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I. 'I'he Conlraclor and the Surety, jointly and severally, bind themselves,
<br />their heirs. cxeculorc. aJmiriistrators, succ`essors and assigns to the Owner
<br />for the perfurmance o( the Construction Contract, which is incorporated
<br />herein hy reference.
<br />2. If the Contractor rerforms the Construction Contract, the Surcty and
<br />the Contractor shall have no obligation under lhis Bond, except to par-
<br />ticipate in conferences as provided in Subparagraph 3.1.
<br />3. If thcre is no Ow•ner Uefault, the Surety's obligation under lhis Bond
<br />shall .vise aRer:
<br />3.1. The Uwner has notified the Contractor and the Surety at its address
<br />described in Paragraph 10 below, that the Owner is considering
<br />declaring a Contractor Uefault and has requested and attempted
<br />to arrange T conference with the Conlractor and the Surety to be
<br />held not later than fifteen days after receipt of such notice lo
<br />discuss melhods of performing the Construction Contract. lC the
<br />Owner, the Contractor and the Surety agrce, the Contractar shall
<br />be allowcd a reasonable time to perform the Construction Con-
<br />tract, but such an agreement shall not waive the Owner's right, if
<br />any, subsequently to declare a Contractor DeCault; and
<br />3.2. The Owner has declared a Contractor Default and formally ter-
<br />minated the Contractor's right to complete the contract. Such
<br />Contractor Default shall not be declared earlier than twenty days
<br />after the Contractor and the Surety have received notice as pro-
<br />vided in Subparagraph 3.1: and
<br />3.3. 'I'he Owner has agreed to pay the Balance of the Contract Price
<br />to the Surety in accordance with the terms of the Construction
<br />Contract or to a contractor selected to perform the Construction
<br />Contract in accordance with the terms of the contract with the
<br />Owner.
<br />4. When the Owner has satisfied the conditions of Paragraph 3, the Surcty
<br />shall promptly and at the Surety's expense take one of the following
<br />actions:
<br />4.1. Arrange for the Contractor, with consent oFlhe Owner, lo perform
<br />anJ complete the Construction Contract; or
<br />4.2. Undcrtake to pcrform and complete the Construction Contract
<br />itself, through its agents or through independent contractors; or
<br />4.3. Ubtain biJs or negotialed proposals from qualified contractors
<br />acceptablc to the Owner for a contract for performance and com-
<br />pletion oC the Construction Contract, arrange for a contract to be
<br />prepared for execution by the Owner and the contractor selected
<br />with the Owner's concurrence, to be secured with performance
<br />and payment bonds executed by a qualified surety equivalent to
<br />the bonds issued on the Construction,Contract, and pay to the
<br />Owner the amount of damages as described in Paragraph 6 in
<br />excess of the Balance of the Contract Price incurred by the Owner
<br />resulting from the Contractor's default; or
<br />4.4. Waive its right to perform and complete, arrange for completion,
<br />or oblain a new contractor and with reasonable promptness under
<br />the circumstances:
<br />1. After investigation, determine the amount for which it may be
<br />liable to the Owner and, as soon as practicable after the amount
<br />is determined, tender payment thtrcfor to the Owner; or
<br />2. veny liability in whole or in part and notify the Owner citing
<br />reasons thercfor.
<br />5. IF the Surcly does not proceed as provided in Paragraph 4 with reason-
<br />abte promptness, the Surety shall be deemed to be in default on this Bond
<br />fifteen days aRer receipt of an additional written nolice from the Owner
<br />to the Surety demanding that the Surety perform its obligations uader this
<br />f3ond, and the Ow•ner shall be entided to enforce any remedy availabk to
<br />the Qwner. If the Surety proceeds as provided in Subparagraph 4.4, and
<br />the Owner re(uses the paymeat tendcred or the Surety has denied liability,
<br />in whole or in part, wilhout further notice the Owner shall be entitlcd to
<br />enforce any remedy available to the Owner.
