SOP 50 46 1: Claims and Recovery Program

Summary

SBA Standard Operating Procedure SOP 50 46 1, Claims and Recovery Program, issued by the Office of Surety Guarantees with an effective date of January 15, 1999 and authorized by Associate Administrator Robert J. Moffitt. Its purpose is to establish written guidelines and procedures for surety bond guarantee claims reimbursement and recovery activity; it applies to the Office of Surety Guarantees' claims and recovery personnel and cancels SOP 50 46. Chapter 1 gives a general overview of the Surety Bond Guarantee Program, its statutory basis, objectives and authority; Chapter 2 covers claim for reimbursement procedures, including when a surety notifies SBA of a claim situation, what a 'rumble' situation and an 'imminent breach' are, and how CRD handles imminent breach requests. It closes with a bibliography of legal and business dictionaries.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

SBA SOP 50 46 1

__________________________________________

Claims and Recovery
Program

Office of Surety Guarantees
SMALL BUSINESS ADMINISTRATION
STANDARD OPERATING PROCEDURE
National

SUBJECT: S.O.P. REV

Claims and Recovery Program SECTION NO.

50 46 1

INTRODUCTION
1. Purpose. To establish written guidelines and procedures for surety bond guarantee claims reimbursement
and recovery activity.

2. Personnel Concerned. Office of Surety Guarantees’ claims and recovery personnel.

3. Directives Canceled. SOP 50 46.

4. Originator. Office of Surety Guarantees.

AUTHORIZED BY: EFFECTIVE DATE
1/15/99

Robert J. Moffitt PAGE
Associate Administrator 1
Office of Surety Guarantees
SBA Form 989 (5-90) Ref: SOP 00 23
Federal Recycling Program Printed on Recycled P

This form was electronically produced by Elite Federal Forms, Inc.
50 46 1

Table of Contents

Chapter 1 ....................................................................................................................................... 6
General Overview of Surety Bond Guarantee Program........................................................ 6
1. What is the General Scope and Purpose of this SOP ..................................................... 6
2. What is the Program's Statutory Basis? ......................................................................... 6
3. What are the Program Objectives?................................................................................. 6
4. What is the Program’s Authority?.................................................................................. 6

Chapter 2 ....................................................................................................................................... 8
Claim for Reimbursement Procedures.................................................................................... 8
1. When Does the Surety Notify the SBA of a Claim Situation?....................................... 8
2. What is a “Rumble” Situation? ...................................................................................... 8
3. What is an “Imminent Breach?”.................................................................................... 8
4. How Does CRD Handle Imminent Breach Requests? ................................................... 8
5. When Does CRD Request a Contractor’s File? ............................................................. 9
6. How Does CRD Request a Contractor’s File? ............................................................... 9
7. What Happens to the File Once it is Received? ............................................................. 9
8. What Happens When CRD Cannot Locate a File? ...................................................... 10
9. How is the Claim File Organized? ............................................................................... 10
10. How Does a Surety Inform SBA of Claim and Recovery Activity?............................ 10
11. What is a Claim Status Code? ...................................................................................... 11
12. How Does CRD Analyze the Contractor File? ............................................................ 11
13. What Happens When a Bid Bond Default Occurs? ..................................................... 14
14. How Does the Surety Request Reimbursement from SBA? ........................................ 14
15. How Does CRD Process Claims for Reimbursement Requests? ................................. 15
16. How are Delays in Reimbursements to Sureties Prevented? ....................................... 17
17. How Does CRD Track Missing Payments? ................................................................. 18
18. Can CRD Release Information Contained in Case Files?............................................ 18

Chapter 3 ..................................................................................................................................... 20
Subrogation and Recovery Procedures ................................................................................. 20
1. How Does CRD Handle Subrogation Activities? ........................................................ 20
2. When are Funds Due SBA? ......................................................................................... 22
3. What are the Procedures for Placing a File in “Closing Final” Status? ....................... 24
4. What is an Indemnity Settlement? ............................................................................... 25

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5. When are Files Reinstated? .......................................................................................... 28

Chapter 4 ..................................................................................................................................... 30
Procedures for Sureties that are Defunct, in Rehabilitation, or in Liquidation ............ 30
1. What are the Definitions of Each Status? .................................................................... 30
2. What are the Claims Handling Procedures for Sureties that are Defunct, in
Rehabilitation, or in Liquidation? .......................................................................................... 30
3. What are the Reinstatement Policies for Contractors?................................................. 30

Appendix 1................................................................................................................................... 32
Index of Forms and Reports ................................................................................................... 32

Appendix 2................................................................................................................................... 34
Sample of Optional Form 23, Chargeout Record................................................................. 34

Appendix 3................................................................................................................................... 36
Sample of SBA Form 912, Statement of Personal History .................................................. 36

Appendix 4................................................................................................................................... 38
Sample of SBA Form 994, Application for Surety Bond Guarantee Assistance ............... 38

Appendix 5................................................................................................................................... 40
Sample SBA Form 994B, Surety Bond Guarantee Underwriting Review ......................... 40

Appendix 6................................................................................................................................... 44
Sample SBA Form 994C, Surety Bond Guarantee Review Update.................................... 44

Appendix 7................................................................................................................................... 46
Sample of SBA Form 994F, Schedule of Uncompleted Work ............................................. 46

Appendix 8................................................................................................................................... 48
Sample SBA Form 990, Surety Bond Guarantee Agreement.............................................. 48

Appendix 9................................................................................................................................... 50
Sample of SBA Form 991, Surety Bond Guarantee Agreement Addendum ..................... 50

Appendix 10................................................................................................................................. 52
Sample of SBA Form 1624, Certification, Regarding Debarment, Suspension, Ineligibility
and Voluntary Exclusion Lower Tier Covered Transaction ............................................... 52

Appendix 11................................................................................................................................. 53
Sample of SBA form 1261, Statements Required by Law and Executive Orders ............. 54

Appendix 12................................................................................................................................. 58
Sample SBA Form 994H, Default Report, Claims for Reimbursement............................. 58

Appendix 13................................................................................................................................. 60
Sample of the Closing Summary Review Sheet .................................................................... 60

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Appendix 14................................................................................................................................. 62
Sample of a Reinstatement Letter.......................................................................................... 62

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Chapter 1

General Overview of Surety Bond Guarantee Program

1. What is the General Scope and Purpose of this SOP

This SOP describes policy and procedures for handling defaults, claims, and recoveries
resulting from surety bond guarantees issued by the Small Business Administration (SBA).

2. What is the Program's Statutory Basis?

The Small Business Investment Act of 1958, as amended, empowers SBA to guarantee the
reimbursement of a surety participating in the Surety Bond Guarantee (SBG) Program for up
to a specified percentage of their losses incurred and paid as a result of the contractor’s
breach of the terms of a guaranteed bid bond, payment bond, performance bond(s).
Contracts eligible for SBA’s guarantee cannot initially exceed $1,250,000 in face value.
Chapter 13, Part115 of the Code of Federal Regulations (13 CFR 115) provides regulatory
guidelines and provisions for the SBG Program.

3. What are the Program Objectives?

The primary objective is to enable small contractors to obtain bonds for contracts requiring
them, which they could not obtain from a surety without an SBA guarantee. A secondary
objective is to assist small and emerging contractors to become more bondable in their own
right.

4. What is the Program’s Authority?

a. Headquarters Office

The Office of Surety Guarantees (OSG) has authority for overview and control of SBG-
related activities. Its primary claims function is to minimize SBA’s losses and maximize
recoveries by:

(1) Reviewing and approving, or denying claims for reimbursement under the
guarantee;

(2) Establishing SBA loss reserves;

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(3) Determining whether cancellation or denial of SBA liability is warranted
under the guarantee;

(4) Conducting on-site reviews of underwriting, claims, and subrogation
practices; and

(5) Establishing procedures for ensuring that SBA receives its share of any
surety recovery.

b. Area Offices

The various area SBG offices support OSG staff in efforts to minimize SBA’s
losses by informing SBA Headquarters of potential problems with contracts that
have an SBA guaranteed bond. The area offices are also responsible for
maintaining contact with district offices where 8(a) contractors or contractors
with SBA loans have secured bonding with SBA’s guarantee.

c. Surety Companies

Participating sureties are required to take all reasonable actions necessary to
minimize loss and pursue recovery on any defaulted bond in which the surety
seeks reimbursement of its losses and/or expenses.

SBA’s direct contractual relationship is with the participating surety company,
and not with the individual contractor.

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Chapter 2

Claim for Reimbursement Procedures

1. When Does the Surety Notify the SBA of a Claim Situation?

A surety must notify OSG’s Claims and Recovery Division (CRD) and the appropriate
area office in writing either at the time the surety applies for a guarantee on behalf of an
affected principal, or within 30 days of the date the surety acquires knowledge, or should
have acquired knowledge, whichever comes first, of any of the following events:

a. Legal action is initiated under of the bond;

b. The Obligee declares the Principal to be in default of the Contract;

c. The surety establishes a claim reserve for the bond; or

d. The surety receives any adverse information concerning the Principal s financial
condition or possible inability to complete the project or to pay laborers,
subcontractor, or suppliers.

2. What is a “Rumble” Situation?

A surety must advise SBA that a claim has been made against the bond, but may indicate
that the principal either intends to satisfy the claim or that the claim is being disputed.
Generally, the surety sets a small reserve in these cases. Based on the reserve amount
and if SBA anticipates that there will be no loss (i.e., collateral is posted, or claim paid),
CRD will not request the case file from the area office at that time. This type of possible
claim situation is referred to as a “rumble” CRD should fax a copy of the rumble notice
to the respective area office immediately upon receipt. Respective area offices will in
turn notify responsible SBA district offices on “rumble” cases pertaining to 8(a)
contractors and contractors that have SBA loans.

