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<br /> 1 The Contractor and the Surety, jointly and severally , Paragraph 6 in excess of the Balance of the Con-
<br /> bind themselves, their heirs, executors, administrators, tract Price incurred by the Owner resulting from the
<br /> successors and assigns to the Owner for the perform- Contractor's default; or
<br /> ance of the Construction Contract, which is incorporated 4.4 Waive its right to perform and complete , arrange
<br /> herein by reference . for completion , or obtain a new contractor and with
<br /> 2 If the Contractor performs the Construction Contract, reasonable promptness under the circumstances:
<br /> the Surety and the Contractor shall have no obligation .1 After investigation , determine the amount for
<br /> under this Bond , except to participate in conferences as which it may be liable to the Owner and , as soon
<br /> provided in Subparagraph 3. 1 . as practicable after the amount is determined ,
<br /> 3 If there is no Owner Default, the Surety's obligation tender payment therefor to the Owner; or
<br /> under this Bond shall arise after: .2 Deny liability in whole or in part and notify the
<br /> 3. 1 The Owner has notified the Contractor and the Owner citing reasons therefor.
<br /> Surety at its address described in Paragraph 10 be- 5 If the Surety does not proceed as provided in Para-
<br /> low that the Owner is considering declaring aCon-
<br /> graph 4 with reasonable promptness, the Surety shall be
<br /> tractor Default and has requested and attempted to deemed to be in default on this Bond fifteen days after
<br /> arrange a conference with the Contractor and the receipt of an additional written notice from the Owner to
<br /> Surety to be held not later than fifteen days after re- the Surety demanding that the Surety perform its obliga-
<br /> ceipt of such notice to discuss methods of perform- tions under this Bond, and the Owner shall be entitled to
<br /> ing the Construction Contract. If the Owner, the Con- enforce any remedy available to the Owner. If the Surety
<br /> tractor and the Surety agree , the Contractor shall be proceeds as provided in Subparagraph 4 . 4 , and the
<br /> allowed a reasonable time to perform the Construc- Owner refuses the payment tendered or the Surety has
<br /> tion Contract, but such an agreement shall not waive denied liability, in whole or in part, without further notice
<br /> the Owner's right, if any, subsequently to declare a the Owner shall be entitled to enforce any remedy avail-
<br /> Contractor Default; and
<br /> able to the Owner.
<br /> 3.2 The Owner has declared a Contractor Default 6 After the Owner has terminated the Contractor's right
<br /> and formally terminated the Contractor's right to to complete the Construction Contract, and if the Surety
<br /> complete the contract. Such Contractor Default shall elects to act under Subparagraph 4 . 1 , 4. 2, or 4. 3 above,
<br /> not be declared earlier than twenty days after the then the responsibilities of the Surety to the Owner shall
<br /> Contractor and the Surety have received notice as not be greater than those of the Contractor under the
<br /> provided in Subparagraph 3 . 1 ; and Construction Contract, and the responsibilities of the
<br /> 3.3 The Owner has agreed to pay the Balance of the Owner to the Surety shall not be greater than those of
<br /> Contract Price to the Surety in accordance with the the Owner under the Construction Contract. To the limit
<br /> terms of the Construction Contract or to a contractor of the amount of this Bond , but subject to commitment
<br /> selected to perform the Construction Contract in ac- by the Owner of the Balance of the Contract Price to
<br /> cordance with the terms of the contract with the mitigation of costs and damages on the Construction
<br /> Owner. Contract, the Surety is obligated without duplication for:
<br /> 4 When the Owner has satisfied the conditions of Para- 6. 1 The responsibilities of the Contractor for correc-
<br /> graph 3, the Surety shall promptly and at the Surety's tion of defective work and completion of the Con-
<br /> expense take one of the following actions : struction Contract;
<br /> 4. 1 Arrange for the Contractor, with consent of the 6.2 Additional legal , design professional and delay
<br /> Owner, to perform and complete the Construction costs resulting from the Contractor's Default, and re-
<br /> Contract; or sulting from the actions or failure to act of the Surety
<br /> 4.2 Undertake to perform and complete the Con- under Paragraph 4; and
<br /> struction Contract itself, throu(ih its agents or 6.3 Liquidated damages, or if no liquidated damages
<br /> through independent contractors ; or are specified in the Construction Contract, actual
<br /> 4.3 Obtain bids or negotiated proposals from quali- damages caused by delayed performance or non-
<br /> fied contractors acceptable to the Owner for a con- performance of the Contractor.
<br /> tract for performance and completion of the Con- 7 The Surety shall not be liable to the Owner or others
<br /> struction Contract, arrange for a contract to be pre- for obligations of the Contractor that are unrelated to the
<br /> pared for execution by the Owner and the contractor Construction Contract, and the Balance of the Contract
<br /> selected with the Owner's concurrence , to be se- Price shall not be reduced or set off on account of any
<br /> cured with performance and payment bonds exe- such unrelated obligations . No right of action shall ac-
<br /> cuted by a qualified surety equivalent to the bonds crue on this Bond to any person or entity other than the
<br /> issued on the Construction Contract, and pay to the Owner or its heirs , executors, administrators or succes-
<br /> Owner the amount of damages as described in sors .
<br /> Printed in cooperation with the American Institute of Architects (AIA) by the Old Dominion Insurance Company. The language in this
<br /> document conforms exactly to the language used in AIA Document A312, December 1984 edition, third printing , March, 1987 .
<br /> 68-5301 (7/96) Page 2 of 6
<br /> A TRUE COPY
<br /> CERTIFICATION ON LAST PAGE
<br /> J . K. BARTON , CLERK
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