<br />6. ACter lhe Owncr has terminateJ the Contractor's right to complete the
<br />Construction Contract, and if the Surety elects to act under Subparagraph
<br />4.1. 4.2, or 4.3 above, then the responsibilities of the Surety to the Owner
<br />shall not be greater than those of the Contractor undet !ee Consirectioi:
<br />Contract, and the responsibilities of the Owner to the Surety shall not be
<br />greater than those of the Owner under lhe Construction Contra:.. To the
<br />limit of the amount of this Bond, but subject to commitment by the Owner
<br />of the Balance of the Contract Price to mitigation of costs and damages
<br />on the Construction Contract, the Surety is obligated without duplication
<br />for:
<br />6.1. The responsibilities of the Contractor for correctioo of defective
<br />work and completion of the Construction Contract;
<br />6.2. Additional legal, design professional and delay costs resulting
<br />from the Contractor's Default, and resulting from the actions or
<br />failure to act of (he Surety under Paragraph 4; and
<br />6.3. Liquidated damages, or if no liquidated damages are specified in
<br />the Construclion Contract, actual damages caused by delayed
<br />performance or non-performance of the Contractor.
<br />7. The Sarety shall not be liable to the Owner or others for obligations of
<br />the Contractor that.are unrolated to the Construction Contract, and the
<br />Balance of the Contract Price shall not be reduced or set off on account
<br />of any such unrelated obligations. No right of action shall accrue on this
<br />Bond lo any person or entity other than the Owner or its heirs, executors,
<br />administrators, or successors.
<br />8. The Surety hereby waives notice of any change, including changes of
<br />time, to the Construction Contract or to related subcontracts, purchase
<br />orders and other obligations. .
<br />9. Any proceeding, legal or equitable, under this Bond may be instituted
<br />in any court of competent jurisdiction in the location in which the work
<br />or part of the work is located and shall be instituted within two years after
<br />Contractor Default or within two years after the Contractor ceased work-
<br />ing or within two years after the Surety refuses or fails to perform its
<br />obligations under this Bond, whichever occurs first. If the provisions of
<br />this Paragraph are void or prohibited by law, the minimum period of
<br />limitation avaitable to sureties as a deCense in the jurisdiction of the suit
<br />shall be applicable.
<br />10. Notice to the Surety, the Owner or the Contractor shall be mailed or
<br />delivered to the address shown on the signature page.
<br />11. When this Bond has been furnished to comply with a statutory or
<br />other legal requirement in the location where the construction was to.be
<br />perfortned, any provision in this Bond conflicting with said statutory or.
<br />legal requirement shall be deemed deleted herefrom and provisions con-
<br />forming to such statutory or other legal requirement shall be deemed
<br />incorporated herein. The intent is that this Bond sha(1 be construed as a
<br />statutory bond and not as a common law bond.
<br />12. Definitions.
<br />12.1. Balance of the Contract Price: The total amount payable by the
<br />Owner to the Contractor under the Construction Contract after
<br />all proper adjustments have been made, including allowance to
<br />the Contractor of any amounts received or to be received by
<br />the Owner in settlement of insurance or other claims for dam-
<br />ages to which the Contractor is entitled, reduced by all valid
<br />and proper payments made to or on behalf of the Contractor
<br />under the Construction Conlract.
<br />12.2. Construction Contract: The agreement between the Owner and
<br />the Contractor identified on the signature page, including all
<br />Contract Documents and changes thereto. _
<br />12.3. Contractor Default: Failure of the Contractor, which has neither
<br />been remedied nor waived, to perform or otherwise to comply
<br />with the terms of the Construction Contract.
<br />12.4. Owner Default: Failure of the Owner, which has neither been
<br />remedied nor waived, to pay the Contractor as required by the
<br />Construction Contract or to perform and complete or comply
<br />with the other terms thereof.
<br />(FOR INFORMATION ONLY-Name, Address and Telephone)
<br />AGENT or BROKER: OWNER'S REPRESENTATIVE (Architect, Engineer or other party):
<br />30
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