3. What is an “Imminent Breach?”

Imminent Breach is a threat to the successful completion of a bonded contract that, unless
remedied by the surety, makes a default under the bond inevitable. In order for the SBA
to reimburse a surety for payments made under Imminent Breach, the surety must submit
a written request for SBA’s approval prior to the surety’s payment(s) to the contractor.
The request includes the circumstances of the Imminent Breach, the reasons why the
surety believes the contractor can complete the contract and the amount of funds needed
to cure the breach.

4. How Does CRD Handle Imminent Breach Requests?

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a. Once SBA receives an Imminent Breach request, CRD should notify the appropriate
area office to request the file temporarily for review. Please remember that the
contractor is not in default. CRD will review the case file with emphasis on current
work in progress; the contractor’s ability to repay the surety; amount of claims
received; and the nature and extent of work to be completed.

b. CRD will provide a brief summary of the case with recommendations on whether
SBA should reimburse the surety for imminent breach payments to the Associate
Administrator (AA)/OSG to approve or decline. If SBA agrees to reimburse the
surety for imminent breach, CRD must enter the imminent breach information into
the computer. This will set-up a computerized file so that SBA can reimburse the
surety and monitor repayment activity. (See Claims & Recovery System User’s
Manual for all data input instructions.)

5. When Does CRD Request a Contractor’s File?

a. CRD will request the contractor’s file from the area office when the surety has
advised SBA that a claim reserve has been established for at least $1,000.00 or more.
All underwriting files for participating contractors are located in the appropriate area
office in the field.

b. Since the same contractor could have multiple guarantees, it is important to determine
if the file is already in CRD. Check the computerized file tracking system to see if
the file was previously forwarded to the CRD. Most default notifications refer to a
specific bond, claim and surety bond guarantee number to make it easier to identify a
specific project.

6. How Does CRD Request a Contractor’s File?

CRD requests contractor’s file by contacting the appropriate area office via e-mail or
faxed memo signed by an SBG specialist or supervisor. The area offices should respond
to a request for files within 3 workdays. Any delays in receiving requested files should
be reported to the supervisor immediately.

7. What Happens to the File Once it is Received?

Once OSG receives the file(s) from the respective area office, the Office Automation
Assistant (OAA) will enter the principal’s name, SBG number, and the date received into
the computerized file tracking system. The OAA will prepare a file label containing the
principal’s name and the first nine digits of the old SBG number or the contractor’s
Employer Identification Number (EIN) or the contractor’s Social Security Number (SSN)
whichever is applicable as part of the new SBG number. An Optional Form 23,
“Chargeout Record,” (Appendix 2) is also prepared, with the same information. Remove
the Optional 23 each time the file is removed from the file room and place it in the

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chargeout box in the file room.

8. What Happens When CRD Cannot Locate a File?

If an original file cannot be located within 2 weeks, the OAA may prepare a “dummy”
file. A “dummy” file is a temporary file that is used to process reimbursement requests
until the original file is found. The dummy file contains a complete set of computer
printouts of all underwriting and claims activity to-date. When the original file is
located, CRD will transfer all of the materials from the dummy file to the original file.

9. How is the Claim File Organized?

CRD maintains information on bond guarantees that are in a “claims” status separate
from the bond guarantees that are not in claims status in chronological order within the
case file. The following documents are placed together in a separate part of the file for
claim and recovery related activity:

a. Current correspondence;

b. Status Report(s);

c. Initial Default Notification(s);

d. SBA Forms;

e. Bonds;

f. Contracts;

g. Copy of Bonding Line(s); and

h. Other related underwriting and claim information.

10. How Does a Surety Inform SBA of Claim and Recovery Activity?

a. The CRD uses status reports from participating surety companies to monitor a
surety’s claims and recovery activity on defaulted bond guarantees. Status reports
must include the project’s completion status, remaining contract balances,
performance and payment bond activities, surety’s indemnity efforts, and the surety’s
claim reserve. This information is also used to adjust SBA’s share of the surety’s
reserves and to update the computer database.

b. At the time of the initial status report, much of the information may not be available
to the surety; therefore, SBA requires the surety to submit semiannual status reports
on each claim beginning 6 months after the initial notice, and then every 6 months

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thereafter. The surety must notify SBA immediately of any substantial changes in the
status of the claim or the amount of loss reserves.

11. What is a Claim Status Code?

Based on the status report(s) received from the surety company, CRD places the file into
an appropriate default status in the computer database. The following is a list of the
possible categories and descriptions.

a. Claim Status "1": This is an "Active" status used to establish the case in claims when
the surety indicates that there is contingent liability and that claims for reimbursement
will be forthcoming.

b. Claim Status "2": This is a "Closed-No Loss" status used after SBA has received full
recovery from the surety for its claims for reimbursement paid by SBA; or when no
payment was made by the surety or SBA after contractor was placed in a claim status.

c. Claim Status "3": This is a "Closed-to-Subrogation" status used when the project has
been completed and all outstanding claims have been paid by the surety and recovery
is being pursued from the indemnitor(s), and/or the obligee (contract retainage).

d. Claim Status "4": This is a "Closed-Final" status that is used only after the surety has
exhausted all reasonable recovery efforts and has receives SBA's approval to cease
further pursuit of recovery.

e. Claim Status "5": This is a "Settlement" status that is used when the surety has
executed an agreement with the principal/indemnitor for less than the actual losses
and/or expenses paid on behalf of the principal/indemnitor. The surety must obtain
SBA’s concurrence before entering into any settlement agreement.

12. How Does CRD Analyze the Contractor File?

a. CRD examines the financial, business, underwriting, and default/claim information
for bond guarantees in default to verify compliance with regulatory provisions. The
file analysis checklist is a helpful guide to organize and review the file materials that
are often extensive.

b. A review of the financial, business, and underwriting information is the first step in
analyzing the claims file. Examine the following underwriting forms to determine
that the guarantee was executed in accordance with the regulations and provisions of
the SBG program.

(1) SBA Form 912, "Statement of Personal History," (Appendix 3), Review for
character and reputation eligibility requirements. See 13 CFR 115.13 to
determine who is required to submit this form.

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(2) General Indemnity Agreement (GIA) Make certain this is signed by the
principal(s) and indemnitor(s), and notarized by an authorized person(s). It must
be applicable to the surety that appears on the bonds and the SBA guarantee
agreement.

(3) SBA Form 994, "Application for Surety Bond Guarantee Assistance," (Appendix
4), contains pertinent information about the company’s gross annual receipts, the
project, its location, starting and completion dates, contract amount, penalty
clause, and the principal's experience with other SBA programs. It also includes
information on the principal's minority status, which may affect the guarantee
percentage.

(4) SBA Form 994B/C, "Surety Bond Guarantee Underwriting Review/Review
Update," (Appendix 5/Appendix 6), contains extensive information about the
principal's financial status, prior work experience, and current contract. Compare
this information to material found elsewhere in the file to verify its consistency
and accuracy.

(5) SBA Form 994F, “Schedule of Uncompleted Work,” (Appendix 7), contains a
listing of all of the contractor’s uncompleted work (bonded and unbonded) at the
time the guarantee was issued, including the subcontractor’s uncompleted work.

(6) SBA Form 990, "Surety Bond Guarantee Agreement," (Appendix 8), is SBA's
commitment to guarantee bonds which were issued by the surety. Check both the
surety and SBA representatives' signatures to verify that these persons were
authorized to execute the SBA 990. There should be a power-of-attorney (POA)
in the file matching the signature for the surety on the SBA 990. SOP 50 45
Chapter 1, “General Overview of the Surety Bond Guarantee Program,” should
be used to verify the delegated authority of the SBA signature on the SBA 990.

(7) SBA Form 991, “Surety Bond Guarantee Agreement Addendum,” Appendix 9),
is used when work under the contract has started prior to the surety
receiving SBA’s guarantee to provide evidence from the principal that the
surety bond requirements was contained in the original contract and to provide
sufficient documentation as to why the surety bond was not previously secured.
The SBA 991 also provides certification that all subcontractors and suppliers
were paid before the SBA 991 is approved. It is important that the percentage of
guarantee on the SBA 990 is correct, based on the contract amount and program
regulations.
(8) SBA Form 1624, “Certification, Regarding Debarment, Suspension, Ineligibility
and Voluntary Exclusion Lower Tier Covered Transaction,” (Appendix 10), is the
certification required by Executive Order 12549, Debarment and Suspension, 13
CFR Part 145. The case file must contain SBA 1624 for each project submission.

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(9) SBA Form 1261, “Statements Required by Law and Executive Orders,”
(Appendix 11), make sure that a copy of this form is in the contractors case file.

