Exhibit 10.1
AIA® Document A111 TM – 1997
Standard Form of Agreement Between Owner and Contractor
where the basis for payment is the COST OF THE WORK PLUS A FEE with a negotiated
Guaranteed Maximum Price
AGREEMENT made as of the 13th day of September in the year 2006
(In words, indicate day, month and year)
BETWEEN the Owner:
(Name, address and other information)

MannKind Corporation
One Casper Street
Danbury, CT 06810
Phone: (203) 796-3423
Fax: (203) 798-7740
and the Contractor:
(Name, address and other information)
Torcon, Inc.
328 Newman Springs Road
Red Bank, NJ 07701
Phone: (732) 704-9800
Fax: (732) 704-9811
The Project is:
(Name and location)
Inhaleable Insulin Manufacturing Facility
Danbury, CT
The Engineer is:
(Name, address and other information)
CRB Consulting Engineers, Inc.
20 West Germantown Pike, Suite 170
Plymouth Meeting, PA 19426
The Architect (consultant to Engineer) is:
Kling
2301 Chestnut Street
Philadelphia, PA 19103
The Owner and Contractor agree as follows.
ADDITIONS AND DELETIONS: The author of this document has added information
needed for its completion. The author may also have revised the text of the
original AIA standard form. An Additions and Deletions Report that notes added
information as well as revisions to the standard form text is available from the
author and should be reviewed.
This document has important legal consequences. Consultation with an attorney is
encouraged with respect to its completion or modification.
This document is not intended for use in competitive bidding.
AIA Document A201-1997, General Conditions of the Contract for Construction, is
adopted in this document by reference. Do not use with other general conditions
unless this document is modified.
This document has been approved and endorsed by the Associated General
Contractors of America
ELECTRONIC COPYING of any portion of this AIA® Document to another electronic
file is prohibited and constitutes a violation of copyright laws as set forth in
the footer of this document.

 

AIA Document A111™ – 1997. Copyright © 1920, 1925, 1951, 1958, 1961, 1963, 1967,
1974, 1978, 1987 and 1997 by The American Institute of Architects. All rights
reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and
International Treaties. Unauthorized reproduction or distribution of this AIA®
Document, or any portion of it, may result in severe civil and criminal
penalties, and will be prosecuted to the maximum extent possible under the law.
This draft was produced by AIA software at 16:53:46 on 03/08/2005 under Order
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ARTICLE 1 THE CONTRACT DOCUMENTS
The Contract Documents consist of this Agreement, Conditions of the Contract
(General, Supplementary and other Conditions), Drawings, Specifications, Addenda
issued prior to execution of this Agreement, other documents listed in
Article 15 of this Agreement and Modifications issued after execution of this
Agreement; these form the Contract, and are as fully a part of the Contract as
if attached to this Agreement or repeated herein. The Contract represents the
entire and integrated agreement between the parties hereto and supersedes prior
negotiations, representations or agreements, either written or oral. An
enumeration of the Contract Documents, other than Modifications, appears in
Article 15. If anything in the other Contract Documents is inconsistent with
this Agreement, this Agreement shall govern. In the event of a conflict between
any of the Contract Documents other than this Agreement, the Contract Document
bearing the later date shall control.
ARTICLE 2 THE WORK OF THIS CONTRACT
§2.1 The Contractor shall fully execute the Work described in this Agreement and
in the Contract Documents or reasonably inferable by Contractor to produce the
results intended by the Contract Documents, except to the extent specifically
indicated in the Contract Documents to be the responsibility of others. The Work
shall be executed in a good and workmanlike manner and in accordance with the
intent and meaning of the Contract Documents as well as any additional Contract
Documents (including, without limitation, plans and specifications) that Owner
may furnish or approve for use in the Work, all of which when so furnished or
approved by Owner shall be deemed to be a part of the Contract.
ARTICLE 3 RELATIONSHIP OF THE PARTIES
The Contractor accepts the relationship of trust and confidence established by
this Agreement and covenants with the Owner to cooperate with the Engineer and
Architect and exercise the Contractor’s skill and judgment in furthering the
interests of the Owner; to furnish efficient business administration and
supervision; to furnish at all times an adequate supply of workers and
materials; and to perform the Work in an expeditious and economical manner
consistent with the Owner’s interests and with the Work Progress Schedule
described herein and all applicable budgets and work progress schedules (whether
bar, CPM, PERT or any modifications or combinations thereof, as chosen by
Owner), which Contractor agrees to prepare for the Owner’s and Engineer’s
review. The Owner agrees to furnish and approve, in a timely manner, information
required by the Contractor and to make payments to the Contractor in accordance
with the requirements of the Contract Documents.
ARTICLE 4 DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION
§ 4.1 The date of commencement of the Work shall be December 11, 2006.
(Insert the date of commencement, if it differs from the date of this Agreement
or, if applicable, state that the date will be fixed in a notice to proceed.)
If, prior to commencement of the Work, the Owner requires time to file
mortgages, mechanic’s liens and other security interests, the Owner’s time
requirement shall be as follows:
Not applicable
§ 4.2 The Contract Time shall be measured from the date of commencement.
§ 4.3 The Contractor shall achieve Substantial Completion of all mechanical
systems (including all testing and validation) in accordance with the following
schedule:

Central Utility Building: Not later than January 30, 2008
Building 2A: Not later than March 17, 2008
Building 2B: Not later than July 9, 2008
Contractor shall achieve Substantial Completion of the entire Work not later
than November 28, 2008.
(Insert number of calendar days. Alternatively, a calendar date may be used when
coordinated with the date of commencement. Unless stated elsewhere in the
Contract Documents, insert any requirements for earlier Substantial Completion
of certain portions of the Work.)
 

