Sec. 32-55-3. Guarantee agreement

Any agreement by the Department to guarantee a Surety Bond Guarantee shall provide that:

(a) the Surety shall represent that the terms and conditions of such bond when executed by it will be in accord with those executed by professional Sureties for that type of contract for which such bond is required to be furnished by principal;

(b) the Surety shall affirm that without the Department guarantee to the Surety, it will not issue said bond to principal;

(c) the term "loss" shall mean any and all liability, damages, court costs, counsel fees, charges and expenses of whatever kind or nature which the Surety shall or may at any time, sustain or incur by reason, or consequence, of having executed the bond guaranteed by the Department;

(d) unless otherwise agreed, the Surety shall take charge of all claim matters arising under said bond; determine its liability and the amount thereof; compromise, settle or defend any claim or suit; and take such action as it deems necessary to minimize loss; and

(e) the Surety shall pay the Department 20 percent of its bond premium for and in consideration of the Department's agreement to issue the Surety Bond Guarantee contemplated by the agreement. It shall be further agreed by the Department and the Surety that, the Surety will pay the Department an amount equal to 20 percent of the additional premiums on any increase in the contract price and the Department will make a refund to the Surety an amount equal to 20 percent on any premium reduction resulting from a reduction in the contract price. When the Department's or Surety's share of any premium increase or decrease is $10.00 or less, there shall be no adjustment.

(Effective May 28, 1985)