(10) Financial/Business Data, is reviewed to determine if principal met program
eligibility requirements for the SBG Program, at the time of the guarantee.

c. CRD must thoroughly review the applicable bond(s), bonded contract, bid
solicitation, and contract award letter to verify that the bonds were required, that the
contract amount is the same on the SBA 990, that the contract amount was within
statutory limits, and that the project was eligible for the SBG Program. (Refer to SOP
50 45, “Surety Bond Guarantee Program,” for more details.)
d. CRD must also review the default notification, and current status reports to ascertain
the following information:

(1) A description of the claim(s) filed against the bond;

(2) The status of the project and completion arrangements;

(3) Remaining contract funds;

(4) Surety's plan for settling or defending the claim(s);

(5) The anticipated loss plus reserve amounts; and

(6) Other information that is pertinent to the claim.

e. CRD will request clarification from surety on any discrepancy or inconsistency in
information provided in the status reports and case files. Once the analysis is
completed and CRD determines that payment can be made under its guarantee, the
contractor is placed in default status in the SBG computer.

f. CRD will prepare written referrals to the AA/OSG, on poorly underwritten cases,
abnormalities, or apparent non-compliance with the terms and conditions of the SBA
990. The referral must include a recommendation for further actions by the Agency.

g. Listed below are a few situations that would require a written referral:

(1) Work began prior to obtaining SBA’s Guarantee;

(2) Original contract amount exceeds statutory limit;

(3) Financial Guarantees;

(4) Surety’s failure to obtain a GIA;

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(5) Bond(s) amount exceeds contract amount;

(6) Surety did not notify SBA timely of possible default/claims;

(7) Surety’s negligence in handling losses;

(8) Surety’s Material misrepresentation; and

(9) Any bond or contract that appears ineligible due to substantial regulatory
violation.

13. What Happens When a Bid Bond Default Occurs?

a. A bid bond default occurs when the surety will not issue the final bonds or when the
contractor refuses to enter the contract after notification of proposed award. To
process a claim under the bid bond, SBA must receive the following information:

(1) A copy of the demand letter from the obligee;

(2) A copy of the lawsuit (if applicable);

(3) A copy of the bid bond; and

(4) A copy of the contract.

b. CRD must receive a copy of the bonding line, in addition to the bid bond, lawsuit, or
demand letter from the obligee when no SBA 990 exists for a bid bond guarantee
executed under a bonding line. The surety must prepare a SBA 990, which must be
signed by the area office surety bond guarantee personnel with the appropriate
delegated authority. This action does not constitute a new guarantee; it is used
only to document a previous commitment under a bonding line. Carefully review
information pertaining to the bid bond default to see if the bid bond was issued after
the contract was awarded and/or the job had started.

14. How Does the Surety Request Reimbursement from SBA?

A surety can request reimbursement by submitting SBA Form 994H, "Default Report,
Claim for Reimbursement, a Record of Administrative Record," (Appendix 12). The
surety can also use a previously approved substitute form that contains all the
information identical to the SBA 994H, including the "verbatim" certification.

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15. How Does CRD Process Claims for Reimbursement Requests?

CRD checks the SBA 994H, for “original” signature by an authorized representative and
date on the certification portion of the form. The following items are reviewed in detail.

a. Initial Payment

(1) Review the SBA 994H or its substitute, to ensure that the information
corresponds with information in the case file.

(2) Check the SBA 990, to determine the following.

(a) Approval signature of SBA official is within appropriate authority.

(b) For all guarantees approved on or after May 8, l989, the guarantee
percentage is:

(i) 80 percent for contracts more than $100,000;

(ii) 90 percent for contracts up to and including $100,000; and

(iii) 90 percent for all contracts awarded to firms owned and
controlled by socially and economically disadvantaged
individuals.

(c) A deductible applies on guarantees issued prior to November 28, l988.
SBA’s guaranteed share does not start until the surety has paid the
lesser of the first $500.00 or the amount of the bond premium as
reduced by the guarantee percentage. The correct deductible is
determined by multiplying 80 percent of the premium charged up to
$500.00, whichever is less.

(d) Correct name of the surety - When there are two sureties (co-sureties)
named on the SBA 990, the lead surety is specified. All transactions
with SBA will be done through the lead surety.

(3) Page two (2) of the SBA 994H provides a list of itemized disbursements
by date, draft number, payee, and amount, any recovery received and the
loss summary. Documentation to support the itemizations on all attorney
and/or consultant fees must accompany the SBA 994H. CRD must enter
all of the SBA 994H information into the computer. Once the information
is entered the computer will calculate the appropriate payment amount or
amount due the SBA.

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Example #1: Surety's Total Loss Disbursements $3369.36
(Less Recovery if applicable) -1000.00
Subtotal 2,269.36
(Less Deductible, if applicable) -500.00
Reimbursable Loss 1,769.36

Reimbursable Loss $1,769.36
SBA percent Guarantee (80 or 90 percent) x .90
SBA's Share of Loss 1,592.42

SBA's Share of Loss $1,592.42
Less Previous SBA Payments 0.00
Amount Due Surety From SBA $1,592.42

(4) CRD staff with the appropriate delegated authority must review and
approve the SBA 994H in the computer.

b. Subsequent Payments

(1) The same procedures are used for the subsequent payment as were for the
initial payments. However, it is important that CRD review the
itemizations more closely for any disbursement duplications from prior
requests. All items that have been previously reimbursed are considered
duplicates and are disallowed from the itemized total amount. Notate dis-
allowances(s) on the SBA 994H and notify the surety of the
disallowance(s) and advise the surety of the corrected amount to be paid.

(2) Request and review current status reports with sufficient loss reserves. If
the validity of the claim for reimbursement or justification for payment
appears to be questionable, refer the file to the supervisor for appropriate
action.

An example of how the computer will calculate a subsequent payment is
as follows:

Example #2: Current Losses Reported $2,151.10
Losses Previously Reported 3,369.36
Total Surety Loss 5,520.46

Surety Loss $5,520.46
(Less Recovery: Current if applicable) 0.00
(Less Recovery: Previously Reported) -1,000.00
Total Surety Net Loss 4,420.46

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Subtotal $4,420.46
Less Deductible (If applicable) -500.00
Reimbursable Loss 3,920.46

Reimbursable Loss $3,920.46
SBA% Guarantee (80 percent or 90 percent) x .90
SBA's Share of Loss 3,528.41

SBA's Share of Loss $3,528.41
(Less Previous SBA Payments) -1,592.42
Amount Due Surety From SBA $1,935.99

c. Trust Accounts

(1) A surety may choose to complete a defaulted project. When this occurs,
the surety may establish a trust account from which expenses are paid.

(2) Monies deposited into the trust account, but not actually disbursed, are not
reimbursable by SBA. The deposit(s) is reported to OSG as part of the
surety’s total loss disbursements on the SBA 994H. If no payments are
made from the trust account, the deposit(s) becomes the undisbursed trust
account balance.

(3) Although no loss disbursements appear on the SBA 994H, payments are
made to the surety on the trust account as the trust account balance
decreases.

(4) To determine the reimbursable amount, subtract the undisbursed trust
account balance from the surety's total loss disbursements. A separate
accounting of the trust account transactions must be submitted by the
surety. Any trust account disbursements unaccounted for must be
included in the undisbursed trust account balance entered on the SBA
994H.
d. Distribution of Approved SBA 994Hs

After the SBA 994Hs have been approved for payment in the computer, CRD will
file the SBA 994Hs into the contractor files under the appropriate project suffix
number.

16. How are Delays in Reimbursements to Sureties Prevented?

a. SBA is required to reimburse surety companies within 90 days of receipt of their
payment request in accordance with 13 CFR 115.35. To help expedite the payment
process, CRD requires the sureties to provide the following items with the initial

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claims for reimbursement:

(1) Initial Default Notification;

(2) Copy of the Contract for which the bonds were issued;

(3) An executed copy of the appropriate contact bonds (bid, payment, and/or
performance);

(4) An executed copy of the SBA 990;

(5) The General Indemnity Agreement;

(6) Documentation for all fees and expenses;

(7) An original signature and date of execution;

(8) A narrative status report that includes percentage of completion, contract balance,
cost to complete, appropriate reserve, and details regarding the claim situation;
and

(9) A Copy of the Agent’s power of attorney.

b. However, when additional information is still needed on a claim payment, CRD can
disallow the questionable amount pending receipt of the information; unless, the
requested information pertains to the entire claim. If the requested information
pertains to the entire amount of the claim, return the reimbursement request to the
surety with an explanation.

17. How Does CRD Track Missing Payments?

If a surety informs SBA that they have not received their check or electronic deposit,
CRD must contact SBA’s Denver Finance Center (DFC) in Denver, CO, immediately for
assistance. DFC will need the SBG number, the surety name, the payment amount, and
the approval date.

18. Can CRD Release Information Contained in Case Files?

a. Public access to information contained in SBA case files is governed by provisions
established by the Freedom of Information Act and Privacy Act. It is essential that
you recognize the importance of compliance with the policies and procedures
governing public access to files, records, and documents of SBA.

b. Disclosure of information in an unofficial manner may compromise SBA's position,
increase vulnerability of the Agency, and result in legal action against both SBA and

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the employee responsible for the release of the material.

c. Prepare your responses to requests for information from case files according to the
procedures found in SOP 40 03, “Disclosure of Information,” and 13 CFR 102,
“Record Disclosure and Privacy.”

d. If SBA receives a subpoena and/or court order from a Court for a file in claims, you
should notify the AA/OSG and the Office of General Counsel (OGC) immediately.
Make sure that you complete a file release form and notate the file charge-out card
accordingly. Under no circumstances should you release a case file from OSG
without notifying the AA/OSG.

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Chapter 3

Subrogation and Recovery Procedures

1. How Does CRD Handle Subrogation Activities?

a. Conditions Necessary to Transfer a Claim File on a Bond Guarantee to
Subrogation/Recovery Status

CRD will place the file into a “Closed-to-Subrogation” status (Claim Status “3”)
in the computer when the surety advises SBA that the project has been completed,
all claims payments have been made, no further contingent liability remains, and
recovery is being actively pursued from the principal, indemnitors, and obligee.
CRD then monitors surety’s recovery efforts through regular status reports.

b. Status Reports

(1) CRD uses status reports from sureties to monitor recovery and to check the
expenses anticipated relative to recovery efforts. These reports are received
semi-annually; however, if significant changes occur in recovery activity, the
surety must advise SBA immediately. CRD can also request additional
information at any time, if necessary. CRD compares information contained
in the current status report to that in previous status reports, as well as to other
information in the file to check for consistency, accuracy, and to verify that
the surety is taking all steps necessary to minimize the loss and is pursuing all
possible sources of recovery.