AIA Document A111™ — 1997. Copyright © 1920, 1925, 1951, 1958, 1961, 1963, 1967,
1974, 1978, 1987 and 1997 by The American Institute of Architects. All rights
reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and
International Treaties. Unauthorized reproduction or distribution of this AIA®
Document, or any portion of it, may result in severe civil and criminal
penalties, and will be prosecuted to the maximum extent possible under the law.
This draft was produced by AIA software at 16:53:46 on 03/08/2005 under Order
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Portion of Work
  Substantial Completion date

, subject to adjustments of this Contract Time as provided in the Contract
Documents.
(Insert provisions, if any, for liquidated damages relating to failure to
complete on time, or for bonus payments for early completion of the Work.)
§4.4 Prior to start of construction the Contractor shall prepare and submit for
the Owner’s review a detailed construction progress schedule for the Work
(“Project Schedule”), which shall be related to the entire Project and shall
indicate the estimated dates for the starting and completion of each of the
various stages of construction of the Work. The initial Project Schedule
prepared by Contractor and reviewed by Owner is attached to this Agreement as
Exhibit “B.” With the advance review of the Owner, it shall be revised as
required by the conditions of the Work, but not less frequently than monthly.
The Project Schedule shall show:
§4.4.1 A sequence of operations mutually agreeable to the Owner and the
Contractor;
§4.4.2 Shop drawing submittal schedule for the various items of the Work.
§4.4.3 The dates of proposed commencement and completion of each of the various
items of the Work; and
§4.4.4 Expected delivery dates for all materials and equipment.
The Project Schedule shall include a complete itemized breakdown of the Work.
It shall be the Contractor’s responsibility to use its best efforts to maintain
the progress of the Work in accordance with the Project Schedule. If Contractor
requests an extension of the Contract Time, the request shall be accompanied by
a revised Project Schedule showing all necessary adjustments consistent with the
requested extension.
If the Contractor shall fail in any respect to prosecute the Work with
promptness and diligence, or if the progress of the Work is such that in Owner’s
opinion its completion within the Contract Time (as adjusted under the terms of
the Contract Documents) is improbable, the Contractor shall, if Owner so
requests, use such overtime labor as shall be necessary to insure the completion
of the Work within the time specified above, but the Contractor shall have no
claim for any adjustment of the Contractor’s Fee or the Guaranteed Maximum Price
(as defined below), nor for reimbursement because of the extra expenses thereby
occasioned.
In executing this Agreement, Contractor represents the Contract Time (as may be
adjusted under the Contract Documents) appears to be reasonable, taking into
consideration the current status of the Contract Documents, the type of
construction planned and the site conditions, climatic conditions and industrial
conditions (including, without limitation, labor conditions) prevailing in the
area of the Project.
§ 4.5 Time is of the essence in the performance of this Agreement. The
Contractor acknowledges and recognizes that the Owner is entitled to full and
beneficial occupancy and use of the completed Work following expiration of the
Contract Time. The Contractor further acknowledges and agrees that if the
Contractor fails to achieve Substantial Completion of the Work within the
Contract Time, the Owner will sustain extensive damages and serious loss as a
result of such failure.
ARTICLE 5 BASIS FOR PAYMENT
§ 5.1 CONTRACT SUM
§ 5.1.1 The Owner shall pay the Contractor the Contract Sum in current funds for
the Contractor’s performance of the Contract. The Contract Sum is the Cost of
the Work as defined in Article 7 plus the Contractor’s Fee.
§ 5.1.2 The Contractor’s Fee is: One point two five percent (1.25%) of the Cost
of the Work

 

AIA Document A111™ – 1997. Copyright © 1920, 1925, 1951, 1958, 1961, 1963, 1967,
1974, 1978, 1987 and 1997 by The American Institute of Architects. All rights
reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and
International Treaties. Unauthorized reproduction or distribution of this AIA®
Document, or any portion of it, may result in severe civil and criminal
penalties, and will be prosecuted to the maximum extent possible under the law.
This draft was produced by AIA software at 16:53:46 on 03/08/2005 under Order
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(State a lump sum, percentage of Cost of the Work or other provision for
determining the Contractor’s Fee, and describe the method of adjustment of the
Contractor’s Fee for changes in the Work.)
The Contractor’s Fee on changes in the Work as defined in Article 7 of AIA
Document A201-1997 shall be one point two five percent (1.25%) of the cost of
performing the change in the Work as determined by such Article 7, and ten
percent (10%) of such cost as compensation in full for the Contractor’s General
Conditions costs as defined in Section 5.2.1, below.
§ 5.2 GUARANTEED MAXIMUM PRICE
§ 5.2.1 The sum of the Cost of the Work and the Contractor’s Fee is guaranteed
by the Contractor not to exceed One Hundred and Fourteen Million, Twenty Two
Thousand, Five Hundred and Seventy-Eight Dollars ($114,022,578.00), based on the
terms and conditions of the Torcon Control Estimate (Revised) dated February 28,
2007 (attached as Exhibit “C” and sometimes referred to herein as the “GMP
Estimate”), subject to additions and deductions by Change Order as provided in
the Contract Documents. Such maximum sum is referred to in the Contract
Documents as the Guaranteed Maximum Price. Costs which would cause the
Guaranteed Maximum Price to be exceeded shall be paid by the Contractor without
reimbursement by the Owner. Contractor has provided Owner with a detailed
Guaranteed Maximum Price (GMP) Estimate which includes a breakdown of all
anticipated Costs of the Work, including Contractor’s General Conditions costs.
As used herein, “General Conditions” costs shall mean the costs of those
facilities and services necessary for the proper execution and completion of the
Work but which are not incorporated in the Work, such as the salaries, bonuses
and expenses of field office personnel, the costs of temporary facilities, the
costs of implementing and executing safety programs, premiums for insurance
required by this Agreement, and the costs of the Contractor’s demobilization,
clean-up and removal of field office. In the event of any conflict between the
terms of the GMP Estimate and the terms of this Agreement or of the accompanying
General Conditions of the Contract for Construction, AIA Document A201-1997, as
modified (“AIA Document A201-1997”), the terms of this Agreement and AIA
Document A201-1997 shall govern.
§ 5.2.2 The Guaranteed Maximum Price is based on the following alternates, if
any, which are described in the Contract Documents and are hereby accepted by
the Owner:
(State the numbers or other identification of accepted alternates. If decisions
on other alternates are to be made by the Owner subsequent to the execution of
this Agreement, attach a schedule of such other alternates showing the amount
for each and the date when the amount expires.)
§ 5.2.3 Unit prices, if any, are as follows:
Description            Units            Price ($ 0.00)
§ 5.2.4 Allowances, if any, are as follows
(Identify and state the amounts of any allowances, and state whether they
include labor, materials, or both.)
Allowance            Amount ($ 0.00)           Included items
§ 5.2.5 Assumptions, if any, on which the Guaranteed Maximum Price is based are
as follows:
§ 5.2.6 To the extent that the Drawings and Specifications are anticipated to
require further development by the Engineer or Architect, the Contractor has
provided in the Guaranteed Maximum Price for such further development consistent
with the Contract Documents and reasonably inferable therefrom. Such further
development does not include such things as changes in scope, systems, kinds and
quality of materials, finishes or equipment, all of which, if required, shall be
incorporated by Change Order.
§.5.2.7 The Guaranteed Maximum Price shall include a fixed contingency line item
which includes a design contingency as well as a construction contingency (the
“Contingency”) in the amount of Seven Million, Five
 

