General Indemnity Agreement - Surety

GENERAL INDEMNITY AGREEMENT

GENERAL INDEMNITY AGREEMENT

Agreement Date: [EFFECTIVE DATE]

PARTIES

SURETY:

[SURETY COMPANY LEGAL NAME]
[ADDRESS]
[CITY, STATE ZIP]
(hereinafter "Surety")

PRINCIPAL:

[PRINCIPAL/CONTRACTOR LEGAL NAME]
[ADDRESS]
[CITY, STATE ZIP]
[STATE OF ORGANIZATION] [ENTITY TYPE]
Federal Tax ID: [EIN]
(hereinafter "Principal")

INDIVIDUAL INDEMNITORS:

The undersigned individuals, jointly and severally with Principal:

1. Name: ________________________________
   Address: ________________________________
   SSN (last 4): _______ DOB: _______________

2. Name: ________________________________
   Address: ________________________________
   SSN (last 4): _______ DOB: _______________

3. Name: ________________________________
   Address: ________________________________
   SSN (last 4): _______ DOB: _______________

4. Name: ________________________________
   Address: ________________________________
   SSN (last 4): _______ DOB: _______________

(Principal and Individual Indemnitors are collectively referred to as "Indemnitors")

RECITALS

WHEREAS, Principal has applied to Surety for the issuance of surety bonds, including but not limited to bid bonds, performance bonds, payment bonds, and other contract or commercial surety bonds (collectively, "Bonds"); and

WHEREAS, Surety is willing to execute Bonds on behalf of Principal, but only upon the condition that Principal and Individual Indemnitors execute this General Indemnity Agreement; and

WHEREAS, Individual Indemnitors are owners, officers, directors, or principals of Principal and will derive substantial direct and indirect benefit from Surety's issuance of Bonds;

NOW, THEREFORE, in consideration of Surety's agreement to execute, or continue to execute, Bonds on behalf of Principal, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Indemnitors jointly and severally agree as follows:

ARTICLE I: INDEMNIFICATION

1.1 General Indemnity

Indemnitors shall indemnify, hold harmless, and exonerate Surety and its affiliates, officers, directors, employees, agents, and attorneys (collectively, "Surety Parties") from and against any and all:

(a) Losses: Claims, demands, liabilities, losses, costs, damages, judgments, settlements, and expenses of whatsoever kind or nature;

(b) Expenses: Attorneys' fees, consultant fees, expert fees, investigative costs, court costs, and other expenses incurred in connection with any Bond;

(c) Payments: Any payments made by Surety under any Bond, including claim payments, settlement payments, and completion costs;

(d) Enforcement Costs: Costs of enforcing this Agreement, including attorneys' fees; and

(e) Related Costs: Interest on any amounts due hereunder at the rate of [PRIME + 2%] per annum or the maximum legal rate, whichever is less.

1.2 Scope of Indemnity

The indemnity obligations hereunder shall apply whether or not:
(a) Principal was in default under the underlying contract;
(b) Surety was required to make payment under the Bond;
(c) The claim against the Bond was valid or meritorious;
(d) Surety had the right to deny the claim; or
(e) Indemnitors consented to any payment or settlement.

1.3 Immediate Payment

Upon written demand by Surety, Indemnitors shall immediately pay to Surety:
(a) Any amount paid by Surety under any Bond;
(b) Any expense incurred by Surety in connection with any Bond; and
(c) Any reserve established by Surety for potential liability under any Bond.

1.4 Payment of Reserve

If Surety, in its sole discretion, establishes a reserve for any potential claim or liability under any Bond, Indemnitors shall, upon demand, deposit with Surety cash or other collateral acceptable to Surety in an amount equal to such reserve.

