 Attached to and made a part of Stewart Title Guaranty Company Policy No. O-5841-21935 SCHEDULE B CONTINUED: 1-10-95, prepared by Jack M. Crawford, R.P.L.S. No. 4059. Mutual Drainage Easement by and between The Parks of Coppell Joint Venture II, and ABQ Development Corporation, a New Mexico corporation, dated 5/24/88, filed 5/25/88, recorded in Volume 88103, Page 2345, Real Property Records, Dallas County, Texas, as shown on survey dated 12-28-94, revised 1-10-95, prepared by Jack M. Crawford, R.P.L.S. No. 4059. 10. Telephone riser and TV riser as shown on survey dated 12-28-94, revised 1-10-95, prepared by Jack M. Crawford, R.P.L.S. No. 4059. 11. Underground telephone cable as referenced on survey dated 12-28-94, revised 1-10-95, prepared by Jack M. Crawford, R.P.L.S. No. 4059. 12. Delinquent County, City, School, CED and MUD property taxes for the years 1987, 1988, 1989, 1990, 1992, 1993 and 1994. CONDITIONS AND STIPULATIONS Continued (continued and concluded from reverse side of Policy Face) records, books, ledgers, checks, correspondence and memoranda in the custody or control of a third party, which reasonably pertain to the loss or damage. All information designated as confidential by the insured claimant provided to the Company pursuant to this Section shall not be disclosed to others unless, in the reasonable judgment of the Company, it is necessary in the administration of the claim. Failure of the insured claimant to submit for examination under oath, pro- duce other reasonably requested information or grant permission to secure rea- sonabJy necessary information from third parties as required in this paragraph shall terminate any tiabilit7 of the Company under this policy as to that claim. 6. OPTIONS TO PAY OR OTHERWISE SETTLE CLAIMS; TERMINATION OF LIABILITY. In case of a claim under this policy, the Company shall have the following additional options: (a) To Pay or Tender Payment of the Amount of Insurance. To pay or tender payment of the amount of insurance under this policy together with any costs, attorneys' fees and expenses incurred by the insured claimant, which were authorized by the Company, up to the time of payment or tender of payment and which the Company is obligated to pay. Upon the exercise by the Company of this option, all liability and obligations to the insured under this policy, otl~er than to make the payment required, shall terminate, including any liability or obligation to defend, prosecute, or continue any litigation, and the policy shall be surrendered to the Company for cancellation. (b) To Pay or Otherwise Settle With Parties Other than the Insured of With the Insured Claimant. (i) to pay or otherwise settle with other parties for or in the name of an insured claimant any claim insured against under this policy, together with any costs, attorneys' fees and expenses incurred by the insured claimant, which were authorized by the Company up to the time of payment and which the Company is obligated to pay; or (ii) to pay or otherwise settle with the insured claimant the loss or dam- age provided for under this policy, together with any costs, attorneys' fees and expenses incurred by the insured claimant, which were authorized b~y the Com- pany up to the time of payment and which the Company is obligatecl to pay. Upon the exercise by the Company of either of the options provided for in paragraphs (b)(i) or (ii), the Company's obligations to the insured under this pol- icy for the claimed loss or damage, other than the payments required to be made, shall terminate, including any liability or obligation to defend, prosecute or continue any litigation. 7. DETERMINATION, EXTENT OF LIABIUTY AND COINSURANCE. This policy is a contract of indemnity against actual monetary loss or dam- age sustained or incurred by the insured claimant who has suffered loss or dam- age by reason of matters insured against by this policy and only to the extent herein described. (a) The liability of the Company under this policy shall not exceed the least of: (i) the Amount of Insurance stated in Schedule A; or (ii) the difference between the value of the insured estate or interest as insured and the value of the insured estate or interest subject to the defect, lien or encumbrance insured against by this policy at the date the insured claimant is required to furnish to Company a proof of loss or damage in accordance with Section 5 of these Conditions and Stipulations. (b) In the event the Amount of Insurance stated in Schedule A at the Date of Policy is less than I~0 percent of the value of the insured estate or interest or the full consideration paid for the land, whichever is less, or if subsequent to