AIA Document A111™ — 1997. Copyright © 1920, 1925, 1951, 1958, 1961, 1963, 1967,
1974, 1978, 1987 and 1997 by The American Institute of Architects.All rights
reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and
International Treaties. Unauthorized reproduction or distribution of this AIA®
Document, or any portion of it, may result in severe civil and criminal
penalties, and will be prosecuted to the maximum extent possible under the law.
This draft was produced by AIA software at 16:53:46 on 03/08/2005 under Order
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Hundred and Forty-Six Thousand, One Hundred Dollars ($7,546,100.00) as detailed
in the Torcon Control Estimate (Revised) dated February 28, 2007. The parties
intend that the Contingency is to be used for Costs of the Work not anticipated
by the Contractor at the time the GMP was established, whether resulting from
errors or omissions of the Contractor, the failure of Subcontractors to fully
perform, increases in the prices of materials, or from development or evolution
of the design of the Project but shall not be used for Changes in the Work. A
separate contingency will be established by the Owner to fund the cost of
Changes in the Work. Subject to Owner review and approval (which approval shall
not be unreasonably withheld), Contractor may access and bill against this
Contingency line item whenever Contractor’s actual costs for any other line
items exceeds the costs reflected in the GMP Budget for those line items, and
Owner shall pay or reimburse Contractor pursuant to Article 12 for such
contingency billings provided that such payment or reimbursement is for a Cost
of the Work item, and does not cause the Guaranteed Maximum Price to be
exceeded. Notwithstanding anything to the contrary, Contingency funds cannot be
used to pay for the cost of Work performed by a “Related Party” as that term is
defined in Section 10.4 below (“Self-Performed Work”). Any increases in the
price of materials required to perform the Work that are not anticipated by
Contractor at the time the GMP was established shall be paid from the
Contingency. If the Contingency has been fully depleted, the GMP shall be
increased by Change Order for the amount of any such increases in the price of
materials that are not paid out of the Contingency.
Whenever Contractor’s estimate for any given line item in its GMP Budget (with
the exception of any line items associated with Costs of Self-Performed Work)
exceeds the cost to complete the Work under that line item, Contractor may
transfer the excess to the Contingency line item, subject to Owner review and
approval, and thereafter seek Owner’s approval to access and bill against the
Contingency line item as provided in the immediately preceding paragraph.
Concurrently with its pay applications, Contractor will provide Owner with all
documentation Owner reasonably requires to identify each transfer included in
the application and the effect of the transfer, if any, on the cost to complete
the Work. Any line item transfers approved by Owner under this Section 5.2.7
must be documented in a “no cost” Change Order signed by Owner.
ARTICLE 6 CHANGES IN THE WORK
§6.1 Adjustments to the Guaranteed Maximum Price on account of changes in the
Work (also referred to herein as a “Change”) may be determined by any of the
methods listed in Section 7.3.3 of AIA Document A201-1997 Change Orders.
§6.1.1 Owner, without invalidating the Contract, may order Changes in the Work
within the general scope of the Contract consisting of additions, deletions or
other revisions of the Work, with the Guaranteed Maximum Price and/or the
Contract Time being adjusted accordingly. Contractor acknowledges and agrees
that it shall not be entitled to adjust the Guaranteed Maximum Price or the
Contract Time except as provided in this Contract. All such Changes in the Work
shall be authorized by Change Order or Construction Change Directive, and shall
be performed under the applicable conditions of the Contract Documents.
§6.1.2 Upon issuance of a Change Order by Owner, Contractor and its
Subcontractors will perform the Change(s) in the Work incorporated by the Change
Order. In the event the Change Order results in an increased Cost of the Work,
Owner shall pay Contractor for such Change(s) in the Work in the time and manner
set forth in Article 12.
§6.1.3 Any difference between the Drawings and Specifications and any revised
drawings and specifications shall not constitute a Change in the Work unless
such differences are not reasonably inferable from the Drawings and
Specifications.
§6.1.4 Notwithstanding and pending resolution of any adjustment in the
Guaranteed Maximum Price or Contract Time with respect to a Change, Contractor
shall promptly proceed with Work required by any Change Order or Construction
Change Directive issued by Owner.
§6.2 Minor Changes in the Work
§6.2.1 Engineer, with Owner’s concurrence, will have authority to order minor
Changes in the Work not involving an adjustment to the Guaranteed Maximum Price
or an extension of the Contract Time and not inconsistent with the intent of the
Contract Documents. Such minor changes shall be effected by written order, and
shall be binding on Contractor, who shall carry out such written orders
promptly.
 