ARTICLE II: SURETY'S RIGHTS AND POWERS

2.1 Right to Settle Claims

Surety shall have the absolute right, in its sole discretion and without notice to or consent of Indemnitors, to:

(a) Settle Claims: Adjust, settle, or compromise any claim, demand, suit, or judgment under or relating to any Bond upon such terms as Surety deems advisable;

(b) Decline Claims: Decline, contest, or litigate any claim;

(c) Complete Work: Take over and complete, or arrange for completion of, any contract covered by a Bond;

(d) Bid on Work: Bid for the completion of any contract;

(e) Hire Contractors: Engage contractors, consultants, accountants, and attorneys; and

(f) Take Other Action: Take any other action Surety deems necessary or appropriate to protect its interests.

Any payment or settlement made by Surety in good faith shall be binding on Indemnitors, and Indemnitors shall not question the propriety of any such payment or settlement.

2.2 Right to Legal Counsel

Surety shall have the right to select legal counsel of its choice to represent its interests in connection with any Bond or claim. Indemnitors shall pay all attorneys' fees and legal expenses incurred by Surety, regardless of whether litigation is commenced.

2.3 No Duty to Perform

Surety shall have no obligation to:
(a) Complete any contract or perform any obligation of Principal;
(b) Take possession of any work, materials, or equipment;
(c) Assume any contract or obligation; or
(d) Pursue any remedy against any obligee or third party.

ARTICLE III: COLLATERAL SECURITY

3.1 Right to Demand Collateral

At any time, whether or not a claim has been made under any Bond, Surety may demand that Indemnitors deposit with Surety, as collateral security:

(a) Cash;
(b) Certified or cashier's check;
(c) Letter of credit in form and from an issuer acceptable to Surety;
(d) Assignment of certificates of deposit;
(e) Pledge of marketable securities; or
(f) Other collateral acceptable to Surety;

in an amount equal to Surety's estimate of its potential liability, loss, or expense under any Bond or this Agreement.

3.2 Immediate Deposit

Indemnitors shall deposit such collateral with Surety within [10] days of Surety's written demand.

3.3 Use of Collateral

Surety may use any collateral deposited hereunder to pay any claim, loss, cost, or expense under any Bond or this Agreement. Surety shall have no obligation to segregate collateral or pay interest thereon.

3.4 Security Interest

As additional security, Indemnitors hereby grant to Surety a security interest in:
(a) All collateral deposited with Surety;
(b) All accounts receivable, contract rights, and payments due or to become due to Principal under any bonded contract;
(c) All materials, equipment, and supplies relating to any bonded contract;
(d) All funds held by any obligee relating to any bonded contract, including retainage; and
(e) All proceeds of the foregoing.

Indemnitors authorize Surety to file UCC financing statements to perfect this security interest without further consent.

ARTICLE IV: ACCESS TO INFORMATION

4.1 Books and Records

Indemnitors shall:
(a) Keep accurate and complete books and records relating to all bonded contracts;
(b) Permit Surety, upon reasonable notice, to examine and copy all books, records, and accounts;
(c) Provide Surety with financial statements, tax returns, and other information upon request; and
(d) Cooperate fully with any investigation by Surety.

4.2 Assignment of Contract Rights

Indemnitors hereby assign to Surety, effective upon any default under a bonded contract or this Agreement:
(a) All rights under any bonded contract, including the right to complete the contract;
(b) All funds due or to become due under any bonded contract;
(c) All claims and causes of action arising from any bonded contract;
(d) All rights against subcontractors, suppliers, and other third parties; and
(e) All materials, equipment, and supplies relating to any bonded contract.

This assignment is presently effective as a present assignment, but Surety shall not exercise its rights hereunder unless a default occurs.

4.3 Power of Attorney

Indemnitors hereby irrevocably appoint Surety as their attorney-in-fact, with full power and authority to:
(a) Execute any document on behalf of Indemnitors;
(b) Endorse checks and other instruments payable to Principal;
(c) Receive and collect any monies due to Principal under any bonded contract;
(d) File financing statements and other documents;
(e) Take any action Surety deems necessary to protect its interests.

This power of attorney is coupled with an interest and shall be irrevocable.