the Date of Policy an improvement is erected on the land which increases the value of the insured estate or interest by at least 20 percent over the Amount of Insurance stated in Schedule A, then this Policy is subject to the following: (i) where no subsequent improvement has been made, as to any par- tial loss, the Company shall only pay the loss pro rata in the proportion that the amount of insurance at Date of Policy bears to the total value of the insured estate or interest at Date of Policy; or (ii) where a subsequent improvement has been made, as to any partial loss, the Company shall only pay the loss pro rata in the proportion that 120 percent of the Amount of Insurance stated in Schedule A bears to the sum of the Amount of Insurance stated in Schedule A and the amount expended for the improvement. The provisions of this paragraph shall not apply to costs, attorneys' fees and expenses for which the Company is liable under this policy, and shal/only apply to that portion of any loss which exceeds, in the aggregate, 10 percent otthe Amount of Insurance stated in Schedule A. (c) The Company will pay only those costs, attorneys' fees and expenses incurred in accordance with Section 4 of these Conditions and Stipulations. 8. APPORTIONMENT. If the land described in Schedule A consists of two or more parcels that are not used as a single site, and a loss is established affecting one or more of the parcels but not all, the loss shall be computed and settled on a pro rata basis as if the amount of insurance under this policy was divided pro rata as to the value on Date of Policy of each separate parcel to the whole, exclusive of any improvements made subsequent to Date of Policy, unless a liability or value has otherwise been agreed upon as to each parcel by the Company and the insured at the time of the issuance of this policy and shown by an express statement or by an endorsement attached to this policy. 9. UMITATION OF LIABILITY. (a) If the Company establishes the title, or removes the alleged defect, lien or encumbrance, or cures the lack of a right of access to or from the land, all as insured, or takes action in accordance with Section 3 or Section 6, in a reasonably diligent manner by any method, including litigation and the completion of any appeals therefrom, it shall have fully performed its obligations with respect to that matter and shall not be liable for any loss or damage caused thereby. (b) In the event of any litigation, including litigation by the Company or with the Company's consent, the Company shall have no liability for loss or damage until there has been a final determination by a court of competent jurisdiction, and disposition of all appeals therefrom, adverse to the title as insured. (c) The Company shall not be liable for loss or damage to any insured for liability voluntarily assumed by the insured in settling any claim or suit without the prior written consent of the Company. 10. REDUCTION OF INSURANCE: REDUCTION OR TERMINATION OF LIABIUTY. AIIpayments under this policy, except payments made for costs, attorneys' fees andexpenses, shall reduce the amount of the insurance pro fanta. 11. LIABIUTY NONCUMULATIVE. It is expressly understood that the amount of insurance under this policy shall be reducedby any amount the Company may pay under any policy insuring a mortgage to which exception is taken in Schedule B or to which the insured has agreed, assumed, or taken subject, or which is hereafter executed by an insured and which is a charge or lien on the estate or interest described or referred to in Schedule A, and the amount so paid shall be deemed a payment under this policy to the insured owner. 12. PAYMENT OF LOSS. (a) No payment shall be made without producing this policy for endorse- ment of the payment unless the policy has been lost or destroyed, in which case proof of loss or destruction shall be furnished to the satisfaction of the Company. (b) When liability and the extent of loss or damage has been definitely fixed in accordance with these Conditions and Stipulations, the loss or damage shall be payable within 30 days thereafter. 