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I The Contractor and the Surety, jointly and severally, bind
<br />themselves, their heirs, executors, administrators,
<br />successors and assigns to the Owner for the performance
<br />of the Construction Contract, which is incorporated herein
<br />by reference.
<br />2 If the Contractor performs the Construction Contract, the
<br />Surety and the Contractor shall have no obligation under
<br />this Bond, except to participate in conferences as provided
<br />in Subparagraph 3.1.
<br />3 If there is no Owner Default, the Surety's obligation
<br />under this Bond shall arise after:
<br />3.1 The Owner has notified the Contractor and the
<br />Surety at its address described in Paragraph 10 below
<br />that the Owner is considering declaring a Contractor
<br />Default and has requested and attempted to arrange a
<br />conference with the Contractor and the Surety to be
<br />held not later than fifteen days after receipt of such
<br />notice to discuss methods of performing the
<br />Construction Contract. If the Owner, the Contractor
<br />and the Surety agree, the Contractor shall be allowed a
<br />reasonable time to perform the Construction Contract,
<br />but such an agreement shall not waive the Owner's
<br />right, if any, subsequently to declare a Contractor
<br />Default; and
<br />3.2 The Owner has declared a Contractor Default and
<br />formally terminated the Contractor's right to complete
<br />the contract. Such Contractor Default shall not be
<br />declared earlier than twenty days after the Contractor
<br />and the Surety have received notice as provided in
<br />Subparagraph 3.1; and
<br />3.3 The Owner has agreed to pay the Balance of the
<br />Contract Price to the Surety in accordance with the
<br />terms of the Construction Contract or to a
<br />contractor selected to perform the Construction
<br />Contract in accordance with the terms of the
<br />contract with the
<br />3.4 Owner.
<br />4 When the Owner has satisfied the conditions of
<br />Paragraph 3, the Surety shall promptly and at the Surety's
<br />expense take one of the following actions:
<br />4.1 Arrange for the Contractor, with consent of the
<br />Owner, to perform and complete the Construction
<br />Contract; or
<br />4.2 Undertake to perform and complete the
<br />Construction Contract itself, through its agents or
<br />through independent contractors; or
<br />4.3 Obtain bids or negotiated proposals from qualified
<br />contractors acceptable to the Owner for a contract for
<br />performance and completion of the Construction
<br />Contract, arrange for a contract to be prepared for
<br />execution by the Owner and the contractor selected
<br />with the Owner's concurrence, to be secured with
<br />performance and payment bonds executed by a
<br />qualified surety equivalent to the bonds issued on the
<br />Construction Contract, and pay to the Owner the
<br />amount of damages as described in Paragraph 6 in
<br />excess of the Balance of the Contract Price incurred
<br />by the Owner resulting from the Contractor's default;
<br />or
<br />4.4 Waive its right to perform and complete, arrange
<br />for completion, or obtain a new contractor and with
<br />reasonable promptness under the circumstances:
<br />.1 After investigation, determine the amount for
<br />which it may be liable to the Owner and, as soon
<br />as practicable after the amount is determined,
<br />tender payment therefor to the Owner; or
<br />.2 Deny liability in whole or in part and notify the
<br />Owner citing reasons therefor.
<br />5 If the Surety does not proceed as provided in Paragraph
<br />4 with reasonable promptness, the Surety shall be deemed
<br />to be in default on this Bond fifteen days after receipt of an
<br />additional written notice from the Owner to the Surety
<br />demanding that the Surety perform its obligations under
<br />this Bond, and the Owner shall be entitled to enforce any
<br />remedy available to the Owner. If the surety proceeds as
<br />provided in Subparagraph 4.4, and the Owner refuses the
<br />payment tendered or the Surety has denied liability, in
<br />whole or in part, without further notice the Owner shall be
<br />entitled to enforce any remedy available to the Owner.
<br />6 After the Owner has terminated the Contractor's right to
<br />complete the Construction Contract, and if the Surety
<br />elects to act under Subparagraph 4.1, 4.2, or 4.3 above,
<br />then the responsibilities of the Surety to the Owner shall
<br />not be greater than those of the Contractor under the
<br />Construction Contract, and the responsibilities of the
<br />Owner to the Surety shall not be greater than those of the
<br />Owner under the Construction Contract. To the limit of the
<br />amount of this Bond, but subject to commitment by the
<br />Owner of the Balance of the Contract Price to mitigation of
<br />costs and damages on the Construction Contract, the
<br />Surety is obligated without duplication for:
<br />6.1 The responsibilities of the Contractor for correction
<br />of defective work and completion of the Construction
<br />Contract;
<br />6.2 Additional legal, design professional and delay
<br />costs resulting from the Contractor's Default, and
<br />resulting from the actions or failure to act of the Surety
<br />under Paragraph 4; and
<br />6.3 Liquidated damages, or if not liquidated damages
<br />are specified in the Construction Contract, actual
<br />damages caused by delayed performance or non-
<br />performance of the Contractor.
<br />7 The Surety shall not be liable to the Owner or others for
<br />obligations of the Contractor that are unrelated to the
<br />Construction Contract, and the Balance of the Contract
<br />Price shall not be reduced or set off on account of any
<br />such unrelated obligations. No right of action shall accrue
<br />on this Bond to any person or entity other than the Owner
<br />or its heirs, executors, administrators or successors.
<br />8 The Surety hereby waives notice of any change,
<br />including changes of time, to the Construction Contract or
<br />to related subcontracts, purchase orders and other
<br />obligations.
<br />9 Any proceeding, legal or equitable, under this Bond may
<br />be instituted in any court of competent jurisdiction in the
<br />location in which the work or part of the work is located and
<br />shall be instituted within two years after Contractor Default
<br />or within two years after the Contractor ceased working or
<br />within two years after the Surety refuses or fails to perform
<br />its obligations under this Bond, whichever occurs first. If
<br />the provisions of this Paragraph are void or prohibited by
<br />law, the minimum period of limitation available to sureties
<br />as a defense in the jurisdiction of the suit shall be
<br />applicable
<br />AIA DOCUMENT A312 • PERFORMANCE BOND AND PAYMENT BOND • DECEMBER 1984 ED. e AIA
<br />THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVE., N.W., WASHINGTON, D.C. 20006 A312 -1984
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