ARTICLE V: REPRESENTATIONS AND WARRANTIES

Indemnitors represent and warrant to Surety that:

5.1 Authority

Each Indemnitor has full legal capacity and authority to execute this Agreement. If Principal is an entity, execution has been duly authorized by all necessary corporate or other action.

5.2 Financial Condition

All financial statements and information provided to Surety are true, complete, and accurate in all material respects.

5.3 No Material Adverse Change

There has been no material adverse change in the financial condition of any Indemnitor since the date of the most recent financial statements provided to Surety.

5.4 No Pending Claims

Except as disclosed to Surety in writing, there are no pending or threatened claims, disputes, or litigation relating to any bonded contract.

5.5 No Defaults

No event of default exists under any bonded contract or any agreement with Surety.

5.6 Continuing Representations

The foregoing representations and warranties shall be deemed made continuously as long as any Bond remains outstanding or any obligation remains under this Agreement.

ARTICLE VI: COVENANTS

6.1 Affirmative Covenants

Indemnitors shall:
(a) Promptly notify Surety of any claim, suit, or proceeding relating to any Bond;
(b) Promptly notify Surety of any default or potential default under any bonded contract;
(c) Provide Surety with updated financial statements and information upon request;
(d) Maintain adequate insurance on all bonded projects;
(e) Perform all obligations under all bonded contracts; and
(f) Pay all premiums and charges due to Surety when due.

6.2 Negative Covenants

Without Surety's prior written consent, Indemnitors shall not:
(a) Sell, transfer, or encumber any material assets;
(b) Make distributions or dividends that would impair ability to perform obligations hereunder;
(c) Amend organizational documents in any material respect;
(d) Change the Principal's name or state of organization;
(e) Incur additional indebtedness that would materially impair financial condition; or
(f) Assign any rights under any bonded contract.

ARTICLE VII: JOINT AND SEVERAL LIABILITY

7.1 Joint and Several

The obligations of all Indemnitors under this Agreement are joint and several. Surety may proceed against any one or more Indemnitors without proceeding against any other Indemnitor.

7.2 No Release

The release, discharge, or settlement with any Indemnitor shall not release any other Indemnitor.

7.3 Death or Incompetency

The death, incompetency, or bankruptcy of any Individual Indemnitor shall not affect the obligations of any other Indemnitor or the estate of such Individual Indemnitor.

7.4 Waiver of Subrogation and Contribution

Each Indemnitor waives all rights of subrogation and contribution against any other Indemnitor until Surety has been fully indemnified.

ARTICLE VIII: WAIVERS

Indemnitors hereby waive:

(a) Notice: Any requirement that Surety notify Indemnitors of the execution of any Bond, acceptance of this Agreement, any claim, any payment, or any other action;

(b) Defenses: All defenses based on suretyship, including any right to require Surety to proceed against Principal, exhaust remedies, or pursue any other course of action;

(c) Marshaling: Any right to require Surety to marshal assets or proceed in any particular order;

(d) Statute of Limitations: Any statute of limitations defense, to the extent permitted by law;

(e) Homestead: Any homestead exemption, to the extent permitted by law;

(f) Exemptions: All property exemptions, to the extent permitted by law; and

(g) Valuation and Appraisement: All rights of valuation and appraisement.

ARTICLE IX: TERM AND TERMINATION

9.1 Effective Date

This Agreement shall be effective as of the date first written above and shall cover all Bonds executed by Surety on behalf of Principal, whether before or after such date.

9.2 Continuing Agreement

This Agreement shall continue in full force and effect until:
(a) All Bonds have been cancelled or expired and all liabilities discharged;
(b) All premiums, losses, costs, and expenses have been paid; and
(c) All obligations of Indemnitors hereunder have been fully performed.

9.3 No Termination

THIS AGREEMENT CANNOT BE CANCELLED OR TERMINATED BY INDEMNITORS as to any existing Bond or any renewal, extension, or modification thereof, or any Bond issued prior to Surety's receipt of written notice of termination.