AIA Document A111™ — 1997. Copyright © 1920, 1925, 1951, 1958, 1961, 1963, 1967,
1974, 1978, 1987 and 1997 by The American Institute of Architects. All rights
reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and
International Treaties. Unauthorized reproduction or distribution of this AIA®
Document, or any portion of it, may result in severe civil and criminal
penalties, and will be prosecuted to the maximum extent possible under the law.
This draft was produced by AIA software at 16:53:46 on 03/08/2005 under Order
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§6.3 Limitation of Entitlement

§6.3.1 Nothing in this Article 6 shall excuse Contractor from proceeding with
the Contract as modified. Nothing contained in this Article 6 shall operate to
limit or extinguish any right or defense of Owner or Contractor contained
elsewhere in the Contract Documents.
ARTICLE 7 COSTS TO BE REIMBURSED

§ 7.1 COST OF THE WORK
The term Cost of the Work shall mean costs necessarily incurred by the
Contractor in the proper performance of the Work. Such costs shall be at rates
not higher than the standard paid at the place of the Project except with prior
consent of the Owner. The Cost of the Work shall include only the items set
forth in this Article 7.
§ 7.2 LABOR COSTS
§ 7.2.1 Wages of construction workers directly employed by the Contractor to
perform the construction of the Work at the site or, with the Owner’s approval,
at off-site workshops.
§ 7.2.2 Wages or salaries and bonuses of the Contractor’s supervisory, project
executive and administrative personnel when stationed at the field office, in
whatever capacity employed. Any field office personnel in addition to a
superintendent, assistant superintendent and watchman must be approved by Owner,
and will be charged for only such time as is actually spent on the job as well
as when Contractor’s staff is performing Project specific tasks off site.
(If it is intended that the wages or salaries of certain personnel stationed at
the Contractor’s principal or other offices shall be included in the Cost of the
Work, identify in Article 14 the personnel to be included and whether for all or
only part of their time, and the rates at which their time will be charged to
the Work.)
§ 7.2.3 Wages and salaries of the Contractor’s supervisory or administrative
personnel engaged at factories, workshops or on the road, in expediting the
production or transportation of materials or equipment required for the Work,
but only for that portion of their time required for the Work.
§ 7.2.4 Wages and salaries included in the Cost of the Work under Sections 7.2.1
through 7.2.3 paid or incurred by the Contractor shall be multiplied by a factor
of two point two five (2.25) for taxes, insurance, contributions, assessments
and benefits required by law or collective bargaining agreements and, for
personnel not covered by such agreements, customary benefits such as sick leave,
medical and health benefits, holidays, vacations and pensions..
§ 7.3 SUBCONTRACT COSTS
§ 7.3.1 Payments made by the Contractor to Subcontractors in accordance with the
requirements of the subcontracts.
§ 7.4 COSTS OF MATERIALS AND EQUIPMENT INCORPORATED IN THE COMPLETED
CONSTRUCTION
§ 7.4.1 Costs, including transportation and storage, of materials and equipment
incorporated or to be incorporated in the completed construction. Such materials
not incorporated or consumed on the Project will remain the property of the
Owner. Contractor must submit an ongoing accounting (including cost) of these
materials and a final material reconciliation prior to final Application for
Payment.
§ 7.4.2 Costs of materials described in the preceding Section 7.4.1 in excess of
those actually installed to allow for reasonable waste and spoilage. Unused
excess materials, if any, shall become the Owner’s property at the completion of
the Work or, at the Owner’s option, shall be sold by the Contractor. Any amounts
realized from such sales shall be credited to the Owner as a deduction from the
Cost of the Work.
§ 7.5 COSTS OF OTHER MATERIALS AND EQUIPMENT, TEMPORARY FACILITIES AND RELATED
ITEMS
§ 7.5.1 Costs, including transportation and storage, installation, maintenance,
dismantling and removal of materials, supplies, temporary facilities, machinery,
equipment, and hand tools not customarily owned by construction workers, that
are provided by the Contractor at the site and fully consumed in the performance
of the Work; and cost (less salvage value) of such items which are used but not
fully consumed, which remain the property of the Contractor.
§ 7.5.2 Rental charges for temporary facilities, machinery, equipment, and hand
tools not customarily owned by construction workers that are provided by the
Contractor at the site, whether rented from the Contractor or others, including
installation, minor repairs and replacements, dismantling, removal,
transportation and delivery costs
 