(2) As part of a status update, a surety may advise SBA that a payment plan has
been established for a defaulted contractor. CRD must request a copy of the
repayment plan to monitor receipt of SBA’s share for monies received by the
surety.

(3) CRD also monitors actual and anticipated legal fees and costs associated with
the surety's subrogation efforts. Refer any abnormalities or apparent non-
compliance with the terms and conditions of the SBA 990 in writing to the
AA/OSG, through the appropriate supervisor, with a recommendation for
appropriate action

c. Sources of Recovery and Related Documentation

The following is a list of recovery documentation that is required for SBA’s
review:

(1) GIA: This is an agreement signed by an individual or entity holding the

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surety harmless from any loss or exposure incurred on a bond that it
issues. The signatures on this form determine who the surety holds liable
and what assets may be pursued by the surety.

(2) Investigative Reports: Two of the most common investigative reports are
the Equifax and the Dun and Bradstreet. Both are used to locate the
indemnitors and ascertain what assets are available for indemnity pursuit.

(3) Financial Statements and Reports: These reports outline the assets and
liabilities of the individual indemnitors or the principal corporation at a
given point in time. Current financial statements should be compared to
those that were submitted with the underwriting package. Question any
discrepancies.

(a) Corporate Assets
Real Estate
Machinery and Equipment
Accounts Receivable
Supplies and materials

(b) Personal Assets
Residence (In many states, subject to Homestead Acts)
Land and Real Estate
Bank Accounts/Stocks and Bonds
Insurance Policies
Luxury Items (Jewelry, automobile, boats, etc. Check with the
Department of Motor Vehicles for registration)

(4) Letters of Credit: Issued by banks, these are sometimes required by the
surety as collateral at the time that the bond was underwritten. If a default
occurs, this can be pursued as recovery.

(5) Discharge in Bankruptcy: This may be requested from the surety as
documentation of the actual parties to the bankruptcy and the date of
discharge, as well as the type of bankruptcy.

(6) Judgment: A copy of the judgment against the principal and/or indemnitors
is requested from the surety to clarify the details of the judgment.

(7) Accounting of Contract Funds: Since the contract funds remaining on a
defaulted project may represent a substantial amount of recovery, a
complete accounting is requested if an apparent discrepancy exists in the
figures.

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2. When are Funds Due SBA?

A “Due SBA” occurs when the surety’s reimbursable loss amount is less than SBA’s paid
amount. SBA is entitled to its guaranteed percentage of all salvage and recovery obtained
on behalf of the defaulted principal. The surety must reimburse or credit SBA its
guaranteed share within 90 days of receipt. A “Due SBA” can also occur when an SBA
overpayment was made to the surety by SBA for an over billing resulting in a refund to the
Agency. Recovery and refund checks are to be sent directly from the surety to DFC at the
following address:

U.S. Small Business Administration
Denver Finance Center
P.0. Box 490
Denver, Colorado 80201-0490

If the surety sends recovery checks to Headquarters instead of DFC, the following
procedures are to be used:

a. Incoming Check(s) Procedures

(1) Date stamp all incoming related correspondence.

(2) Check the case file for the appropriate SBG number.

(3) Type the SBG number on the lower left corner of the check. If the check
pertains to several SBG numbers, itemize under each SBG number the
proportionate amount to each bond.

(4) Write the date that the check was sent to Denver and indicate the preparer's
initials on all related correspondence.

(5) Make three copies of the check and the related correspondence and
distribute as follows: a copy with the computer printout attached for the
chron file; a copy for the subject file; and a copy for the diary file.

(6) Prepare a route slip with applicable SBG numbers and allotted amounts; the
total number of checks enclosed; and the date that the checks are forwarded
to DFC in Denver, CO.

(7) Place the check(s) and route slip in an envelope addressed to DFC and put it
in the Denver overnight box in the Office of the Chief Financial Officer
(CFO).

(8) Diary the file for at least 30 days. At that time, follow the “Due SBA”

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procedures described in the next section.

(9) Send a letter to the surety advising them of the correct mailing address for
recovery checks.

b. Due SBA Procedures

"Due SBAs" are submitted on SBA 994H, "Claim for Reimbursement." CRD uses
the following steps to process a "Due SBA."

(1) Check the trade name and the SBG number on the "Due SBA" to make sure
that the name and number corresponds to the correct contractor file, and to
bond and claim number(s) on previous correspondence.

(2) Check the figures on the SBA 994H using the same procedures described in
Chapter 2, “Claim for Reimbursement Procedures.” The SBA 994H may
indicate that the surety’s recovery was offset by the loss paid.

(3) If the surety's calculation and the amount due to SBA are incorrect, notify the
surety of the discrepancies and diary the file for follow-up.

(4) Check the “Accounting Transactions” screen in the computer for the
appropriate SBG number to determine if SBA has received its share of the
recovery funds.

(5) If the recovery monies have been received and are indicated in the computer,
notate this in the file.

c. Recovery Not Received by SBA

If a period of 90 calendar days has passed since the receipt of the "Due SBA" and
there is no indication that the recovery monies have been credited to the
appropriate bond, CRD will proceed as follows.

(1) Call DFC to verify receipt of the check(s) from the surety.

(2) If the check has not been received by DFC, contact the surety to verify that
the check was sent. If the check has not been sent, request remittance from
the surety in writing.

(3) Diary a copy of the letter for approximately 2 weeks and follow-up at that
time.

(4) A surety's failure to remit recovery monies to SBA within 3 months (90 days)
should be reported in writing to the supervisor for further action.

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d. Recovery Applied to an Incorrect SBG Number

If recovery monies have been applied to an incorrect bond, the computer database
records must be adjusted. Contact SBA’s DFC in Denver, CO and the Office of
Chief Information Officer (OCIO) in Headquarters with the correct information for
assistance.

e. Refund of Recovery Money

Request a SBA 994H from the surety to process a refund due the surety for
overpayments of SBA's share of the recovery. Once CRD receives the information
and agrees with the refund, contact OCIO for assistance in correcting the computer
information.

3. What are the Procedures for Placing a File in “Closing Final” Status?

A surety must obtain SBA’s written consent to discontinue subrogation efforts, when
further indemnity pursuit is considered economically unfeasible or when the indemnitor(s)
have been discharged in bankruptcy. CRD must take the following steps to complete the
closing process.

a. File Review

(1) CRD must review the case file for each defaulted bond guarantee listed in the
surety’s request. Request the financial background information on each
respective indemnitor to verify that it is no longer feasible to continue
indemnity pursuit. Make sure that final reimbursement has been made.

(2) Request that the surety strongly consider the use of a collection agency versus
attorneys on further indemnity actions if it appears that it is feasible and
economically beneficial to continue indemnity pursuit.

(3) If the indemnitor(s) have been discharged in bankruptcy, the case file must
contain a copy of the Bankruptcy Discharge. Make sure that the
indemnitor(s) listed on the GIA are listed on the Discharge.

b. Closing Process

(1) Usually the final request for reimbursement is submitted with the closing
status report. If it is not received with the surety's request to close, maintain
the file in the "Closed to Subrogation" status until the final billing is received.
Disbursements over a year old must be accompanied by supporting
documentation. Once the final payment request and any applicable
documentation have been received, place the specific bond guarantee into a

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“Closed Final” status in the computer.

(2) Complete a "Closing Summary Sheet" (Appendix 13) when the entire file is
being closed. Include a brief summary of the surety's subrogation attempts on
each defaulted project in the closing request, reasons for closing the file, and
CRD’s recommendations concerning the surety's request to discontinue
subrogation efforts. Submit this summary to the supervisor for approval to
close the file. Once approval is received, prepare a letter to the surety for the
supervisor’s signature.

(3) Update the computer and the file tracking system with the closing
information.
c. Disposition of a Closed-Final File

(1) When the entire file is being closed, place a note on the outside of the folder
instructing the OAA to close the file.

(2) The OAA will notate the file chargeout record and update the computer file
tracking system that the file is “Closed-Final.”

(3) The OAA forwards the file to the warehouse for storage and enters the
appropriate storage box number into the computer.

(4) A listing of the closed-final files is maintained by the OAA.

4. What is an Indemnity Settlement?

a. Definition of a Settlement

A settlement occurs when a defaulted contractor and its surety agree upon an
amount less than the total loss amount that will satisfy the contractor's
indebtedness to the surety. SBA must concur, in writing, to a surety’s
recommendations regarding the settlement offer before the settlement can be
finalized. Once the settlement has been executed, surety must submit SBA’s
guaranteed share of such amount within 90 days of receipt. (For details on
submitting payments to SBA, see Paragraph 3-2, “When are Funds Due SBA?”)

b. Types of Settlements

(1) Settlement (Immediate Payment of SBA's Pro Rata Share of Recovery) -
The surety settled its claim with the indemnitor(s) for an amount less than the
surety's total loss with terms accepted by OSG.

(2) Settlement (Delayed Payment of Settlement Adequately Assured) - The
contractor has paid the surety a portion of the settlement amount and the

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surety has taken firm collateral from the contractor for the balance of the
settlement amount. CRD must obtain a copy of the collateral and SBA's share
of the partial payment from the surety. In some cases, a surety may wish to
reinstate the contractor so that money can be made to help pay off the
settlement. Prior to reinstating the file, the surety must receive at least 50
percent of the settlement amount.

