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1. The Contractor and Surety, jointly and severally, bind
<br />themselves, their heirs, executors, administrators,
<br />successors, and assigns to the Owner to pay for labor,
<br />materials, and equipment furnished for use in the
<br />performance of the Construction Contract, which is
<br />incorporated herein by reference, subject to the
<br />following terms.
<br />2. If the Contractor promptly makes payment of all sums
<br />due to Claimants, and defends, indemnifies, and holds
<br />harmless the Owner from claims, demands, liens, or
<br />suits by any person or entity seeking payment for
<br />labor, materials, or equipment furnished for use in the
<br />performance of the Construction Contract, then the
<br />Surety and the Contractor shall have no obligation
<br />under this Bond.
<br />3. If there is no Owner Default under the Construction
<br />Contract, the Surety's obligation to the Owner under
<br />this Bond shall arise after the Owner has promptly
<br />notified the Contractor and the Surety (at the address
<br />described in Paragraph 13) of claims, demands, liens,
<br />or suits against the Owner or the Owner's property by
<br />any person or entity seeking payment for labor,
<br />materials, or equipment furnished for use in the
<br />performance of the Construction Contract, and
<br />tendered defense of such claims, demands, liens, or
<br />suits to the Contractor and the Surety.
<br />4. When the Owner has satisfied the conditions in
<br />Paragraph 3, the Surety shall promptly and at the
<br />Surety's expense defend, indemnify, and hold harmless
<br />the Owner against a duly tendered claim, demand,
<br />lien, or suit.
<br />5. The Surety's obligations to a Claimant under this Bond
<br />shall arise after the following:
<br />5.1 Claimants who do not have a direct contract
<br />with the Contractor,
<br />5.1.1 have furnished a written notice of non-
<br />payment to the Contractor, stating with
<br />substantial accuracy the amount claimed
<br />and the name of the party to whom the
<br />materials were, or equipment was,
<br />furnished or supplied or for whom the
<br />labor was done or performed, within
<br />ninety (90) days after having last
<br />performed labor or last furnished
<br />materials or equipment included in the
<br />Claim; and
<br />5.1.2 have sent a Claim to the Surety (at the
<br />address described in Paragraph 13).
<br />5.2 Claimants who are employed by or have a direct
<br />contract with the Contractor have sent a Claim
<br />to the Surety (at the address described in
<br />Paragraph 13).
<br />6. If a notice of non-payment required by Paragraph 5.1.1
<br />is given by the Owner to the Contractor, that is
<br />sufficient to satisfy a Claimant's obligation to furnish a
<br />written notice of non-payment under Paragraph 5.1.1.
<br />7. When a Claimant has satisfied the conditions of
<br />Paragraph 5.1 or 5.2, whichever is applicable, the
<br />Surety shall promptly and at the Surety's expense take
<br />the following actions:
<br />7.1 Send an answer to the Claimant, with a copy to
<br />the Owner, within sixty (60) days after receipt of
<br />the Claim, stating the amounts that are
<br />undisputed and the basis for challenging any
<br />amounts that are disputed; and
<br />7.2 Pay or arrange for payment of any undisputed
<br />amounts.
<br />7.3 The Surety's failure to discharge its obligations
<br />under Paragraph 7.1 or 7.2 shall not be deemed
<br />to constitute a waiver of defenses the Surety or
<br />Contractor may have or acquire as to a Claim,
<br />except as to undisputed amounts for which the
<br />Surety and Claimant have reached agreement.
<br />If, however, the Surety fails to discharge its
<br />obligations under Paragraph 7.1 or 7.2, the
<br />Surety shall indemnify the Claimant for the
<br />reasonable attorney's fees the Claimant incurs
<br />thereafter to recover any sums found to be due
<br />and owing to the Claimant.
<br />8. The Surety's total obligation shall not exceed the
<br />amount of this Bond, plus the amount of reasonable
<br />attorney's fees provided under Paragraph 7.3, and the
<br />amount of this Bond shall be credited for any
<br />payments made in good faith by the Surety.
<br />Payment Bond
<br />00 61 13-3
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