AIA Document A111™ — 1997. Copyright © 1920, 1925, 1951, 1958, 1961, 1963, 1967,
1974, 1978, 1987 and 1997 by The American Institute of Architects. All rights
reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and
International Treaties. Unauthorized reproduction or distribution of this AIA®
Document, or any portion of it, may result in severe civil and criminal
penalties, and will be prosecuted to the maximum extent possible under the law.
This draft was produced by AIA software at 16:53:46 on 03/08/2005 under Order
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thereof, at rental charges not to exceed AGC or CRG Rates for Contractor’s owned
equipment and AED or bluebook rates when rented from others.
§ 7.5.3 Costs of removal of construction-generated debris from the site.
§ 7.5.4 Costs of document reproductions, facsimile transmissions and
long-distance telephone calls, postage and parcel delivery charges, telephone
service at the site and reasonable petty cash expenses of the site office.
§ 7.5.5 That portion of the reasonable (economy class) transportation,
traveling, living and hotel expenses of the Contractor or of his officers or
employees in discharge of duties connected directly and solely with the Work,
when traveling more than thirty-five (35) miles one way from the Project. Costs
for mileage shall not exceed $0.485/mile.
§ 7.5.6 Costs of materials and equipment suitably stored off the site at a
mutually acceptable location, if approved in advance by the Owner.
§ 7.6 MISCELLANEOUS COSTS
§ 7.6.1 Except as excluded by Sections 8.1.9 and 8.1.10, that portion of
insurance and bond premiums that can be directly attributed to this Contract:
§ 7.6.2 Sales, use, lease, gross receipt or similar taxes imposed by a
governmental authority that are related to the Work.
§ 7.6.3 Fees and assessments for the building permit and for other permits,
licenses and inspections for which the Contractor is required by the Contract
Documents to pay.
§ 7.6.4 Fees of laboratories for tests required by the Contract Documents,
except those related to defective or nonconforming Work for which reimbursement
is excluded by Section 13.5.3 of AIA Document A201-1997 or other provisions of
the Contract Documents, and which do not fall within the scope of Section 7.7.3.
§ 7.6.5 Royalties and license fees paid for the use of a particular design,
process or product required by the Contract Documents; the cost of defending
suits or claims for infringement of patent rights arising from such requirement
of the Contract Documents; and payments made in accordance with legal judgments
against the Contractor resulting from such suits or claims and payments of
settlements made with the Owner’s consent. However, such costs of legal
defenses, judgments and settlements shall not be included in the calculation of
the Contractor’s Fee or subject to the Guaranteed Maximum Price. If such
royalties, fees and costs are excluded by other provisions of the Contract
Documents, then they shall not be included in the Cost of the Work.
§ 7.6.6 Data processing costs related to the Work.
§ 7.6.7 Permit fees, royalties and deposits lost for causes other than the
Contractor’s negligence or failure to fulfill a specific responsibility to the
Owner as set forth in the Contract Documents.
§ 7.6.8 Legal, mediation and arbitration costs, including attorneys’ fees, other
than those arising from disputes between the Owner and Contractor, reasonably
incurred by the Contractor in the performance of the Work and with the Owner’s
prior written approval; which approval shall not be unreasonably withheld.
§ 7.6.9 Expenses incurred in accordance with the Contractor’s standard personnel
policy for relocation and temporary living allowances of personnel required for
the Work, if approved by the Owner in writing.
§ 7.7 OTHER COSTS AND EMERGENCIES
§ 7.7.1 Other costs incurred in the performance of the Work if and to the extent
approved in advance in writing by the Owner.
§ 7.7.2 Costs due to emergencies incurred in taking action to prevent threatened
damage, injury or loss in case of an emergency affecting the safety of persons
and property, as provided in Section 10.6 of AIA Document A201-1997.
 

AIA Document A111™ — 1997. Copyright © 1920, 1925, 1951, 1958, 1961, 1963, 1967,
1974, 1978, 1987 and 1997 by The American Institute of Architects. All rights
reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and
International Treaties. Unauthorized reproduction or distribution of this AIA®
Document, or any portion of it, may result in severe civil and criminal
penalties, and will be prosecuted to the maximum extent possible under the law.
This draft was produced by AIA software at 16:53:46 on 03/08/2005 under Order
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§ 7.7.3 Costs of repairing or correcting damaged or nonconforming Work executed
by the Contractor, Subcontractors or suppliers, provided that such damaged or
nonconforming Work was not caused by negligence or failure to fulfill a specific
responsibility of the Contractor and only to the extent that the cost of repair
or correction is not recoverable by the Contractor from insurance, sureties,
Subcontractors or suppliers.
§7.7.4 Losses and expenses, not compensated by insurance or otherwise, sustained
by the Contractor in connection with the Work, provided they have resulted from
causes other than the fault or neglect of the Contractor, any subcontractor, or
anyone directly or indirectly employed by any of them or for whose acts any of
them may be liable. Such losses shall include settlements made with the written
consent and approval of the Client.
§7.7.5 Costs of water, power, fuel, first aid, temporary facilities, winter
protection, OSHA protection, blueprints, photographs, and field office supplies.
§7.7.6 General Conditions costs as set forth in the GMP Estimate as described in
Section 5.2.1 and attached as Exhibit “C”.
§7.7.7 The cost of all glass protection shall be a Cost of the Work. The
Contractor shall also replace all broken or otherwise damaged glass before
Substantial Completion of the Work. The cost of breakage or other such damage to
the glass shall be a Cost of the Work, if such breakage or damage cannot be
determined to be the fault of the Contractor or a specifically identifiable
Subcontractor, provided that such costs shall not increase the Guaranteed
Maximum Cost.
§7.7.8 Any cost referred to in Section 8.1.6 of this Agreement that cannot be
determined to be the fault of the Contractor or any specifically identifiable
Subcontractor or other person or persons referred to in that provision shall be
a Cost of the Work, provided that the GMP shall not be increased because of such
costs.
§7.7.9 If requested by Owner, the cost of a final certified audit of the
Contractor’s Cost of the Work for any project unless such audit reveals an
overcharge in excess of the GMP.
ARTICLE 8 COSTS NOT TO BE REIMBURSED
§ 8.1 The Cost of the Work shall not include:
§ 8.1.1 Salaries and other compensation of the Contractor’s personnel stationed
at the Contractor’s principal office or offices other than the site office,
except as specifically provided in Sections 7.2.2 and 7.2.3.
§ 8.1.2 Expenses of the Contractor’s principal office and offices other than the
field office.
§ 8.1.3 Overhead and general expenses of any kind, except as may be expressly
included in Article 7.
§ 8.1.4 The Contractor’s capital expenses, including interest on the
Contractor’s capital employed for the Work.
§ 8.1.5 Rental costs of machinery and equipment, except as specifically provided
in Section 7.5.2.
§ 8.1.6 Costs due to the negligence or failure to fulfill a specific
responsibility of the Contractor, Subcontractors and suppliers or anyone
directly or indirectly employed by any of them or for whose acts any of them may
be liable, including but not limited to the cost to correct defective or
nonconforming Work, dispose of materials and equipment wrongly supplied, or
making good any damage to property.
§ 8.1.7 Any cost not specifically and expressly described in Article 7.
§ 8.1.8 Costs, other than costs included in Change Orders approved by the Owner,
that would cause the Guaranteed Maximum Price to be exceeded.
§8.1.9 Cost of Contractor’s general fidelity insurance, and any losses sustained
by Contractor in connection with theft, robbery, or embezzlement caused by
defalcation of Contractor’s employees.
§8.1.10 The cost of insurance on equipment owned by Contractor.
 