(3) Contested Claim (Scheduled Court Appearance) - The contractor has been
presented with a claim which it contests in court. The contractor posts
collateral with the surety in the amount of the possible loss from the claim,
including legal and administrative fees reimbursed to the surety by SBA. The
surety sends SBA a copy of the draft, money order, or collateral document
plus confirmation that there are no other claims outstanding on this or any
other SBA-guaranteed bond involving this contractor.

c. Policy Guidelines for Settlements

Under the terms and conditions of SBA 990, the authority to act upon proposed
settlement offers in connection with defaulted surety bonds lies with the surety and
not SBA. The contractor's contractual relationship is with the surety company;
therefore, all matters pertaining to settlement and reinstatement must be arranged
with and through the surety. SBA is not a party to the contractual relationship
between the contractor and the surety. Since SBA's direct contractual
relationship is with the surety company only, SBA will neither negotiate nor
discuss with the contractor amounts owed to the surety by the contractor or
settlement of such debts. However, the surety must obtain SBA’s concurrence to
terms negotiated by the surety before entering into a settlement agreement.

d. Procedures Used to Review a Settlement Proposal

CRD takes the following steps to review a surety’s recommendation for indemnity
settlement.

(1) Checks SBA’s payment amount for all defaulted projects (including projects
with other sureties) to determine SBA’s total net loss on all projects.

(2) Determines which defaulted projects are involved in the settlement proposal.

(3) Reviews the facts outlined in the settlement letter and the details of any
telephone conversations with the surety representative.

(4) Reviews the following information in the file.

(a) GIA - Make sure that all of the indemnitors are accounted for in the surety
settlement proposal. If not, request information regarding what recovery

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actions have been taken against the indemnitor(s) in question.

(b) Status Reports, Financial Statements (including tax returns) - ascertain the
financial status of the indemnitors.

(d) If clarification of questionable items or supporting documentation is
needed, contact the surety for additional information.

(e) Compare the total net loss figure with the total amount of the settlement
being offered. Consider whether the settlement offer is reasonable
compared to the total loss amount.

(f) Prepare a written summarization of the facts of the case, including any
pertinent recommendations concerning the settlement proposal. Explain
any agreement or disagreement with the settlement offer.

(g) Submit recommendations to the AA/OSG, with concurrences from your
supervisor and the DAA/OSG, for approval.

(h) Advise the surety of SBA's recommendation concerning the settlement
offer. This response may be in the form of a telephone call or a letter,
depending upon the urgency of the situation. If the response is by phone,
prepare a letter of confirmation no later than the next business day. The
letter should outline the settlement terms as submitted to SBA.

(i) If the settlement proposal is not satisfactory to SBA, CRD should advise
the surety and ask it to re-negotiate the settlement terms.

(j) Request a follow-up letter from the surety representative outlining the
settlement terms and the final outcome. If the settlement is executed,
CRD must request a copy of the executed agreement and SBA’s share of
monies received.

(k) Upon receipt of this follow-up letter, diary a copy for an appropriate
period of time. At that time, check the file and computer to be sure that
the recovery monies have been received.

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5. When are Files Reinstated?

a. Definition of a Reinstatement

A reinstatement occurs when the principal becomes eligible for further surety bond
guarantees and his/her file is returned to the appropriate area office for
underwriting consideration.

b. General Circumstances Prompting Reinstatement

Circumstances prompting reinstatement of a contractor's case file to the appropriate
area office for future bonding include the following.

(1) A settlement agreement has been executed between the surety and the
principal and/or indemnitor(s) and SBA has been appropriately satisfied. See
paragraph 3-4 of this SOP for the specific types of settlements.

(2) Closed-No Loss (SBA Completely Reimbursed). The contractor has satisfied
the surety’s losses and the surety has repaid SBA in full.

(3) Closed-No Loss (Balance of SBA Loss Adequately Secured). The surety has
repaid SBA at least one-half of SBA's loss and has obtained a promissory note
from the contractor to pay the balance, or has obtained collateral of equal
value. Reinstate the file as a Closed-No Loss.

(4) The contractor’s indebtedness to the surety is discharged by operation of law
(e.g., bankruptcy discharge.)

c. Policy Guidelines for Reinstatement

As a result of the contractual relationships established by the SBA 990, the surety
is the only party that may request reinstatement of a principal's file (except for
bankruptcy). A principal whose debt has been expunged through bankruptcy may
request that their claims file be reinstated for underwriting consideration. Often
OSG and area office staffs are contacted by the principal, the principal's attorney,
or the principal's current agent regarding future bonding. In these instances, SBA
personnel may act as a liaison between the surety and the principal and encourage
repayment negotiations between the two parties. The surety must then notify OSG
when the principal has resolved his/her claim obligations so that reinstatement
procedures can be initiated.

d. Reinstatement Procedures

CRD takes the following steps to reinstate a file.

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(1) Retrieve the file and print a copy of the appropriate claims computer
screens.

(2) If the file was previously closed-final and sent to storage, request that the
records center return it to OSG. Inform the area office that the file has been
requested and that the reinstatement will be processed upon its receipt.

(3) If a settlement has been approved, check the net loss figure, recovery total,
and default status, and review the file to ascertain that the terms of the
settlement have been satisfied.

(4) Update the computer database records to reflect the reinstatement or closing
status.

(5) Prepare a reinstatement letter (appendix 13) and submit it to the supervisor
for approval.

(6) After the reinstatement has been approved and the reinstatement letter
signed, the following steps should be taken to return the file to the area
office.

(a) Keep copies of the computer printout, the reinstatement letter, and
documentation that supports the reinstatement for OSG’s records.
This information should be placed in the “reinstatement” folder under
the appropriate area office. The reinstatement file is maintained by the
OAA.

(b) The OAA will update the file tracking system and notate the Optional
23 chargeout record with the date of the reinstatement.

(c) Send the entire file with the reinstatement letter to the appropriate area
office via mail or overnight express, depending upon the urgency of
the matter.

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Chapter 4

Procedures for Sureties that are Defunct, in Rehabilitation, or in Liquidation

1. What are the Definitions of Each Status?

a. Defunct Surety A defunct surety has ceased to function and no longer conducts business
operations.

b. Surety in Rehabilitation A surety in rehabilitation is under corporate reorganization of
Chapter 11 of the Bankruptcy Act in an attempt to reinstate the surety to its former
condition of successful operation and solvency.

c. Surety in Liquidation A surety in liquidation is in the process of settling its financial
affairs by reducing its assets to cash, discharging liabilities, and dividing surplus or loss.
Liquidation may precede or follow dissolution, which is the end of the legal existence of
a corporation.

2. What are the Claims Handling Procedures for Sureties that are Defunct, in
Rehabilitation, or in Liquidation?

If a surety becomes insolvent, all rights or benefits conferred on the surety under a valid and
binding Prior Approval agreement will accrue only to the trustee or receiver of the surety.
SBA will not be liable to the trustee or receiver of the insolvent surety except for the
guaranteed portion of any loss incurred and actually paid by such surety or its trustee or
receiver under the guaranteed bonds. The State Insurance Department where the surety is
located becomes responsible for settling claims and handling all claims matters.
Accordingly, the trustee or receiver must submit quarterly status reports accounting for all
claims paid, all funds received and all settlements being considered. All correspondence
concerning sureties that are defunct, in rehabilitation, or liquidation are referred to the
supervisor for action. Refer to Chapter 2, “Claims For Reimbursement Procedures,” of this
SOP to process payment requests from insolvent sureties.

3. What are the Reinstatement Policies for Contractors?

a. Discharge of Debt The contractor’s indebtedness to the surety is discharged by operation
of law.

b. Full Reimbursement of Loss by Principal The contractor's file may be reinstated if the
principal has repaid the appropriate State insurance liquidator the full loss incurred by the
surety, and valid evidence of repayment is received by SBA.

c. Settlement Effected Prior to the Surety Company's Status Change If a settlement
between the principal or principal's legal representative and the surety company was
effected prior to the surety company's status change to defunct, rehabilitation, or

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liquidation, then the amount and the terms of the settlement should stand as the duly
renegotiated debt.

d. Settlement Effected After the Surety Company's Status Changed A new settlement
regarding a defaulted SBA-guaranteed bond may be effected between a principal and a
State Insurance Department as liquidator, if the principal's surety is defunct, in
rehabilitation, or in liquidation.