9.4 Survival

The indemnification and other obligations under this Agreement shall survive termination and shall remain in effect until all claims under all Bonds have been fully resolved and Surety has been fully indemnified.

ARTICLE X: DISPUTE RESOLUTION

10.1 Governing Law

This Agreement shall be governed by the laws of the State of [GOVERNING LAW STATE], without regard to conflict-of-laws principles.

10.2 Forum Selection

Any action arising out of or relating to this Agreement shall be brought exclusively in the state or federal courts located in [COUNTY, STATE], and Indemnitors consent to personal jurisdiction in such courts.

10.3 Jury Trial Waiver

INDEMNITORS AND SURETY HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY BOND.

10.4 Attorneys' Fees

In any action to enforce this Agreement, the prevailing party shall be entitled to recover its reasonable attorneys' fees and costs.

ARTICLE XI: GENERAL PROVISIONS

11.1 Amendments

No amendment or waiver of any provision of this Agreement shall be effective unless in writing and signed by Surety.

11.2 Severability

If any provision of this Agreement is held unenforceable, the remaining provisions shall remain in full force and effect.

11.3 Entire Agreement

This Agreement, together with any Bonds and related documents, constitutes the entire agreement between the parties with respect to the subject matter hereof.

11.4 Counterparts

This Agreement may be executed in counterparts, each of which shall be deemed an original.

11.5 Electronic Signatures

Signatures transmitted electronically shall be deemed original signatures.

11.6 Notices

All notices shall be in writing and delivered to the addresses set forth above.

11.7 Headings

Section headings are for convenience only and shall not affect interpretation.

EXECUTION

READ THIS AGREEMENT CAREFULLY. IT CONTAINS PROVISIONS THAT MAY RESULT IN PERSONAL LIABILITY FOR THE UNDERSIGNED INDIVIDUALS. CONSULT AN ATTORNEY BEFORE SIGNING.

IN WITNESS WHEREOF, the parties have executed this General Indemnity Agreement as of the date first written above.

PRINCIPAL:

[PRINCIPAL LEGAL NAME]

By: _____________________________________
Name: ___________________________________
Title: ___________________________________
Date: ____________________________________

INDIVIDUAL INDEMNITORS:

_____________________________________
Print Name: _____________________________
Date: ____________________________________

_____________________________________
Print Name: _____________________________
Date: ____________________________________

_____________________________________
Print Name: _____________________________
Date: ____________________________________

_____________________________________
Print Name: _____________________________
Date: ____________________________________

SPOUSAL CONSENT AND INDEMNITY

The undersigned spouses of the Individual Indemnitors hereby:
(a) Consent to this Agreement;
(b) Agree to be personally bound by all terms and conditions hereof;
(c) Waive any community property or homestead rights that may affect Surety's rights; and
(d) Acknowledge that such spouse may be individually liable for all obligations hereunder.

_____________________________________
Print Name: _____________________________
Spouse of: _____________________________
Date: ____________________________________

_____________________________________
Print Name: _____________________________
Spouse of: _____________________________
Date: ____________________________________

ACKNOWLEDGMENT (if required)

STATE OF _____________ )
) ss.
COUNTY OF ____________ )

On this ___ day of __________, 20__, before me personally appeared the above-named individuals, who acknowledged execution of this General Indemnity Agreement.

_____________________________________
Notary Public

My Commission Expires: _______________

ATTORNEY CHECKLIST (DO NOT INCLUDE IN FINAL DOCUMENT)

☐ Verify all owners with 10%+ ownership are listed as Indemnitors
☐ Obtain spousal signatures where required
☐ Review state law on spousal indemnity enforceability
☐ Confirm homestead and exemption waiver enforceability in applicable state
☐ Review collateral security provisions
☐ Verify UCC filing authority
☐ Review governing law and forum selection
☐ Confirm jury waiver enforceability
☐ Coordinate with Surety Bond Application
☐ Ensure Indemnitors understand personal liability exposure

END OF TEMPLATE