AIA Document A111™ — 1997. Copyright © 1920, 1925, 1951, 1958, 1961, 1963, 1967,
1974, 1978, 1987 and 1997 by The American Institute of Architects. All rights
reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and
International Treaties. Unauthorized reproduction or distribution of this AIA®
Document, or any portion of it, may result in severe civil and criminal
penalties, and will be prosecuted to the maximum extent possible under the law.
This draft was produced by AIA software at 16:53:46 on 03/08/2005 under Order
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§8.1.11 Contractor’s entertainment expense.
§8.1.12 Any of Contractor’s income, excess profits, franchise taxes, and the
cost of any licenses obtained or other taxes or levies imposed in connection
with the general conduct of Contractor’s business.
§8.1.13 Any of the Contractor’s travel expenses within seventy (70) miles or
less of the Project except as Owner hereafter may specifically authorize in
writing.
§8.1.14 Office supplies and office equipment and furniture, except as used at
the field office.
§8.1.15 Dues and/or assessments of construction organizations, unions or
associations.
§8.1.16 Any costs resulting from unacceptable work by the Contractor or anyone
directly employed by him, making good on damaged property, corrective work, or
excess costs for material or labor or otherwise, as may be determined by the
Engineer or Owner shall be borne by the Contractor without reimbursement or
liability by the Owner. Such work shall be performed and completed when so
directed by Owner in accordance with Article 12 of the General Conditions.
§8.1.17 Costs incurred or paid to perform pursuant to warranties and guarantees.
§8.1.18 Legal costs (including attorney’s fees), except as provided in
Section 7.6.8.
§8.1.19 General Conditions costs incurred after the Final Completion of the
Work, as defined in Article 9 of the General Conditions.
ARTICLE 9 DISCOUNTS, REBATES, REFUNDS AND PURCHASE/LEASE DECISIONS
§ 9.1 All trade discounts, cash discounts earned through advance or prompt
payment, proceeds from insurance or the sale of surplus materials and equipment,
and the fair market value of any tools, supplies or equipment purchased for the
Work but not incorporated therein or sold, refunds of insurance or bond
premiums, and to the extent permitted by law, fees, commissions, and gratuities
received by Contractor, or any subsidiary or affiliate, in connection with the
Work shall be for the benefit of Owner and shall reduce the Cost of the Work.
Contractor shall require all of its subcontractors and suppliers, and shall
itself use best efforts to obtain the most favorable quantity and cash discounts
and rebates in making purchases of materials, supplies, equipment and tools, and
except in the case of fixed price subcontracts, all such discounts and rebates
shall be credited to the Owner and shall reduce the Cost of the Work.
§9.2 The Contractor is to determine the economic feasibility of purchasing or
leasing the equipment over the life of the applicable Project. If the decision,
with the Owner’s approval, is to lease, the rental rates should be in accordance
with the current rates in the Associated Equipment Dealers book. If the
decision, with the Owner’s approval, is to purchase the equipment, the equipment
will be returned to the Owner at the end of the Project in clean and good
working order. The Contractor may be given an option to purchase the equipment
for the Owner at a mutually acceptable discounted rate at the end of the
Project. All equipment, machinery and tools expressly purchased by the
Contractor for each Project, under the General Conditions, shall be accounted
for and remain on site and become the property of the Owner, unless agreed to in
advance in writing between the Owner and Contractor.
§ 9.3 Amounts that accrue to the Owner in accordance with the provisions of
Section 9.1 shall be credited to the Owner as a deduction from the Cost of the
Work.
ARTICLE 10 SUBCONTRACTS AND OTHER AGREEMENTS
§ 10.1 Those portions of the Work that the Contractor does not customarily
perform with the Contractor’s own personnel shall be performed under
subcontracts or by other appropriate agreements with the Contractor. The Owner
may designate specific persons or entities from whom the Contractor shall obtain
bids. The Contractor shall make every effort to obtain at least three
(3) responsive bids from Subcontractors and from suppliers of materials or
equipment fabricated especially for the Work and shall deliver such bids to the
Owner. The Owner shall then determine, with the advice of the Contractor and the
Engineer, which bids will be accepted. The Contractor shall not be required to
contract with anyone to whom the Contractor has reasonable objection.
 