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Appendix 1

Index of Forms and Reports

Forms Paragraph

SBA Form 990, Surety Bond Guarantee Agreement 2-12

SBA Form 991, Surety Bond Agreement Addendum 2-12

SBA Form 994, Application for Surety Bond Guarantee
Assistance 2-12

SBA Form 994B, Surety Bond Guarantee Underwriting
Review 2-12

SBA Form 994C, Surety Bond Guarantee Review Update 2-12

SBA Form 994F, Schedule of Uncompleted Work 2-12

SBA Form 994H, Default Report, Claim for Reimbursement,
and, Record of Administrative Action 2-12

SBA Form 1261, Statements Required by Law and Executive Orders 2-12

SBA Form 1624, Certification Regarding Debarment, Suspension,
Ineligibility and Voluntary Exclusion Lower Tier Covered Transactions 2-12

SBA Form, 912, Statement of Personal History 2-12

Optional Form 23, Chargeout Record 2-9

Reports

Reserved

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Appendix 2
(paragraph 2-12)
Sample of Optional Form 23, Chargeout Record

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Appendix 3
(paragraph 2-12)
Sample of SBA Form 912, Statement of Personal History

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Appendix 4
(paragraph 2-12)
Sample of SBA Form 994, Application for Surety Bond Guarantee Assistance

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SURETY BOND GUARANTY APPLICATION PROCEDURES

1. Applicant contacts a surety, or its representative, which participates in SBA’s Surety Bond
Guarantee Program. The nearest SBA Regional Office may refer applicant to these sureties.
2. Surety will provide applicant with:
a. SBA Form 912 (Statement of Personal History)
b. SBA Form 1261 (Statements Required by Laws and Executive Orders)
c. SBA Form 994 (Application for Surety Bond Guarantee Assistance)
d. SBA Form 994F (Schedule of Uncompleted Work)
e. Documents relating to credit information and business history which are standard to the
surety industry.
Applicant completes these documents and returns them to the surety.
3. If the applicant is for final (performance and/or payment) bonds, it must be accompanied by
the Contractor Fee. The check is payable to SBA (or Small Business Administration).
4. Upon completion of favorable underwriting, surety forwards all required documents, including
SBA Form 990 (Guarantee Agreement) and SBA Form 991 (Surety Bond Guarantee
Agreement Addendum), to the appropriate SBA Regional Office.
5. The SBA Surety Bond Guarantee staff reviews the application, makes the final determination,
and notifies surety of its decision. SBA returns the countersigned Guarantee Agreement to the
surety. Where SBA declines to issue the guarantee, the check for the Contractor Fee is also
returned to the surety.
6. If any adverse information develops subsequent to SBA’s approval to the guarantee, surety
may decline to issue the bonds.

PLEASE NOTE: The estimated burden for completing this form is 5 minutes per response. You
are not required to respond to any collection of information unless it displays a currently valid
OMB approval number. Comments on the burden should be sent to U.S. Small Business
Administration, Chief, AIB, 409 3rd St., S.W., Washington, D.C. 20416 and Desk Officer for the
Small Business Administration, Office of Management and Budget, New Executive Office
Building, Room 10202, Washington, D.C. 20503. OMB Approval (3245-0007).

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Appendix 5
(paragraph 2-12)
Sample SBA Form 994B, Surety Bond Guarantee Underwriting Review

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Appendix 6
(paragraph 2-12)
Sample SBA Form 994C, Surety Bond Guarantee Review Update

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Appendix 7
(paragraph 2-11)
Sample of SBA Form 994F, Schedule of Uncompleted Work

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Appendix 8
(paragraph 2-12)
Sample SBA Form 990, Surety Bond Guarantee Agreement

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By the signature of its authorized representative on the reverse side of this form (Blocks 16-18), the U.S. Small
Business Administration guarantees the Surety named in Item 2 against loss resulting from the breach by the Principal
of the terms of the bond(s) described in Blocks 11, 12, 13, 22 and 24, pursuant and subject to 15 U.S.C. §694a and b,
the regulations thereunder (13 CFR Part 115) and the conditions and representations stated below, in reliance on the
declarations made on the reverse side hereof, and on the several forms submitted and signed by surety as applicable.
This guaranty shall become effective upon the issuance (as defined in said regulations) of the SBA-guaranteed bond
by the Surety.

1. Surety represents that I has determined the accuracy and completeness of the information in the Forms submitted
by Surety which relate to this agreement, in accordance with generally accepted surety industry underwriting
practices. Said Forms are incorporated herein by this reference.

2. Surety shall, conditional on the execution of this guarantee by SBA, if the Surety determines that the Contract
price is reasonable and the contract amount does not exceed $1,250,000, become Surety on bid, performance,
payment, and other ancillary and coterminous bond(s) required for the award of the Contract. Surety may
withdraw its decision to issue such bond(s) if prescribed underwriting conditions are not met or if additional
information comes to the attention of Surety of a nature so as to change its underwriting determination, and notice
is given to SBA.

3. The terms and conditions of such bond(s) will be in accord with those generally established and accepted by the
surety industry for the type of contract for which such bond(s) are required to be furnished by Principal, and
Surety represents that such bonds would not be provided for Principal on this Contract without this SBA
guarantee.

4. If any suit or claim is filed against Surety upon said bond(s), Surety shall inform SBA of the same within 30 days
of receipt of notice therof in the Surety’s home office. Unless SBA decides otherwise, and so notifies Surety,
Surety shall take charge of all suits or claims arising under said bond(s) and compromise, settle or defend such
suit or claim until so notified. Surety shall take all steps necessary to mitigate any loss resulting from Principal’s
default. Surety shall not join SBA in any lawsuit to which Surety is a party unless SBA has denied liability or has
agreed to such joinder in writing.

5. No employee of SBA has authority to waive, change or alter the terms of this Agreement, unless such alterations
are separately attached hereto and both the SBA and Surety’s authorized representatives have signed and dated
their assent thereto.

6. This Agreement is made exclusively for the benefit of SBA and the Surety, and does not confer any rights or
benefits on any other party, such as any right of action against SBA by any person claiming under SBA-
guaranteed bonds or otherwise. In the event of the Surety’s insolvency, SBA shall not be liable to the receiver or
other representative of the surety except for any loss incurred and monies actually paid by such representative
under the bonds guaranteed by SBA.

7. If any provision of this Agreement is in conflict with any SBA regulation, such regulation shall prevail in
construing or applying this Agreement.

8. Any intentionally false statement or willful misrepresentation in connection with the procurement of the
Guarantee or claim for payment pursuant to this Agreement is a violation of Federal law, subject to criminal and
civil prosecution under 18 U.S.C. §§ 287, 371, 1001, 15 U.S.C. §645, or 31 U.S.C. §231, carrying fines up to
$10,000 and imprisonment of up to five years.

PLEASE NOTE: The estimated burden for completing this form is 5 minutes per response. You are not required to
respond to any collection of information unless it displays a currently valid OMB approval number. Comments on the
burden should be sent to U.S. Small Business Administration, Chief, AIB, 409 3rd St., S.W., Washington, D.C. 20416
and Desk Officer for the Small Business Administration, Office of Management and Budget, New Executive Office
Building, Room 10202, Washington, D.C. 20503. OMB Approval (3245-0007).

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Appendix 9
(paragraph 2-12)
Sample of SBA Form 991, Surety Bond Guarantee Agreement Addendum

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Appendix 10
(paragraph 2-12)
Sample of SBA Form 1624, Certification, Regarding Debarment, Suspension, Ineligibility
and Voluntary Exclusion Lower Tier Covered Transaction

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-2-
INSTRUCTIONS FOR CERTIFICATION

1. By signing and submitting this proposal, the prospective lower tier participant is providing the certification set out
below.

2. The certification in this clause is a material representation of fact upon which reliance was placed when this
transaction was entered into. If it is later determined that the prospective lower tier participant knowingly
rendered an erroneous certification, in addition to other remedies available to the Federal Government, the
department or agency with which this transaction originated may pursue available remedies, including suspension
and/or debarment.

3. The prospective lower tier participant shall provide immediate written notice to the person to which this proposal
is submitted if at any time the prospective lower tier participant learns that its certification was erroneous when
submitted or has become erroneous by reason of changed circumstances.

4. The terms “covered transaction,” “debarred,” “suspended,” “ineligible,” “lower tier covered transaction,”
“participant,” “person,” “primary covered transaction,” “principal,” “proposal,” and “voluntary excluded,” as used
in this clause, have the meanings set out in the Definitions and Coverage sections of the rules implementing
Executive Order 12549. You may contact the person to which this proposal is submitted for assistance in
obtaining a a copy of those regulations (13 CFR Part 145).

5. The prospective lower tier participant agrees by submitting this proposal that, should the proposed covered
transaction be entered into, it shall not knowingly enter into any lower tier covered transaction with a person who
is debarred, suspended, declared ineligible, or voluntarily excluded from participation in this covered transaction,
unless authorized by the department or agency with which this transaction originated.

6. The prospective lower tier participant further agrees by submitting this proposal that it will include the clause
titled “Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion—Lower Tier
Covered Transactions,” without modification, in all lower tier covered transactions and in all solicitations for
lower tier covered transactions.

7. A participant in a covered transaction may rely upon a certification of a prospective participant in a lower tier
covered transaction that is not debarred, suspended, ineligible, or voluntarily excluded from the covered
transaction, unless it knows that the certification is erroneous. A participant may decide the method and
frequency by which it determines the eligibility of its principals. Each participant may, but is not required to,
check the Nonprocurement List.

8. Nothing contained in the foregoing shall be construed to require establishment of a system of records in order to
render in good faith the certification required by this clause. The knowledge and information of a participant is
not required to exceed that which is normally possessed by a prudent person in the ordinary course of business
dealings.

9. Except for transactions authorized under paragraph 5 of these instructions, if a participant in a covered transaction
knowingly enters into a lower tier covered transaction with a person who is suspended, debarred, ineligible, or
voluntarily excluded from participation in this transaction, in addition to other remedies available to the Federal
Government, the department or agency with which this transaction originated may purse available remedies,
including suspension and/or debarment.

Appendix 11

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(paragraph 2-12)
Sample of SBA form 1261, Statements Required by Law and Executive Orders

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Appendix 12
(paragraph 2-12)
Sample SBA Form 994H, Default Report, Claims for Reimbursement
and Record of Administrative Action

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Appendix 13
(paragraph 3-3)
Sample of the Closing Summary Review Sheet

SUMMARY REVIEW SHEET
Single Bond Report

IDENTIFICATION

CASE NAME

SURETY NAME

CLOSED FINAL

SBG#
Bond Amount $
Claim No.
Net Amt. $
SBA Recovery $
Surety Net Loss $

COMMENTS

RECOMMENDED BY__________________________DATE_________________
APPROVED BY_______________________________DATE_________________

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Appendix 14
(paragraph 3-5)
Sample of a Reinstatement Letter

DATE:

TO: _____________________, Supervisory SBG Specialist
Area Office

FROM: _____________________, Director
Claims & Recovery Division
Office of Surety Guarantees

SUBJECT: REINSTATEMENT OF _______________________
SBG#
SURETY

The subject file, including claims information, is being transmitted with this memorandum of
reinstatement into your normal underwriting portfolio.

