Exhibit 10.16
Continental Casualty
Company
National Fire Insurance Company of
Hartford
American Casualty Company of Reading,
Pennsylvania
The Continental Insurance Company
Firemen’s Insurance Company of Newark, New
Jersey
Western Surety Company
Universal Surety of America
Surety Bonding Company of America
CNA Surety
333 South Wabash
Chicago, IL 60604
GENERAL AGREEMENT
OF INDEMNITY
This Agreement entered into by
and between the undersigned, herein called the Indemnitors, and
Continental Casualty Company, National Fire Insurance Company of
Hartford, American Casualty Company of Reading, Pennsylvania, The
Continental Insurance Company, Firemen’s Insurance Company of
Newark, New Jersey, Western Surety Company, Universal Surety of
America, Surety Bonding Company of America and their successors,
assigns, affiliates, and subsidiary companies, CNA Surety, 333
South Wabash, Chicago, IL 60604, as the case may be, any one or all
hereinafter called the Company, witnesseth:
WHEREAS, in the transaction of
business certain bonds, undertakings and other writings obligatory
in the nature of a bond, hereinafter referred to as
“bond” or “bonds,” may have heretofore
been, and may hereafter be, required by, for, or on behalf of the
undersigned Indemnitors or any one or more of the Indemnitors in
whose bonds and undertakings the Indemnitors do hereby affirm to
have a substantial material or beneficial interest, and as a
condition precedent to the execution of any and all such bonds, the
Company requires execution of this General Agreement of
Indemnity.
NOW, THEREFORE, in consideration of
the premises, and of the execution or continuance of such bonds,
and for other good and valuable considerations, the undersigned
Indemnitors do, for themselves, their heirs, executors,
administrators and assigns, jointly and severally, agree with the
Company as follows:
1. The Indemnitors will pay to the
Company, at its Office in Chicago, Illinois, premiums and charges
at the rates and at the times specified in respect to each such
bond in the Company’s schedule of rates, which, with any
additions or amendments thereto, is by reference made a part
hereof, and will continue to pay the same where such premium or
charge is annual, until the Company shall be discharged and
released from any and all liability and responsibility upon and
from each such bond or matters arising therefrom, and until the
Indemnitors shall deliver to the Company at its Office in Chicago,
Illinois, competent written evidence satisfactory to the Company of
its discharge from all liability on such bond or bonds.
2. The Indemnitors will indemnify
and save the Company harmless from and against every claim, demand,
liability, cost, charge, suit, judgment and expense which the
Company may pay or incur in consequence of having executed, or
procured the execution of such bonds, or any renewals or
continuations thereof or substitutes therefor, including, but not
limited, to fees of attorneys, whether on salary, retainer or
otherwise, and the expense of procuring, or attempting to procure,
release from liability, or in bringing suit to enforce the
obligation of any of the Indemnitors under this Agreement. In the
event the Company deems it necessary to make an independent
investigation of a claim, demand or suit, the Indemnitors
acknowledge and agree that all expense attendant to such
investigation is included as an indemnified expense. In the event
of payments by the Company, the Indemnitors agree to accept the
voucher or other evidence of such payments as prima facie evidence
of the propriety thereof, and of the Indemnitors’ liability
therefor to the Company.
3. Payment shall be made to the
Company by the Indemnitors as soon as liability exists or is
asserted against the Company, whether or not the Company shall have
made any payment therefor. Such payment shall be either equal to
the larger of (a) the amount of any reserve set by the
Company, or (b) such amount as the Company, in its sole
judgment, shall deem sufficient to protect it from loss. The
Company shall have the right to use the deposit, or any part
thereof, in payment or settlement of any liability, loss or expense
for which the Indemnitors would be obligated to indemnify the
Company under the terms of this Agreement. If for any reason the
Company shall deem it necessary to increase a reserve to cover any
possible liability or loss, the Indemnitors will deposit with the
Company, immediately upon demand, a sum of money equal to any
increase thereof as collateral security to the Company for such
liability or loss.
4. The Indemnitors immediately upon
becoming aware of any demand, notice, or proceeding preliminary to
determining or fixing any liability with which the Company may be
subsequently charged under any such bond, shall notify the Company
thereof in writing at its Office, CNA Surety, 333 South Wabash,
Chicago, Illinois 60604.
5. The Company shall have the
exclusive right to determine for itself and the Indemnitors whether
any claim or suit brought against the Company or the principal upon
any such bond shall be settled or defended and its decision shall
be binding and conclusive upon the Indemnitors.
6. The Company, and its designated
agents, shall, at any and all reasonable times, have free access to
the books and records of the Indemnitors. The Indemnitors hereby
authorize the Company to obtain a credit report at the time this
Agreement is secured, in any review or renewal, at the time of any
potential or actual claim, or for any other legitimate purpose as
determined by the Company in its reasonable discretion.