AIA Document A111™ — 1997. Copyright © 1920, 1925, 1951, 1958, 1961, 1963, 1967,
1974, 1978, 1987 and 1997 by The American Institute of Architects. All rights
reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and
International Treaties. Unauthorized reproduction or distribution of this AIA®
Document, or any portion of it, may result in severe civil and criminal
penalties, and will be prosecuted to the maximum extent possible under the law.
This draft was produced by AIA software at 16:53:46 on 03/08/2005 under Order
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§ 10.2 If a specific bidder among those whose bids are delivered by the
Contractor to the Owner or Engineer (1) is recommended to the Owner by the
Contractor; (2) is qualified to perform that portion of the Work; and (3) has
submitted a bid that conforms to the requirements of the Contract Documents
without reservations or exceptions, but the Owner requires that another bid be
accepted, then the Contractor may require that a Change Order be issued to
adjust the Guaranteed Maximum Price by the difference between the bid of the
person or entity recommended to the Owner by the Contractor and the amount of
the subcontract or other agreement actually signed with the person or entity
designated by the Owner.
§ 10.3 Subcontracts or other agreements shall conform to the applicable payment
provisions of this Agreement, and shall not be awarded on the basis of cost plus
a fee without the prior consent of the Owner.
§ 10.4 Contractor shall not enter into any contract, subcontract, purchase order
or other such agreement in connection with the Work with any Related Party, as
defined below, unless (i) Contractor has satisfied the requirements of this
Article 10 with respect to such arrangement and (ii) such arrangement has been
approved in writing by Owner, after full disclosure in writing by Contractor to
Owner of such affiliation or relationship and all details relating to the
proposed agreement. The terms of any such agreement must conform to the
requirements of the Contract Documents. “Related Party” means (a) with respect
to any officer, employee, or owner of the Contractor, an individual who is a
relative or an entity owned or managed by a relative, and (b) any party or
entity related to or affiliated with the Contractor or in which the Contractor
has direct or indirect ownership or control, including, without limitation,
(i) any entity owned in whole or in part by the Contractor, (ii) any party or
entity with more than five percent (5%) interest in the Contractor, and
(iii) any entity in which any officer, director, employee, partner or
shareholder (or member of the family of any of the foregoing persons) of the
Contractor or any entity owned by the Contractor has a direct or indirect
interest. “Relative” means father, mother, son, daughter, brother, sister,
uncle, aunt, first cousin, nephew, niece, husband, wife, father-in-law,
mother-in-law, sister-in-law, brother-in-law, stepfather, stepmother, stepson,
stepdaughter, stepbrother, stepsister, half brother, or half sister.
ARTICLE 11 ACCOUNTING RECORDS
The Contractor shall keep full and detailed accounts and exercise such controls
as may be necessary for proper financial management under this Contract, and the
accounting and control systems shall be satisfactory to the Owner. The Owner and
the Owner’s accountants shall be afforded access to, and shall be permitted to
audit and copy, the Contractor’s records, books, correspondence, instructions,
drawings, receipts, subcontracts, purchase orders, vouchers, memoranda and other
data relating to this Contract, and the Contractor shall preserve these for a
period of three years after final payment, or for such longer period as may be
required by law.
ARTICLE 12 PAYMENTS

§ 12.1 PROGRESS PAYMENTS
§ 12.1.1 Based upon Applications for Payment submitted to the Owner by the
Contractor, the Owner shall make progress payments on account of the Contract
Sum to the Contractor as provided below and elsewhere in the Contract Documents.
§ 12.1.2 The period covered by each Application for Payment shall be one
calendar month ending on the last day of the month, or as follows:
§ 12.1.3 Provided that an Application for Payment and all supporting
documentation required hereunder is received by the Owner not later than the
first day of a month, the Owner shall make payment to the Contractor of
undisputed amounts not later than the thirtieth day of the same month. If an
Application for Payment is received by the Owner after the application date
fixed above, payment of undisputed amounts shall be made by the Owner not later
than thirty ( 30 ) days after the Owner receives the Application for Payment and
all supporting documentation.
§ 12.1.4 With each Application for Payment, the Contractor shall submit
payrolls, petty cash accounts, receipted invoices or invoices with check
vouchers attached, partial lien waivers in form acceptable to Owner from the
Contractor, its subcontractors and sub-subcontractors and all material
suppliers, and any other evidence required by the Owner, Owner’s lender or
Engineer to demonstrate that cash disbursements already made by the Contractor
on account of the Cost of the Work equal or exceed (1) progress payments already
received by the Contractor; less (2)
 

AIA Document A111™ — 1997. Copyright © 1920, 1925, 1951, 1958, 1961, 1963, 1967,
1974, 1978, 1987 and 1997 by The American Institute of Architects. All rights
reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and
International Treaties. Unauthorized reproduction or distribution of this AIA®
Document, or any portion of it, may result in severe civil and criminal
penalties, and will be prosecuted to the maximum extent possible under the law.
This draft was produced by AIA software at 16:53:46 on 03/08/2005 under Order
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that portion of those payments attributable to the Contractor’s Fee; plus
(3) payrolls for the period covered by the present Application for Payment.
§ 12.1.5 Each Application for Payment shall be based on the most recent schedule
of values submitted by the Contractor in accordance with the Contract Documents.
The schedule of values shall allocate the entire Guaranteed Maximum Price among
the various portions of the Work, except that the Contractor’s Fee shall be
shown as a single separate item. The schedule of values shall be prepared in
such form and supported by such data to substantiate its accuracy as the Owner
may require. This schedule, unless objected to by the Owner, shall be used as a
basis for reviewing the Contractor’s Applications for Payment.
§ 12.1.6 Applications for Payment shall show the percentage of completion of
each portion of the Work as of the end of the period covered by the Application
for Payment. The percentage of completion shall be the lesser of (1) the
percentage of that portion of the Work which has actually been completed; or
(2) the percentage obtained by dividing (a) the expense that has actually been
incurred by the Contractor on account of that portion of the Work for which the
Contractor has made or intends to make actual payment prior to the next
Application for Payment by (b) the share of the Guaranteed Maximum Price
allocated to that portion of the Work in the schedule of values.
§ 12.1.7 Subject to other provisions of the Contract Documents, the amount of
each progress payment shall be computed as follows:

  .1   take that portion of the Guaranteed Maximum Price properly allocable to
completed Work as determined by multiplying the percentage of completion of each
portion of the Work by the share of the Guaranteed Maximum Price allocated to
that portion of the Work in the schedule of values. Pending final determination
of cost to the Owner of changes in the Work, amounts not in dispute shall be
included as provided in Section 7.3.8 of AIA Document A201-1997;     .2   add
that portion of the Guaranteed Maximum Price properly allocable to materials and
equipment delivered and suitably stored at the site for subsequent incorporation
in the Work, or if approved in advance by the Owner, suitably stored off the
site at a location agreed upon in writing;     .3   add the Contractor’s Fee,
computed as described in Section 5.1.2, and subtract ten percent (10%)
retention; provided, however, that retention shall not be withheld from the
Contractor’s Fee. The Contractor’s Fee shall be computed upon the Cost of the
Work described in the two preceding Clauses at the rate stated in Section 5.1.2;
    .4   subtract the aggregate of previous payments made by the Owner;     .5  
subtract the shortfall, if any, indicated by the Contractor in the documentation
required by Section 12.1.4 to substantiate prior Applications for Payment, or
resulting from errors subsequently discovered by the Owner’s accountants in such
documentation; and     .6   subtract amounts, if any, for which the Owner has
withheld or nullified approval of payment as provided in Section 9.5 of AIA
Document A201-1997.