As of_______________claims paid have been fully reimbursed and the following disposition
applies to this file:

Closed-no loss (no claims/expenses paid by survey). ____

Closed-no loss (claims/expenses reimbursed in full by principal;/indemnitor). ____

Surety settled with indemnitor for $_____________ ____
with loss to SBA of $____________

Comments:

Please consider this file for further bond guarantee assistance based upon the disposition
information above and your assessment of its future in the Surety Bond Guarantee Program.

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Glossary

The terms listed below are frequently used in SBA's Surety Bond Guarantee Program. The
definitions are quoted or paraphrased from published definitions, and reflect common usage and
connotation within the program.

1. Ad Damnum: In pleading, "To the damage." The technical name of that clause of the writ,
declaration, or, more commonly, the complaint, which contains a statement of the plaintiff's money
loss, or the damages which he claims. The "ad damnum" in the complaint is in excess of $100,000.

2. Amicable Demand: Agreed or assented to by parties having conflicting interests or a dispute; as
opposed to hostile or adversary.

3. Attorney-in-Fact: Any person who is authorized by another to act in his/her place, either in a
particular matter or generally. The authorization is embodied in a document known as a “letter of
attorney” while the authority itself is known as “power of attorney”

4. Balance Sheet: A statement of financial position of any economic unit disclosing its assets, at cost,
depreciated cost, or other indicated value, its liabilities, and the equity of the owners in conformity
with generally accepted accounting principles.

5. Bankruptcy: The state or condition of being unable to meet one’s financial obligation; the legal
procedure under which the affairs of an insolvent person’s business are turned over to a receiver or
trustee for the administration and payment of debts.

a) Voluntary Bankruptcy: When a person or business cannot pay its debts, it can voluntarily petition
the court to declare it bankrupt.
b) Involuntary Bankruptcy: The creditors of a person or business file the petition for bankruptcy
against the debtor.

6. Types of Bankruptcies

a) Chapter 7: A Chapter 7 bankruptcy is known as a liquidation. Generally, the debtor
has few, if any, assets. What assets a debtor may have are sold and the money
distributed to its creditors. Again, those assets are in the vast majority of cases, non-
existent. Chapter 7 is available to individuals. The court will, however, allow a
corporation to change from a Chapter 11 bankruptcy to a Chapter 7 bankruptcy.

b) Chapter 11: A Chapter 11 bankruptcy is known as a reorganization. It is available to
both corporations and individuals. Under a Chapter 11 bankruptcy, the debtor usually
possesses sufficient assets, or has the capacity to obtain them, to satisfy at least a
portion of the creditors' claims. In the case of a corporation, the debtor will remain in
business and the future income is used to pay the creditors. An individual who files a
Chapter 11 usually is a person that is capable of earning a good living but does not have
a regular wage, such as to allow him to file a Chapter 13. In a Chapter 11, the payoff

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may be in any amount, from one cent on the dollar through 100 cents on the dollar.

c) Chapter 13: A Chapter 13 bankruptcy is known as the wage earners' bankruptcy. To
qualify, an individual must have a steady source of income, though not necessarily
wages. The court determines the "disposable" amount of the debtor's income. Again, a
prepayment schedule is worked out which allows for partial or full reimbursement of all
creditors.

7. Bid Bond: A bond given by a bidder for a supply, service, or construction contract to
guarantee that the bidder, if awarded such a contract within the time stipulated, will enter into
the contract and furnish the prescribed performance bond. Default will ordinarily result in
liability of the principal and the surety for the difference between the amount of the principal's
bid and of the next low bidder who can qualify for the contract.

8. Bond: An agreement whereby one party, called the surety, obligates itself to a second party
called the obligee, to guarantee the successful performance of a contract by a third party,
called the principal.

9. Bond Penalty: The amount by which a surety must respond for loss under the terms of the
given bond, i.e., the face amount of the bond.

10. Bonding Lines: A commitment to a surety company by the SBA that allows the surety to issue
bid, payment, and performance bonds to a specified small contractor within preapproved
terms, conditions, and limitations.

11. Cede: To pass on to another insurer (the reinsurer) all or part of the insurance written by an
insurer (the ceding insurer) with the object of reducing the possible liability of the latter.

12. Ceding Company: An insurer that has bought reinsurance protection as distinquished from the
reinsurer that has issued the reinsurance protection.

13. Cession:
a) The unit of insurance passed to a reinsurer by a primary company that issued a policy to
the original insured. A cession may accordingly be the whole or a portion of single
risks, defined policies, or defined divisions of business, as agreed to in the reinsurance
contract.

b) The act of ceding where such an act is necessary to invoke the reinsurance protection.

14. Claim: A party’s demand for something believed due from another party.

15. Claimant: One who has asserted a claim under the bond.

16. Collateral: Personal or business possessions assigned by the principal as a pledge of

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repayment to the surety in the event of default by the principal. Collateral Document: A legal
document securing the item pledged as collateral, i.e., promissory notes, mortgages,
assignments, etc.’

17. Collateral Documents: A legal document securing the item(s) pledged as collateral, i.e.,
promissory notes, mortgages, assignments, etc.

18. Collection Agency: A private firm hired by the surety to locate the principal and indemnitors
in an effort to collect the debt owed to the surety. Generally. they work on a contingency basis
so there is no cost to the surety or SBA unless monies are recovered.

19. Contract Funds: Funds that are paid to the principal for the completion of the project. These
progress payments are usually cash and made monthly. based upon estimates of work
completed and materials used. These funds are also usually escrowed in a bank by the obligee,
and have a direct effect on the principal's financing of the job and his working capital.

20. Contract Price: The whole sum of money which passes from the obligee to the principal
when final settlement is made between the two under the contract, it is the basis of the
premium charge on most types of construction bonds.

21. Co-Surety: One of two or more surety companies participating directly in a bond. Their
obligation to the obligee (owner) is joint and several but sometimes a limit of liability for each
surety is stated between themselves. An authorized representative of each co-surety must sign
the guarantee agreement (SBA Form 990) and the lead or primary surety must be designated.
If a default occurs, claim payments are made to the lead surety only.

22. Current Assets: Items of ownership of a person or business that will be converted into cash
in the normal operation of business at an early date, usually within 1 year. These are also
referred to as "short term" assets.

23. Deductible: The portion of an insured loss to be borne by the insured before he is entitled to
recovery from the insurer; an amount of loss which is to be borne by the surety itself and is
therefore deducted from the total loss on which a claims is made to the SBA.

24. Default: The failure of a principal to meet obligation when due. This gives rise immediately
to the surety’s obligation to the obligee provided there are no conditions precedent to the
surety’s liability.

25. Diary: A term used for scheduling a specific time to follow-up on an action.

26. Discharge of Debtor: The debtor is legally released from the obligation of all his debts which
were or might be proved in the bankruptcy proceedings so that he may thereafter engage in
business and acquire property without its being liable for the satisfaction of such former debts.

27. Dun andBradstreet: Dun and Bradstreet is a private firm which gathers financial information

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about individuals and firms and prepares a report describing the financial condition of the
subject. Dun and Bradstreet deals only with its subscribers and in no way assumes any of the
subscriber's risk.

28. Equifax: A claim investigative firm whose services are available to the general public. The
types of reports available include a Current Assets and Income Report, a Skip-Trace Locate
Report, and the Recovery and Subrogation Report.

29. Estimated Loss: An estimate of the amount that a surety expects to pay for reported and
unreported claims under the terms of the bond.

30. Faculative Reinsurance: Reinsurance in which specific coverage is arranged individually for
each exposure. This is contrasted with treaty reinsurance, under which each member of the
group agrees in advance to cover risks on some predetermined basis.

31. Financial Reports: Reports that describe the financial condition of a business or individual at a
specific period of time.

32. Foreclosure: The action or legal proceeding brought by the creditor against a debtor under
which the debtor is required to pay the debt in total or forfeit his right of redemption of the
property put up as security. The creditor, upon gaining full possession of the property may
keep it or sell it in a foreclosure sale, depending upon State laws.

33. Garnishment: A statutory proceeding whereby a person's property, money, or credits in
possession or under control of, or owing by, another are applied to payment of former's debt to
third person by proper statutory process against debtor and garnishee. Usually the defendant is
required to surrender a percentage of his future wages in order to satisfy an outstanding debt.

34. General Indemnity Agreement: A written contract between the surety and the indemnitor
whereby the indemnitors undertake and agree to reimburse the surety for monetary loss
suffered by the surety as a result of a default by the principal. It may be signed by individual
or corporate indemnitors, who determine what assets are liable for the loss.

35. Guaranty: An undertaking or contract to assume the liability for a debt, to perform a duty
upon the default of another, or in general to give assurance that a thing will be done, or an
obligation filled as promised. It provides that the guarantor will be liable for the failure to
perform.
36. Homestead Exemption Laws: Laws passed in most of the states allowing a household or head
of a family to designate a house and land as his homestead, and exempting the same
homestead from execution for his general debts.

37. Improvement: A change in the condition of the property in real estate, often the addition of a
building to a vacant lot.

38. Incurred Loss: The total of actual surety payouts plus outstanding reserve less recovery

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received, contract funds anticipated, and collateral (e.g. cash, certificates of deposit, and
irrevocable letters of credit).

