Legal Bond Letter

LEGAL BOND LETTER

This Legal Bond Letter is made as of , by and between Surety Name: whose principal place of business is at (\"Surety\"), and Principal Name: whose principal place of business is at (\"Principal\"). This Letter addresses a bond issued in favor of Obligee Name: in relation to the Contract described below.

RECITALS

WHEREAS, Obligee has required Principal to furnish a bond guaranteeing the performance and/or payment obligations under the Contract identified below; and

WHEREAS, Surety is willing to issue such bond, subject to the terms and conditions set forth in this Letter and subject to receipt of executed indemnity and collateral documents acceptable to Surety; and

WHEREAS, Principal has requested Surety to issue the bond and has agreed to be bound by the indemnity and reimbursement obligations herein.

NOW, THEREFORE

In consideration of the mutual covenants and for other good and valuable consideration, the parties agree as follows:

1. BOND IDENTIFICATION

Bond Type (select applicable): Performance Bond Payment Bond Bid Bond

Bond Number:    Penal Sum: $    Effective Date: , .

2. CONTRACT

Contract Title/Description:

Contract Amount: $    Contract Date: , .

3. SURETY OBLIGATION

Subject to the terms and conditions of this Letter and the Bond instrument to be issued, Surety agrees to issue the Bond in favor of Obligee in the penal sum specified above. The liability of Surety under the Bond shall not exceed the penal sum, irrespective of the number of claims, demands or suits made upon the Bond.

4. CONDITIONS AND INDEMNITY

Principal hereby agrees to indemnify, defend, and hold harmless Surety from and against any and all liability, losses, damages, claims, costs and expenses (including reasonable attorneys' fees and court costs) which Surety may sustain or incur by reason of having executed or procured the Bond, or in enforcing any rights under this Letter, until Surety is released in writing by Obligee or until the Bond is fully discharged.

Principal further agrees to reimburse Surety on demand for any sums paid by Surety under the Bond, together with interest at the maximum legal rate permitted under applicable law and all costs of collection, including attorneys' fees, whether or not suit is filed.

5. CONDITIONS PRECEDENT

Issuance of the Bond by Surety is expressly conditioned upon: (a) receipt by Surety of an executed indemnity agreement and such other documents as Surety may reasonably require; (b) verification of Principal's representations and financial information; and (c) payment by Principal of all premiums and fees due to Surety in connection with the Bond.

6. CLAIMS PROCEDURE

Obligee shall provide written notice to Surety of any claim or alleged default under the Contract. Such notice and any supporting documentation must be delivered to Surety in accordance with the Notices section below. Surety shall have the right, but not the obligation, to investigate and, in its discretion, to perform or satisfy any obligation of Principal under the Contract. Any payment by Surety under the Bond shall be subject to Surety's right of reimbursement and subrogation to the rights of Obligee against Principal.

7. LIMITATION OF LIABILITY

Except as expressly provided in the Bond instrument, Surety's liability hereunder shall be limited to the penal sum of the Bond. Surety shall not be liable for punitive, consequential, incidental or special damages unless such damages are recoverable under the Bond instrument and by applicable law.

8. REPRESENTATIONS AND WARRANTIES

Principal represents and warrants that Principal is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, has full power and authority to enter into and perform its obligations under this Letter, and that the execution, delivery and performance will not violate any agreement to which Principal is a party.

9. NOTICES

All notices, demands or communications required or permitted hereunder shall be in writing and shall be deemed given when delivered personally, sent by nationally recognized overnight courier, or three (3) business days after deposit in the U.S. mail, postage prepaid, certified or registered, return receipt requested, addressed as follows:

10. GOVERNING LAW; VENUE

This Letter and any Bond issued pursuant hereto shall be governed by and construed in accordance with the laws of the state identified below, without regard to its conflict of law principles. The parties agree that any action arising out of or relating to this Letter or the Bond shall be brought in the courts of the county and state identified.

11. ENTIRE AGREEMENT; SEVERABILITY; AMENDMENTS; WAIVER

This Letter, together with the Bond instrument and any indemnity agreement executed in connection herewith, constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior understandings. If any provision of this Letter is held invalid or unenforceable, the remaining provisions shall continue in full force and effect. No amendment or waiver of any provision of this Letter shall be effective unless in writing and signed by the party against whom enforcement is sought. Failure of any party to enforce any right shall not constitute a waiver of that right.

12. COUNTERPARTS

This Letter may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Facsimile or electronic signatures shall be deemed original signatures for all purposes.

CERTIFICATION

Each party represents and warrants that the person signing below is duly authorized to execute this Letter on its behalf and to bind such party to the terms and conditions set forth herein.

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