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<br />1. Contractor and Surety, jointly and severally, bind themselves, their heirs,
<br />executors, administrators, successors, and assigns to Owner for the performance of
<br />the Contract, which is incorporated herein by reference.
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<br />2. If Contractor performs the Contract, Surety and Contractor have no obligation
<br />under this Bond, except to participate in conferences as provided in Paragraph 3.1.
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<br />3. If there is no Owner Default, Surety's obligation under this Bond shall arise
<br />after:
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<br />3.1. Owner has notified Contractor and Surety, at the addresses described in
<br />Paragraph 10 below, that Owner is considering declaring a Contractor
<br />Default and has requested and attempted to arrange a conference with
<br />Contractor and Surety to be held not later than 15 days after receipt of
<br />such notice to discuss methods of performing the Contract. If Owner,
<br />Contractor and Surety agree, Contractor shall be allowed a' reasonable
<br />time to perform the Contract, but such an agreement shall not waive
<br />Owner's right, if any, subsequently to declare a Contractor Default; arid
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<br />3.2. Owner has declared a Contractor Default and formally terminated
<br />Contractor's right to complete the Contract. Such Contractor Default
<br />shall not be declared earlier than 20 days after Contractor and Surety
<br />have received notice as provided in Paragraph 3.1; and
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<br />3.3. Owner has agreed to pay the Balance of the Contract Price to:
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<br />'1
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<br />1. Surety in accordance with the terms of the Contract;
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<br />"' )
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<br />2. Another contractor selected pursuant to Paragraph 4.3 to perform the
<br />Contract.
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<br />4. When Owner has satisfied the conditions of Paragraph 3, Surety shall promptly
<br />and at Surety's expense take one of the followin~ actions:
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<br />4.1. Arrange for Contractor, with consent of Owner, to perform and
<br />complete the Contract; or
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<br />4.2. Undertake to perform and complete the Contract itself, through its
<br />agents or through independent contractors; or
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<br />4.3. Obtain bids or negotiated proposals from qualified contractors acceptable
<br />to Owner for a contract for performance and completion of the Contract,
<br />arrange for a contract to be prepared for execution by Owner and
<br />Contractor selected with Owner's concurrence, to be secured with
<br />performance and payment bonds executed by a qualified surety
<br />equivalent to the bonds issued on the Contract, and pay to Owner the
<br />amount of damages as described in Paragraph 6 in excess of the Balance
<br />of the Contract Price incurred by Owner resulting from Contractor
<br />Default; or
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<br />4.4. Waive its right to perform and complete, arrange for completion, or
<br />obtain a new contractor and with reasonable promptness under the
<br />circumstances:
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<br />1. After investigation, detennine the amount for which it may be liable
<br />to Owner and, as soon as practicable after the amount is detennined,
<br />tender payment therefor to Owner; or
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<br />2. Deny liability in whole or in part and notify Owner citing reasons
<br />therefor.
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<br />5. If Surety does not proceed as provided in Paragraph 4 with reasonable
<br />promptness, Surety shall be deemed to be in default on this Bond 15 days after
<br />receipt of an additional written notice from Owner to Surety demanding that Surety
<br />perform its obligations under this Bond, and Owner shall be entitled to enforce any
<br />remedy available to Owner. If Surety proceeds as provided in Paragraph 4.4, and
<br />Owner refuses the payment tendered or Surety has denied liability, in whole or in
<br />part, without further notice Owner shall be entitled to enforce any remedy available
<br />to Owner.
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<br />6. After Owner has tenninated Contractor's right to complete the Contract, and if
<br />Surety elects to act under Paragraph 4.1, 4.2, or 4.3 above, then the responsibilities
<br />of Surety to Owner shall not be greater than those of Contractor under the Contract,
<br />and the responsibilities of Owner to Surety shall not be greater than those of Owner
<br />under the Contract. To a limit of the amount of this Bond. but subject to
<br />comminnent by Owner of the Balance of the Contract Price to mitigation of costs
<br />and damages on the Contract, Surety is obligated without duplication for:
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<br />6.1. The responsibilities of Contractor for correction of defective Work and
<br />completion of the Contract;
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<br />6.2. Additional legal, design professional. and delay costs resulting from
<br />Contractor's Default, and resulting from the actions or failure to act of
<br />Surety under Paragraph 4; and
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<br />6.3. Liquidated damages, or if no liquidated damages are specified in the
<br />Contract, actual damages caused by delayed performance or non-
<br />performance of Contractor.
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<br />7. Surety shall not be liable to Owner or others for obligations of Contractor that
<br />are unrelated to the Contract, and the Balance of the Contract Price shall not be
<br />reduced or set off on account of any such unrelated obligations. No right of action
<br />shall accrue on this Bond to any person or entity other than Owner or its heirs.
<br />executors, administrators. or successors.
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<br />8. Surety hereby waives notice of any change, including changes of time, to
<br />Contract or to related subcontracts. purchase orders, and other obligations.
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<br />9. Any proceeding, legal or equitable, under this Bond may be instituted in any
<br />court of competent jurisdiction in the location in which the Work or pan of the
<br />Work is located and shall be instituted within two years after Contractor Default or
<br />within two years after Contractor ceased working or within two years after Surety
<br />refuses or fails to perform its obligations under this Bond, whichever occurs first. If
<br />the provisions of this paragraph are void or prohibited by law, the minimum period
<br />of limitation available to sureties as a defense in the jurisdiction of the suit shall be
<br />applicable.
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<br />10. Notice to Surety, Owner, or Contractor shall be mailed or delivered to the
<br />address shown on the signature page.
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<br />11. When this Bond has been furnished to comply with a statutory requirement in
<br />the location where the Contract was to be performed, any provision in this Bond
<br />conflicting with said statutory requirement shall be deemed deleted herefrom and
<br />provisions confonning to such statutory requirement shall be deemed incorporated
<br />herein. The intent is that this Bond shall be consllUed as a statutory bond and not as
<br />a common law bond.
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<br />12. Definitions.
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<br />12.1 Balance of the Contract Price: The total amount payable by Owner to
<br />Contractor under the Contract after all proper adjusnnents have been
<br />made, including allowance to Contractor of any amounts received or to
<br />be received by Owner in settlement of insurance or other Claims for
<br />damages to which Contractor is entitled, reduced by all valid and proper
<br />payments made to or on behalf of Contractor under the Contract.
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<br />12.2. Contract: The agreement between Owner and Contractor identified on
<br />the signature page. including all Contract Documents and changes
<br />thereto .
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<br />12.3. Contractor Default: Failure of Contractor. which has neither been
<br />remedied nor waived, to perform or otherwise to comply with the terms
<br />of the Contract.
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<br />12.4. Owner Default: Failure of Owner, which has neither been remedied nor
<br />waived, to pay Contractor as required by the Contract or to perform and
<br />complete or comply with the other terms thereof.
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<br />FOR INFORMA TION ONLY - Name, Address and Telephone
<br />Surety Agency or Broker
<br />Owner's Respresentative (engineer or other party)
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<br />00610-1
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