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<br />1 The Contractor and the Surety, jointly and severally, bind
<br />themselves, their heirs, executors, administrators, successors
<br />and assigns to the Owner for the performance of the
<br />Construction Contract, which is incorporated herein by
<br />reference.
<br />
<br />2 If the Contractor performs the Construction Contract, the
<br />Surety and the Contractor shall have no obligation under this
<br />Bond, except to participate in conferences as provided in
<br />subparagraph 3,1.
<br />
<br />3 If there is no Owner default, The Surety's obligation under
<br />this bond shall arise after:
<br />
<br />3.1 The Owner has notified the Contractor and the
<br />Surety at its address described in paragraph 10 below
<br />that the Owner is considering declaring a Contractor
<br />default and has requested and attempted to arrange a
<br />conference with the Contractor and the Surety to be held
<br />not later than fifteen days after receipt of such notice to
<br />discuss methods of performing the Construction
<br />Contract. If the Owner, Contractor and Surety agree, the
<br />Contractor shall be allowed a reasonable time to perform
<br />the Construction Contract, but such an agreement shall
<br />not waive the Owner's right, if any, subsequently to
<br />declare a Contractor default; and
<br />
<br />3.2 The Owner has declared a Contractor default and
<br />formally terminated the Contractor's right to complete
<br />the Contract. Such Contractor default shall not be
<br />declared earlier than twenty days after the Contractor
<br />and the Surety have received notice as provided in
<br />subparagraph 3.1 ; and
<br />
<br />3.3 The Owner has agreed to pay the balance of the
<br />contract price to the Surety in accordance with the terms
<br />of the Construction Contract or to a contractor selected
<br />to perform the Construction Contract in accordance with
<br />the terms of the Contract with the Owner,
<br />
<br />4 When the Owner has satisfied the conditions of paragraph
<br />3, the Surety shall promptly and at the Surety's expense take
<br />one of the following actions:
<br />
<br />4.1 Arrange for the Contractor, with the consent of the
<br />Owner, to perform and complete the Construction
<br />Contract; or
<br />
<br />4.2 Undertake to perform and complete the Construction
<br />Contract itself, through its agents or through independent
<br />contractors; or
<br />
<br />4,3 Obtain bids or negotiated proposals from qualified
<br />contractors acceptable to the owner for a contract for
<br />"performance and completion of the eonstruction
<br />contract, arrange for a contract to be prepared for
<br />execution by the Owner and the contractor selected with
<br />the Owner's concurrence, to be secured with
<br />performance and payment bonds executed by a qualified
<br />surety equivalent to the bonds issued on the Construction
<br />Contract, and pay to the Owner the amount of damages
<br />as described in paragraph 6 in excess of the balance of
<br />the contract price incurred by the owner resulting from
<br />the Contractor's default; or
<br />
<br />4.4 Waive its right to perform and complete, arrange for
<br />completion, or obtain a new contractor with reasonable
<br />promptness under the circumstances:
<br />.1 After investigation, determine the amount for
<br />which it may be liable to the Owner and, as soon as
<br />practical after the amount is determined, tender
<br />payment therefore to the Owner; or
<br />
<br />.2 deny liability in whole or in part and notify the
<br />Owner citing reasons therefore.
<br />
<br />5 If the Surety does not proceed as provided in paragraph 4
<br />with reasonable promptness, the Surety shall be deemed to
<br />be in default on this Bond 15 days after receipt of an
<br />additional written notice from the Owner to the Surety
<br />demanding that the surety perform its obligations under this
<br />bond, and the Owner shall be entitled to enforce any remedy
<br />available to the Owner. If the Surety proceeds as provided
<br />in subparagraph 4.4, and the Owner refuses the payment
<br />tendered or the Surety has denied liability, in whole or in
<br />part, without further notice the Owner shall be entitled to
<br />enforce any remedy available to the owner.
<br />
<br />6 After the Owner has terminated the Contractor's right to
<br />complete the Construction Contract, and if the Surety elects
<br />to act under subparagraph 4.1, 4,2 or 4,3 above, then
<br />responsibilities of the Surety to the Owner shall not be
<br />greater than those of the Contractor under the Construction
<br />Contract, and the responsibilities of the Owner to the Surety
<br />shall not be greater than those of the Owner under the
<br />Construction Contract. To the limit of the amount of this
<br />Bond, but subject to commitment by the Owner of the
<br />balance of the contract price to mitigation of costs and
<br />damages on the Construction Contract, the Surety is
<br />obligated without duplication for:
<br />
<br />6.1 The responsibilities of the Contractor for correction
<br />of defective work and completion of the Construction
<br />Contract;
<br />
<br />AlA DOCUMENT A312. PERFORMANCE BOND AND PAYMENT BOND. DECEMBER 1984 EDITION. AIA@
<br />THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVE., N,W,. W ASHlNGTON. D.C. 20006
<br />THIRD PRINTING, MARCH 1987
<br />
<br />S-4149 (7/99)
<br />
<br />A312-1984
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