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The Contractor and the Surety, jointly and severally, bind themselves, their heirs, executors, administrators,
<br />successors and assigns to the Owner to pay for labor, materials and equipment furnished for use in the
<br />performance of the Construction Contract, which is incorporated herein by reference, subject to the following
<br />terms.
<br />2. If the Contractor promptly makes payment of all sums due to Claimants, and defends, indemnifies and holds
<br />harmless the Owner from claims, demands, liens or suits by any person or entity seeking payment for labor,
<br />materials or equipment furnished for use in the performance of the Construction Contract, then the Surety and the
<br />Contractor shall have no obligation under this Bond.
<br />3. If there is no Owner Default under the Construction Contract, the Surety's obligation to the Owner under this Bond
<br />shall arise after the Owner has promptly notified the Contractor and the Surety (at the address described in Section
<br />13) of claims, demands, liens or suits against the Owner or the Owner's property by any person or entity seeking
<br />payment for labor, materials or equipment furnished for use in the performance of the Construction Contract and
<br />tendered defense of such claims, demands, liens or suits to the Contractor and the Surety.
<br />4. When the Owner has satisfied the conditions in Section 3, the Surety shall promptly and at the Surety's expense
<br />defend, indemnify and hold harmless the Owner against a duly tendered claim, demand, lien or suit.
<br />5. The Surety's obligation to a Claimant under this Bond shall arise after the following:
<br />5.1 Claimants, who do not have a direct contract with the Contractor
<br />.1 have furnished a written notice of non-payment to the Contractor, stating with substantial accuracy the
<br />amount claimed and the name of the party to whom the materials were, or equipment was, furnished or
<br />supplied or for whom the labor was done or performed, within ninety (90) days after having last
<br />performed labor or last furnished materials or equipment included in the Claim; and
<br />.2 have sent a Claim to the Surety (at the address described in Section 13)
<br />5.2 Claimants, who are employed by or have a direct contract with the Contractor, have sent a Claim to the Surety
<br />(at the address described in Section 13).
<br />6. If a notice of non-payment required by Section 5.1.1 is given by the Owner to the Contractor that is sufficient to
<br />satisfy a Claimant's obligations to furnish a written notice of non-payment under Section 5.1.1.
<br />7. When a Claimant has satisfied the conditions of Sections 5.1 or 5.2, whichever is applicable, the Surety shall
<br />promptly and at the Surety's expense take the following actions:
<br />7.1 Send an answer to the Claimant, with a copy to the Owner, within sixty (60) days after receipt of the
<br />Claim, stating the amounts that are undisputed and the basis for challenging any amounts that are
<br />disputed; and
<br />7.2 Pay or arrange for payment of any undisputed amounts.
<br />7.3 The Surety's failure to discharge its obligations under Section 7.1 or Section 7.2 shall not be deemed to
<br />constitute a waiver of defenses the Surety or Contractor may have or acquire as to a Claim, except as to
<br />undisputed amounts for which the Surety and Claimant have reached agreement. If, however, the Surety
<br />fails to discharge its obligations under Section 7.1 or Section 7.2, the Surety shall indemnify the Claimant
<br />for the reasonable attorney's fees the Claimant incurs thereafter to recover any sums found to be due and
<br />owing to the Claimant.
<br />8. The Surety's total obligation shall not exceed the amount of this Bond, plus the amount of reasonable attorney's
<br />fees provided under Section 7.3, and the amount of this Bond shall be credited for any payments made in good
<br />faith by the Surety.
<br />9. Amounts owed by the Owner to the Contractor under the Construction Contract shall be used for the performance
<br />of the Construction Contract and to satisfy claims, if any, under any construction performance bond. By the
<br />Contractor furnishing and the Owner accepting this Bond, they agree that all funds earned by the Contractor in the
<br />Language conforms to AIA Document A312 Payment Bond, 2010 edition.
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