Issuing Agency Agreement

ISSUING AGENCY AGREEMENT


This Agreement is made this 25th day of August, 1997, between FIDELITY NATIONAL TITLE INSURANCE COMPANY, a California corporation ("Company"), and Santa Barbara Title Company, a California Corporation ("Agent") (collectively, the "Parties"). In Consideration of the mutual benefits accruing and subject to the terms and conditions hereof, the Parties agree as follows:
The Schedules indicated below are attached and incorporated by reference:
[ X ] Schedule A: Effective Date of Agreement, Agent's Territory, Liability
Limit, Compensation, General Liability of Agent
[ X ] Schedule B: Corporate Agent's Bond and Insurance Requirements
[ X ] Schedule C: Exclusivity
[ ] Schedule D: Personal Guarantee l. APPOINTMENT AND AUTHORITY OF AGENT
Company appoints Agent solely to countersign and issue title insurance
commitments, binders, guarantees, endorsements, title insurance policies
of Company, or any other form whereby Company assumes liability
(collectively, "Title Assurance"j in Agent's Territory set forth in
Schedule A. 2. RESPONSIBILITY OF AGENT
A. Affirmative Covenants. Agent Shall:
1. Receive and process applications for Title Assurances in
accordance with the provisions of state law, in conformity
with usual and customary practices and procedures, prudent
underwriting principles and in full compliance with manuals,
instructions, and bulletins of company from time to time given
to Agent.
2. Maintain a Policy Register (the "Policy Register") referencing
the Agent's file number, policy number, date of issue, name of
insured, amount of policy, premium charged, and the
description of land insured. A legible copy of the policy
Register shall be tendered to Company upon termination of this
Agreement or at any time as requested by Company.
3. Make available for examination by Company, at any time during
normal business hours and with reasonable prior notice from
Company during the term of this Agreement, all financial
records and records relating to the issuance of Company's
Title Assurances by Agent.
4. Provide to Company copies of any audited and any unaudited
financial reports or data submitted to any regulator agencies
with jurisdiction over Agent.
5. Permit Company and its examiners, auditors, and independent
certified public accountants to enter Agent's business
premises for the purpose of inspecting same of performing a
financial, procedural, technical or forms audit.
6. Comply with all applicable federal, state and local laws
including statutes, ordinances, rules, regulations and
judicial opinions.
7. Obtain Company's prior approval where funds are to be held
under an escrow and/or indemnity agreement in order to
facilitate the issuance of a Title Assurance without exception
to or with affirmative coverage over a specific defect, lien
or encumbrance. The funds and property held under any such
escrow and/or indemnity agreement, together with the original
documents evidencing the escrow/indemnity, shall be
transferred to Company on request of Company.
8. Keep safely and segregated, in a FDIC insured escrow/trust
account, which is subject to audit by Company, all monies that
may be entrusted by Agent by Company, or others, in the course
of: (i) Agent's business operations; and, (ii) the issuance of
Company's Title Assurances hereunder. Agent shall exercise a
fiduciary duty with respect to the owners of the funds so
deposited. Agent shall be solely liable for any and all losses
arising by reason of Agent's improper, unauthorized, reckless
or premature disbursement of any escrowed funds.
9. Retain for seven (7) years, or such other time period required
by law, an original or legible copy of its file to evidence
the determination of insurability.
10. If Agent is a corporation or partnership, disclose to Company
any change in the controlling interest in said corporation or
partnership within five (5) business days of the change. A
change in the controlling interest shall be deemed to occur
when an owner of more then fifty percent (50%) of the capital
stock of said corporation ceases to own more than fifty
percent (50% ) of said stock, or when there is a sale of
substantially all of Agent's assets or when there is a change
in more than fifty percent (50% ) ownership of the interest(s)
in the partnership. B. Negative Covenants. Agent shall not, without the prior written
approval of Company's corporate underwriting department:
1. Accept service of process on behalf of Company.
2. Incur debts in the name of Company.
3. Issue any Title Assurance in a liability amount in excess of
the Risk Limit stated in Schedule A.
4. Commit Company to insure any Extra Hazardous Risk as defined
herein.
5. Alter any Title Assurance or other form furnished by Company
or commit Company to any particular interpretation of
provisions or terms of any Title Assurance.
6. Receive any funds including escrow settlement or closing
funds, in the name of Company, but shall receive funds solely
in Agent's name.
7. Use Company's name in any manner inconsistent with the terms
and conditions of this Agreement.
8. Issue any Title Assurance on land in which any officer,
director, shareholder or partner of Agent has an interest.


