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§1 The Contractor and Surety,jointly and severally,bind themselves,their heirs,executors,administrators,successors and assigns to the Owner for <br /> the performance of the Construction Contract,which is incorporated herein by reference. <br /> §2 If the Contractor performs the Construction Contract,the Surety and the Contractor shall have no obligation under this Bond,except when <br /> applicable to participate in a conference as provided in Section 3. <br /> §3 If there is no Owner Default under the Construction Contract,the Surety's obligation under this Bond shall arise after <br /> .1 the Owner first provides notice to the Contractor and the Surety that the Owner is considering declaring a Contractor Default.Such <br /> notice shall indicate whether the Owner is requesting a conference among the Owner,Contractor and Surety to discuss the <br /> Contractor's performance.If the Owner does not request a conference,the Surety may,within five(5)business days after receipt of <br /> the Owner's notice,request such a conference.If the Surety timely requests a conference,the Owner shall attend.Unless the Owner <br /> agrees otherwise,any conference requested under this Section 3.1 shall be held within ten(10)business days of the Surety's receipt <br /> of the Owner's notice.If the Owner,the Contractor and the Surety agree,the Contractor shall be allowed a reasonable time to <br /> perform the Construction Contract,but such an agreement shall not waive the Owner's right,if any,subsequently to declare a <br /> Contractor Default; <br /> .2 the Owner declares a Contractor Default,terminates the Construction Contract and notifies the Surety;and <br /> .3 the Owner has agreed to pay the Balance of the Contract Price in accordance with the terms of the Construction Contract to the <br /> Surety or to a contractor selected to perform the Construction Contract. <br /> §4 Failure on the part of the Owner to comply with the notice requirement in Section 3.1 shall not constitute a failure to comply with a condition <br /> precedent to the Surety's obligations,or release the Surety from its obligations,except to the extent the Surety'demonstrates actual prejudice. <br /> §5 When the Owner has satisfied the conditions of Section 3,the Surety shall promptly and at the Surety's expense take one of the following actions: <br /> §5.1 Arrange for the Contractor,with the consent of the Owner,to perform and complete the Construction Contract; <br /> §5.2 Undertake to perform and complete the Construction Contract itself,through its agents or independent contractors; <br /> §5.3 Obtain bids or negotiated proposals from qualified contractors acceptable to the Owner for a contract for performance and completion of the <br /> Construction Contract,arrange for a contract to be prepared for execution by the Owner and a contractor selected with the Owner's concurrence,to be <br /> secured with performance and payment bonds executed by a qualified surety equivalent to the bonds issued on the Construction Contract,and pay to <br /> the Owner the amount of damages as described in Section 7 in excess of the Balance of the Contract Price incurred by the Owner as a result of the <br /> Contractor Default;or <br /> §5.4 Waive its right to perform and complete,arrange for completion,or obtain a new contractor and with reasonable promptness under the <br /> circumstances: <br /> .1 After investigation,determine the amount for which it may be liable to the Owner and,as soon as practicable after the amount is <br /> determined,make payment to the Owner;or <br /> .2 Deny liability in whole or in part and notify the Owner,citing the reasons for denial. <br /> §6 If the Surety does not proceed as provided in Section 5 with reasonable promptness,the Surety shall be deemed to be in default on this Bond <br /> seven days after receipt of an additional written notice from the Owner to the Surety demanding that the Surety perform its obligations under this <br /> Bond,and the Owner shall be entitled to enforce any remedy available to the Owner.If the Surety proceeds as provided in Section 5.4,and the <br /> Owner refuses the payment or the Surety has denied liability,in whole or in part,without further notice the Owner shall be entitled to enforce any <br /> remedy available to the Owner. <br /> 2 <br />