39. Indemnitor: A person or company which agrees with a surety to hold surety harmless from
any loss or exposure incurred on a bond that it issues.

40. Indemnity: A collateral contract or assurance by which one person engages to secure another
against an anticipated loss; this term pertains to liability for loss shifted from one person held
legally responsible to another person.

41. Imminent Breach: A threat to the successful completion of a bonded contract which, unless
remedied by the surety, makes a default under the bond appear to be inevitable.

42. Insolvency: The condition in which one's total assets, if realized, would not be sufficient to
cover one's total liabilities; the inability of a borrower to meet financial obligations as they
mature; or having insufficient assets to pay legal debts.

43. Judgment: The final decree, ruling, or sentence handed down by a court after hearing all of
the evidence in a trial or other proceeding.

a) Consent Judgment: A judgment given in the progress of a cause upon some plea,
proceeding, or default, which is only intermediate and does not finally determine or
complete the suit.
b) Default Judgment: A judgment rendered in consequence of the non-appearance of the
defendant.
c) Interlocutory Judgment: A judgment given in the progress of cause upon some plea,
proceeding, or default, which is only intermediate and does not finally determine or
complete the suit.
d) Judgment Creditor: One who has obtained a judgment against his debtor, under which he
can enforce execution.
e) Judgment Debtor: A person against whom judgment has been recovered and which
remains unsatisfied.
f) Judgment Lien A lien binding the real estate of a judgment debtor, in favor of the holder of
the judgment and giving the latter a right to levy on the land for the satisfaction of his
judgment.

44. Lien: The right or claim that a creditor has against the property of a debtor, under which he
may detain or seize the property pending the payment of a debt.

45. Liquidation: The disposal of the collateral securing a loan; conversion of assets into cash.

46. Liquidated Damages: The term is applicable when the amount of the damages has been
ascertained by the judgement in the action, or when a specific sum of money has been
expressly stipulated by the parties to a bond or other contract as the amount of damages to be
recovered by either party for a breach of the agreement by the other.

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47. Lis Pendens: A pending suit. Jurisdiction, power, or control that courts acquire over property
in suit pending action and until final judgment. Notice of Lis Pendens: A notice filed on public
record for the purpose of warning all persons that the title to certain property is in litigation,
and that they are in danger of being bound by an adverse judgment. The notice is for the
purpose of preserving rights pending litigation.

48. Litigation: Contest in a court of law for the purpose of enforcing a right or seeking a remedy;
the practice of taking legal action through the judicial process.

49. Long Arm Statute: Various State legislative acts which provide for personal jurisdiction, via
substituted service of process over persons or corporations which are nonresidents of the State,
and which voluntarily go into the State. This may be directly, by agent, or by communication
with persons in the state, for limited purposes in actions which concern claims relating to the
performance or execution of those purposes.

50. Maintenance: In general, the work of keeping up property or equipment in good sound
condition or the cost of doing so; the upkeep or preservation of the condition of property.

51. Material Misrepresentation: Any statement of alleged fact which is untrue or partly untrue or
which is so stated as to lead to false conclusions and which has an important or critical effect
on the outcome.

52. Miller Act: Federal statute which requires the posting of performance and payment bonds
before an award may be made for a contract beyond a certain amount for construction,
alteration, or repair of a public building or public work of the U.S. Government.

53. Net Worth: The total assets of a person or business less the total liabilities (amounts due to
creditors).

54. Non-Recoverable Expenses: Expenses incurred but not legally recoverable from the borrower.

55. Novation: Substitution of a new contract debt, or obligation for an existing one, between the
same or different parties. The substitution by mutual agreement of one debtor for another or of
one creditor for another, whereby the old debt is extinguished. The requisites of a novation
are a previous valid obligation, an agreement of all the parties to a new contract, the
extinguishment of the old obligation, and the validity of the new one.

56. Obligee: (Also called "owner") the party to whom someone else is obligated under a contract;
the party protected by the bond against loss; an obligee may be a person, firm, corporation,
government, or an agency of a government.

57. Payback: A plan which specifies the gross sum of recovery money to be paid to the surety by
the principal and/or indemnitors and specifies a time schedule to be adhered to for
reimbursement; it also applies to a payment schedule which will be utilized for reimbursement

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from the surety to SBA.

58. Payment Bond: A bond given for the labor and material used in the work which the principal
is obligated to pay under the contract. This liability may be contained in the performance
bond, in which case a separate labor and material bond (payment bond) is not given.

59. Penal Sum of the Bond: Also called "penalty" and "bond penalty," is the maximum amount
for which a surety company may normally be held liable under the bond.

60. Performance Bond: A bond which indemnifies the owner against loss resulting from the
failure of the contractor to complete the work in accordance with the plans and specifications;
performance bonds frequently incorporate payment bond liability.

61. Power of Attorney: An instrument authorizing another to act as one's agent or attorney to the
extent set forth in the instrument creating the power.

62. Prime Contractor: Person with whom the obligee has contracted to perform the contract.

63. Principal: The one who is primarily responsible for fulfilling the obligation set forth on the
contract and for whom the bond is issued. The principal is usually the contractor or
subcontractor for whom SBA's surety bond guarantee is written.

64. Quota Share Reinsurance: A form of pro rata reinsurance (proportional) in which the reinsurer
assumes an agreed percentage of each insurance policy being insured and shares all premiums
and losses accordingly with the reinsured.

65. Recovery: Reimbursement received by a surety from subrogation, indemnitors, or from
salvage following a loss.

66. Refund: The amount returned to SBA as a result of SBA's inadvertent overpayment to a surety
company.

67. Reimbursement: Amount that is repaid for the loss incurred.

68. Reinsurance: The shifting of risk by a primary insurer (known as the reinsurer).

69. Retained Funds: A reserve which is usually held by the obligee from the contract funds until
the work has been completed and paid to the principal after the lien period has expired.

70. Retention: The portion of a risk kept by an insurer for its own account while ceding the
balance to a reinsurer: also refers to that portion of a risk retained by a corporation for its own
account, the balance being transferred to a commercial insurer.

71. Risk: The element of uncertainty regarding economic loss.

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72. Rumble: A situation where a claim has been made against a bond, but the surety expects the
claim to be satisfied with no loss or expense.

73. Salvage: Property which is recovered from the principal or indemnitors which is liquidated to
offset, in whole or in part, the loss and expense incurred by a surety in satisfying obligations it
has sustained under a bond.

74. Settlement: An agreement by which parties having disputed matters between them determine
what is coming from one to the other; any agreement for the adjustment, liquidation, or
disposal of obligation; satisfaction of a claim or demand between parties.

75. Specialty Surety: A surety company which specializes in writing surety bonds for business
which cannot ordinarily obtain bonding through the standard bond market.

76. Standard Surety: A surety company which charges the standard premium rates for contract
bonds; usually is a well-known company which adheres to a more conservative underwriting
philosophy.

77. Subrogation: The right of one who has paid to be indemnified by the other; the legal right of
the surety to recover losses it paid to the obligee.

78. Subcontract: A contract award made by a prime contractor to a any contractor for a portion of
the work received by the prime contractor.

79. Subcontractor: A person who has contracted with a prime contractor or with another
subcontractor to perform a contract.

80. Surety Bond: A written agreement wherein one party (the surety) obligates itself to a second
party (the obligee or beneficiary) to answer for the default of a third party (the principal) in
failing to perform specified acts within a stated time. Such obligations include payment of
debts and responsibility for defaults.

81. Surety Company: Usually a corporation listed on the Department of the Treasury Circular
570, "Surety Companies Acceptable on Federal Bonds," and as otherwise qualified by the
Small Business Administration, which guarantees to the obligee (owner) the payment of
money or the performance of a contract in the event the principal (contractor) defaults on the
performance of said contract. The surety company is entitled to be indemnified (compensated
for actual loss sustained) via an indemnity agreement from the principal and principal's
indemnitors.
82. Treaty: A contract or arrangement under which risks or shared by agreement between
insurers, usually through a process of reinsurance.

83. Treaty Reinsurance: A reinsurance agreement between an insurance company and a reinsurer,
usually for one year or longer, which may be divided into two broad classifications:

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a) the participating type, which provides for sharing of risks between the ceding company and
the reinsurer; and

b) the excess type, which provides for indemnity by the reinsurer for losses that exceed some
specified, predetermined amount.

84. Trust Account: Where money or property is deposited to be kept intact and not co-mingled
with other funds or property of the bank, and is to be returned in kind to the depositor or
devoted to the particular purpose or requirement of depositor payment of particular debts or
obligations.

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References

Ruck, Andrew J. and Bevan, John S., Guidelines for Evaluating Contract Bond Forms and
Contract Documents, Philadelphia, PA: Duanes Morris and Heckscher, 1992.

Clore, Duncan L., Bond Default Manual, Second Edition. Chicago, IL: Publications, Planning and
Marketing, American Bar Association, 1995.

Gallagher, Edward G., The Law of Suretyship, Chicago, IL: Publications, Planning and
Marketing, American Bar Association, 1993.

Remmen, Albert. The Contract Bond Book, Cincinnati, OH: The National Underwriter Co., 1977.

Strain, Robert W. Insurance Words and Their Meanings, Indianapolis, IN: Rough Notes Co.,
1981.
Gleene, Mark R. and Trieschmann, James S., Risk and Insurance, Fifth Edition. Cincinnati, OH:
South-Western Publishing Co., 1981.

Black, Henry C., Black s Law Dictionary, Fifth Edition. St. Paul, MN: West Publishing Co.,
1979.

Clark, Donald T. and Gottfried, Bert A., University Dictionary of Business and Finance, New
York, NY: Thomas Y.Crowell Publishers, 1957.

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