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3. RESPONSIBILITY OF COMPANY
Company shall:
A. Furnish to Agent. without cost, the then currently approved forms
of Title Assurances which Agent is authorized to issue hereunder.
B. Provide Agent with any relevant Company manuals, underwriting
bulletins and/or instructions which may now or hereafter be issued
by Company.
C. Be responsible for remitting payment of all Premium taxes.
D. Determine all underwriting questions submitted by Agent.
E. Arrange for reinsurance when necessary, but only to the extent
reinsurance is reasonably available.
F. Furnish its Insured Closing Service Letter to each of Agent's
qualified customers requesting same. 4. COMPENSATION
A. Agent shall remit to Company a percentage of the gross Premiums as
set for in Schedule A on all Title Assurances issued by Agent.
Agent shall hold Company's percentage of gross Premiums in trust
for Company until such time as such remittances are made to Company.
B. No later than the tenth (10th) of each calendar month Agent shall
submit to company copies, with Premium charged set forth thereon,
of all Title Assurances issued by Agent during the previous
calendar month, remit the Company's percentage of the Premium
charged for such Title Assurances and shall return all spoiled,
obsolete or canceled policies accumulated during the previous
calendar month. 5. REINSURANCE AND COINSURANCE
If reinsurance or coinsurance is purchased, the cost shall be deducted
from the Title Assurance Premium before determining the compensation due
to Agent and the remaining Premium together with the cost of the
reinsurance or coinsurance shall be remitted to Company, except as
otherwise agreed in writing between the Parties. 6. ALLOCATION OF LOSSES
A. Agent's General Liability shall be as set forth in Schedule A for any
Loss sustained or incurred as a result of the issuance of Title
Assurances by Agent, unless otherwise mandated by state and federal
law.
B. In the event that a Loss sustained or incurred for a matter arising
under this Agreement resulted or arose from the negligent, willful
or reckless conduct of Agent, Agent's employees or any independent
contractor relied upon by Agent, then Agent shall reimburse Company
for the Loss. The instances where Agent shall be liable to Company
under this subparagraph shall include, without limitation, the
following:
1. Failure of Agent to comply with the terms and conditions of
this Agreement or with the manuals, underwriting bulletins
and/or instructions given to Agent by Company.
2. Issuance of Title Assurances which contain errors or omissions
which could reasonably have been detected by Agent from the
commitment, examiner's report, title search or abstract.
3. Loss arising from escrow or Non-Title Assurance operations of
Agent including, but not limited to, preparation of documents,
providing abstracting services, providing accommodation
services and the handling and disbursement of funds.
4. Any Loss arising out of the issuance of an insured closing
service letter naming Agent.
5. Commission of fraud, conspiracy, dishonesty, misrepresentation
or defalcation by Agent or Agent's aiding and abetting therein.
6. Any act, or failure to act, of Agent which results in Company
sustaining Loss for bad faith, deceptive trade practices,
unfair claim practices, consumer protection violations or
punitive damages.
C. Agent shall be liable to Company for any Loss resulting to Company
by reason of Agent's failure to comply with the terms and
conditions of this Agreement.
D. Recovery of Loss under a claim will first be applied to
reimbursement of Company's Loss, then the balance, if any, to
reimburse Agent's loss. However, if Agent renders material
assistance in achieving recovery of a Loss, then the recovered
funds will be applied: (i) first, to reimburse Company's recovery
related expenses; (ii) second, to Agent's recovery related
expenses; and, (iii) third, to Company and Agent in accordance with
the percentage of loss paid by each party. 7. CLAIMS, LITIGATION AND ADMINISTRATIVE PROCEEDINGS
A. Agent shall immediately notify Company if Agent becomes aware of:
l. Any claim, or threaten claim, under any Title Assurance issued
hereunder.
2. Any judicial action or proceeding affecting or purporting to
affect: (i) Company's interest; or (ii) the rights of an
insured or proposed insured under a Title Assurance issued by
Agent.
3. Any administrative proceeding, including any written
complaints or inquiries, by any insurance department or
regulatory agency involving: (i) one or both of the Parties;
or (ii) a Title Assurance issued by Agent.
Agent shall provide an initial notification to Company
describing the allegations and basic known facts. This initial
notification shall be provided, at the addresses and telephone
numbers set forth herein, by: (i) telephone advice; and, (ii)
overnight courier, or, (iii) facsimile transmission. Initial
notification shall be provided to Company within three (3)
business days of Agent becoming aware of any of the matters
described in this subparagraph 7 A. Following this initial
notification Agent sh ...