7. If such bond be given in
connection with a contract, the Company is hereby authorized, but
not required, to consent to any change in the contract or in the
plans or specifications relating thereto and to make or guarantee
advances or loans for the purpose of the contract without necessity
of seeing to the application thereof, it being understood that the
amount of all such advances or loans, unless repaid with legal
interest by the Contractor to the Company when due, shall be
conclusively presumed to be a loss hereunder.
8. In the event the Indemnitors, or
any of them, shall (a) fail to pay any premium charge when
due, or (b) fail to pay any amounts due under paragraphs 2 or
3, or (c) abandon, forfeit or breach such contract, or
(d) breach any bond given in connection therewith, or
(e) fail, neglect or refuse to pay for any labor or materials
used in the prosecution of such contract, or (f) have proceedings
instituted against them, or any of them, alleging that they are
insolvent, or for the appointment of a receiver or trustee for the
benefit of creditors, whether such Indemnitor(s) are insolvent or
not, or (g) have proceedings instituted against them, or any
of them, the effect of which may be to deprive any of them of the
use of any part of the equipment used in connection with the work
under the contract so as to hinder, delay or impede the normal
satisfactory progress of the work (hereinafter individually and
collectively referred to as “Event of Default”), the
Company shall have the right, but not the obligation, to take
possession of the work under the contract and under any other
contract in connection with which the Company has given its bond or
bonds within the purview of this Agreement and, at the expense of
the Indemnitors, to complete the contract(s), or cause, or consent,
to the completion thereof.
9. The Indemnitors hereby assign,
transfer, and set over to the Company (to be effective as of the
date of such bond or bonds, but only in the Event of Default), all
of their rights under the contract(s), including their right, title
and interest in and to all subcontracts let in connection
therewith; all machinery, plant, equipment, tools and materials
which shall be upon the site of the work or elsewhere for the
purposes of the contract(s), including all materials ordered for
the contract(s); and any and all sums due under the contract(s) at
the time of such default, or which may thereafter become due, and
the Indemnitors hereby authorize the Company to endorse in the name
of the payee, and to receive and collect any check, draft, warrant
or other instrument made or issued in payment of any such sum, and
to disburse the proceeds thereof.
10. The Indemnitors understand and
agree that the circumstances, financial or otherwise, of any one or
more of the Indemnitors may change substantially over the period of
this Agreement and the Indemnitors therefore agree to keep
themselves fully informed as to the business activities and
financial affairs of any one or more of the Indemnitors and of the
risks being engaged in so that the Indemnitors are always aware of
the risks or hazards in continuing to act as Indemnitors. The
Indemnitors hereby expressly waive any notice from the Company of
any fact or information coming to the notice or knowledge of the
Company affecting its rights or the rights or liabilities of the
Indemnitors.
11. In the event of any claim or
demand being made by the Company against the Indemnitors, or any
one or more of the parties so designated, by reason of the
execution of a bond or bonds, the Company is hereby expressly
authorized to settle with any one or more of the Indemnitors
individually, and without reference to the others, and such
settlement or composition shall not affect the liability of any of
the others, and the Indemnitors hereby expressly waive the right to
be discharged and released by reason of the release of one or more
of the joint debtors, and hereby consent to any settlement or
composition that may hereafter be made.
12. The Company is not required, by
reason of any applications for a bond or by reason of having issued
a previous bond or bonds or otherwise, to execute or procure the
execution of or participate in the execution of any such bond or
bonds and the Company, at its option, may decline to execute or to
participate in or procure the execution of any such bond without
impairing the validity of this Agreement. The Indemnitors
understand and agree that other than for the entity issuing a bond,
no other entity included within the definition of the
“Company” in this Agreement assumes any obligation
whatsoever with respect to either this Agreement or such
bond.
13. If the Company procures the
execution of such bonds by other companies, or executes such bonds
with co-sureties, or reinsures any portions of such bonds with
reinsuring companies, then all the terms and conditions of this
Agreement shall apply and operate for the benefit of such other
companies, co-sureties and reinsurers as their interests may
appear.
14. The liability of the Indemnitors
hereunder shall not be affected by the failure of the Indemnitors
to sign any such bond, nor by any claim that other indemnity or
security was to have been obtained, nor by the release of any
indemnity, nor the return or exchange of any collateral that may
have been obtained and if any party signing this Agreement is not
bound for any reason, this Agreement shall still be binding upon
each and every other party.
15. This Agreement may be terminated
by the Indemnitors, or any one or more of the parties so
designated, upon written notice sent by registered mail to the
Office of the Company, CNA Surety, 333 South Wabash, Chicago,
Illinois 60604, of not less than twenty (20) days. In no
event, however, shall any such termination notice operate to
modify, bar, discharge, limit, affect or impair the liability of
any party hereto, with respect to, upon or by reason of any and all
such bonds, undertakings and obligations executed prior to the date
of the Company’s receipt and notice of such
termination.
