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I . The Contractor and Surety, jointly and severally, bind themselves, their heirs, executors, administrators, successors
<br />and assigns to the Owner for the performance of the Construction Contract, which is incorporated herein by
<br />reference.
<br />2. If the Contractor performs the Construction Contract, the Surety and the Contractor shall have no obligation under
<br />this Bond, except when 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
<br />after:
<br />.l the Owner first provides notice to the Contractor and the Surety that the Owner is considering declaring a
<br />Contractor Default. Such notice shall indicate whether the Owner is requesting a conference among the
<br />Owner, Contractor and Surety to discuss the Contractor's performance. If the Owner does not request a
<br />conference, the Surety may, within five (5) business days after receipt of the Owner's notice, request such a
<br />conference. If the Surety timely requests a conference, the Owner shall attend. Unless, the Owner agrees
<br />otherwise, any conference requested under this Section 3.1 shall be held within ten (10) business days of the
<br />Surety's receipt of the Owner's notice. If the Owner, the Contractor and the Surety agree, the Contractor shall
<br />be allowed a reasonable time to perform the Construction Contract, but such an agreement shall not waive the
<br />Owner's right, if any, 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
<br />Construction 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
<br />to comply with a condition precedent to the Surety's obligations, or release the Surety from its obligations, except
<br />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
<br />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
<br />performance and completion of the Construction Contract, arrange for a contract to be prepared for execution by
<br />the Owner and a contractor selected with the Owner's concurrence, to be secured with performance and payment
<br />bonds executed by a qualified surety equivalent to the bonds issued on the Construction Contract, and pay to the
<br />Owner the amount of damages as described in Section 7 in excess of the Balance of the Contract
<br />Price incurred 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
<br />practicable after the amount is 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
<br />be in default on this Bond seven days after receipt of an additional written notice from the Owner to the Surety
<br />demanding that the Surety perform its obligations under this Bond, and the Owner shall be entitled to enforce any
<br />remedy available to the Owner. If the Surety proceeds as provided in Section 5.4, and the Owner refuses the
<br />payment tendered or the Surety has denied liability, in whole or in part, without further notice the Owner shall be
<br />entitled to enforce any remedy available to the Owner.
<br />7. If the Surety elects to act under Section 5.1, 5.2, or 5.3, then the responsibilities of the Surety to the Owner shall
<br />not be greater than those of the Contractor under the Construction Contract, and the responsibilities of the Owner
<br />to the Surety shall not be greater than those of the Owner under the Construction Contract. Subject to the
<br />Language conforms to AIA Document A312 Performance Bond, 2010 edition.
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