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Owner,s notice. If the Owner, the Contractor and the Surety agree, the Contractor. shall be allowed a reasonable
<br />time to perform the Construction Contract, but such an agreiment shall not waive the Owner's right, if any,
<br />subsequently to declare a 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
<br />Contract to the Surety or to a contractor selected to perform the Construction Contract'
<br />$4 Failure on the part of the owner to comply with the notice requirement in Section 3.1 shall not constitute a failure to
<br />comply with a condition precedent to the Surety's obligations, o, ..i"ur. the Surety from its obligations, except to the extent
<br />the Surety demonstrates actual prejudice.
<br />$ 5 When the owner has satisfied the conditions of Section 3, the Surety shall promptly and at the Surety's expense take one of
<br />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
<br />completion of the Construction Contract, arrange for a contract to be prepared for execution by the Owner and a contractor
<br />selected with the owner,s concurrence, to be secured with performance and payment bonds executed by a qualified surety
<br />equivalent to the bonds issued on the Construction Contract, and pay to the Owner the amount of damages as described in
<br />Section 7 in excess of the Balance of the Contract Price incuned by the Owner as a result of the Contractor Default; or
<br />$ 5.4 Waive its right to perform and complete, arrange for completion, or obtain a new contractor and with reasonable
<br />promptness under the circumstances:
<br />.1 After investigation, determine the amount for which it may be liable to the Owner and, as soon as practicable
<br />after the amount is determined, make payment to the Owner; or
<br />,2 Deny liability in whole or in part and notifi the Owner, citing the reasons for denial'
<br />$ 6 Ifthe Surety does not proceed as provided in Section 5 with reasonable promptness, the Surety shall be deemed to be in
<br />default on this Bond seven days after receipt of an additional written notice from the owner to the Surety demanding that the
<br />Surety perform its obligations under this Bond, and the Owner shall be entitled to enforce any remedy available to the O.rvner'
<br />If the Surety proceeds as provided in Section 5.4, and the Owner refuses the payment or the-surety has denied liability, in
<br />whole or in part, without further notice the Owner shall be entitled to enforce any remedy available to the Owner'
<br />$7 If the Surety elects to act under Section s.1,5.2 or 5.3, then the responsibilities of the surety to the owner shall not be
<br />greater than those ofthe contractor under the construction contract, and the responsibilities ofthe owner to the surety shall
<br />not be greater than those of the Owner under the Construction Contract. Subject to the commitment by the Owner to pay the
<br />Balance of the Contract Price, the Surety is obligated, without duplication, for
<br />,1 the responsibilities of the Contractor for correciion of defective work and completion of the Construction
<br />Contract;
<br />,2 additional legal, design professional and delay costs resulting from the Contractor's Default, and resulting from
<br />the actions or failure to act ofthe Surety under Section 5; and
<br />.3 liquidated damages, or if no liquidated damages are specified in the Construction Contract' actual damages
<br />caused by delayed performance or non-performance ofthe contractor.
<br />S g If the Surety elects to act under Section 5.1, 5.3 or 5.4, the Surety's liability is limited to the amount of this Bond'
<br />$ g rhe surety shall not be liable to the owner or others for obligations ofthe contractor that are unrelated to the construction
<br />contract, and the Balance of the contract price shall not be reduied or set off on account of any such unrelated obligations' No
<br />right of action shall accrue on this Bond to any person or entity other than the owner or its heirs, executors, administrators,
<br />successors and assigns.
<br />$ 10 The Surety hereby waives notice of any change, including changes of time, to the Construction Contract or to related
<br />subcontracts, purchase orders and other obligations.
<br />$ 11 Any proceeding, legal or equitable, under this Bond may be instituted in any court of competent jurisdiction in the
<br />location in which the wirk o. purt of the work is located und rhull be instituted within rwo years after a declaration of
<br />Contractor Default or within two years after the Contractor ceased working or within two years after the Surety refuses or fails
<br />The Company executing this bond vouches that
<br />A312,2010 edition
<br />conforms to American Institute of Architects Document
<br />2
<br />this document
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