13. SUBROGATION UPON PAYMENT OR SETTLEMENT. (a) The Cempany's Right ef Subrogation. Whenever the Company shall have settled and paid a claim under this pol- icy, all right of subrogation shall vest in the Company unaffected by any act of the insured claimant. The Company shall be subrogated to and be entitled to all rights and reme- dies that the insured claimant would have had against any person or property in respect to the claim had this policy not been issued. If requested by the Com- pany, the insured claimant shall transfer to the Company all rights and remedies against any person or proper~ necessary in order to perfect this right of subro- gation. The insured claimant shall permit the Company to sue, compromise or settle in the name of the insured claimant and to use the name of the insured claimant in any transaction or litigation involving these rights or remedies. If a payment on account of a claim does not fully cover the loss of the insured claimant, the Company shall be subrogated to these rights and remedies in the proportion that the Company's payment bears to the whole amount of the loss. If loss should result from any act of the insured claimant, as stated above, that act shall not void this policy, but the Company, in that event, shall be required to pay only that part of any losses insured against by this policy that shall exceed the amount, if any, lost to the Company by reason of the impair- ment by the insured claimant of the Company's right of subrogation. (b) The Com ,pany's Rights Against Non-insured Obligors. The Company s right of subrogation against non-insured obligors shall exist and shall include, without limitation, the rights of the insured to indemnities, gua- ranties, other policies of insurance or bonds, notwithstanding any terms or condi- tions contained in those instruments that provide for subrogation rights by rea- son of this policy. ] 4 ARBITRATION. Unless prohibited by applicable law or unless this arbitration section is deleted by s~ecific prowsion ,n Schedule B of this policy, either the Company or the insured may demand arbitration pursuant to the Title Insurance Arbitration Rules of the American Arbitration Association. Arbitrable matters may include, but are nat limited to, any controversy or claim beh,veen the Company and the Insured arising out of or relating to this poilcy, any service of the Company in connect[on with its issuance or the breach of a policy provision or other obligation. All arbitrable matters when the Amount o~ Insurance is $1,000,000 or less SHALL BE arbitrated at the request of either the Company or the insured, unless the insured is an individual person (as distinguished from a corporation, Irust, partnership, association or other legal enti~}. All arbitrable matters when the Amount of Insurance ~s in excess of $1,000,000 shall be arbitrated only when agreed to by both the Company and the insured. Arbitration pursuant to this policy and under the Rules in effect on the date the demand ~or arbitration is made or, at the option of the insured, the Rules in effect at Date of Policy shall be binding upon the parties. The award may include attorney's fees only if the laws of the state in which the land is located permit a court to award attorneys' fees to a prevailing pony Judgment upon the award rendered by the Arbitrator(s} may be entered in any court having jurisdiction thereof. The law of the situs of the land shall apply to an arbitration under the Title Insurance Arbitration Rules. A copy of the Rules may be obtained from the Company upon request. 15, UABIUTY UMITED TO THIS POUCY: POUCY ENTIRE CONTRACT. la) This policy together with all endorsements, if any, attached hereto by the Company In interpreting any provision of this poiicy, this policy a whole. lb( Any claim of loss or damage, whether or not based on neg:igence, ard arises out of the status of the title to the estate or interest covered hereay or ay any action asserting such claim, shall be restricted to this policy. (c) No amendment of or endorsement to this policy can be made except by a writing endorsed hereon or attached hereto signed by either the Presiaent, a Vice President, the Secretary, an Assistant Secretary, or validating officer or authorized signatory of the Company 16. SLnl/~RABIUTY. In the event any provision of the policy is held invalid or unenforceable under applicable law, the policy shall be deemed not to include that provision and all other provisions shall remain in Full force and effect. 17. NOTICES, WHERE SENT. All notices required to be given the Company and any statement in writing required to be furnished the Company shall include the number of this policy and shall be addressed to the Company at P.O. Box 2029, Houston, Texas 77252-2029 COMPLAINT NOTICE. Should any dispute arise about your premium or about a claim that you have filed, contact tho agent or write to tho Company that issued tho policy. If tho problom is not resolved, you also may write the Texas Department of Insurance, P.O. Box 149091, Austin, TX 78714-9091, Fax No. (512) 475-1771. This notice of complaint procedure is for information only and does not becoma a part or condition of this policy. STEWART TITLE ~UA~ANTY COMPANY Zm .,( I'll