§ 12.1.8 Except with the Owner’s prior approval, payments to Subcontractors
shall be subject to retainage of ten percent (10%). The Owner and the Contractor
shall agree upon a mutually acceptable procedure for review and approval of
payments and retention for Subcontractors.
§ 12.1.9 After approval by the Owner, the monthly payment shall be paid directly
to Contractor for distribution to subcontractors and suppliers who have
furnished labor, materials, services or equipment forming the basis of the
Application for Payment.
§ 12.2 FINAL PAYMENT
§ 12.2.1 Final payment, constituting the entire unpaid balance of the Contract
Sum, shall be made by the Owner to the Contractor when:
 

AIA Document A111™ — 1997. Copyright © 1920, 1925, 1951, 1958, 1961, 1963, 1967,
1974, 1978, 1987 and 1997 by The American Institute of Architects. All rights
reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and
International Treaties. Unauthorized reproduction or distribution of this AIA®
Document, or any portion of it, may result in severe civil and criminal
penalties, and will be prosecuted to the maximum extent possible under the law.
This draft was produced by AIA software at 16:53:46 on 03/08/2005 under Order
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.1 the Contractor has fully performed the Contract, including the requirements
of Section 9.10 of AIA Document A201-1997, except for the Contractor’s
responsibility to correct Work as provided in Section 12.2.2 of AIA Document
A201-1997, and to satisfy other requirements, if any, which extend beyond final
payment;
.2 all governmental, insurance and testing agencies have issued all
certificates, licenses and approvals that are preconditions to the Owner’s use
of the Project. In this regard, Contractor shall obtain and submit to Owner two
(2) copies of the Certificate of Occupancy (if applicable);
.3 the Owner shall have received two (2) copies of final conditional lien
releases from all persons furnishing labor, materials, services or equipment
under Contractor entitled to a lien on the Work Site, Building Project or any
part thereof, or, alternatively, has received from Contractor a bond or bonds to
release the Project and the Owner from the effects of any liens. In this regard,
no later than two (2) weeks after final payment, Contractor shall furnish Owner
with two (2) copies of final unconditional lien releases from all such persons,
.4 the Owner shall have received from the Contractor an assignment of warranties
and guarantees from all of the Subcontractors and suppliers, as well as two
(2) copies of all such warranties, guarantees and operation and maintenance
manuals;
.5 the Owner shall have received one (1) reproducible and one (1) copy of
Construction Record Drawings (or approved copies thereof), including CAD
as-built drawings stored in electronic format.
§ 12.2.2 The Owner’s final payment to the Contractor shall be made within the
time provided by Section 12.2.3. In the event Owner elects to forego the final
accounting described in that section, Owner shall make final payment no later
than forty-five (45) days after the satisfaction of the conditions in
Section 12.2.1. Subject to receiving the consent of Owner’s lender, if any,
Owner may release final payment, including retention, prior to this date for
portions of the Work fully completed by certain subcontractors or suppliers,
when Owner and Contractor so agree.
§ 12.2.3 The Owner’s accountants will review and report in writing on the
Contractor’s final accounting within 30 days after delivery of the final
accounting to the Owner by the Contractor. Based upon such Cost of the Work as
the Owner’s accountants report to be substantiated by the Contractor’s final
accounting, and provided the other conditions of Section 12.2.1 have been met,
the Owner will, within seven days after receipt of the written report of the
Owner’s accountants, either issue to the Contractor final payment or notify the
Contractor in writing of the Owner’s reasons for withholding all or any portion
of the final payment as provided in Section 9.5.1 of the AIA Document A201-1997.
The time periods stated in this Section 12.2.3 supersede those stated in
Section 9.4.1 of the AIA Document A201-1997.
§ 12.2.4 If the Owner’s accountants report the Cost of the Work as substantiated
by the Contractor’s final accounting to be less than claimed by the Contractor,
the Contractor shall be entitled to have the dispute resolved in a court of
competent jurisdiction. Pending a final resolution the Owner shall pay the
Contractor the undisputed portion of such Final Application for Payment.
§ 12.2.5 If, subsequent to final payment and at the Owner’s request, the
Contractor incurs costs described in Article 7 and not excluded by Article 8 to
correct defective or nonconforming Work, the Owner shall reimburse the
Contractor such costs and the Contractor’s Fee applicable thereto on the same
basis as if such costs had been incurred prior to final payment, but not in
excess of the Guaranteed Maximum Price. If the Contractor has participated in
savings as provided in Section 5.2, the amount of such savings shall be
recalculated and appropriate credit given to the Owner in determining the net
amount to be paid by the Owner to the Contractor.
ARTICLE 13 TERMINATION OR SUSPENSION
§ 13.2 The Contract may be terminated by the Owner for cause as provided in
Article 14 of AIA Document A201-1997. The amount, if any, to be paid to the
Contractor under Section 14.2.4 of AIA Document A201-1997 shall not cause the
Guaranteed Maximum Price to be exceeded, nor shall it exceed an amount
calculated as follows:
§ 13.2.1 Take the Cost of the Work incurred by the Contractor to the date of
termination;
 

AIA Document A111™ — 1997. Copyright © 1920, 1925, 1951, 1958, 1961, 1963, 1967,
1974, 1978, 1987 and 1997 by The American Institute of Architects. All rights
reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and
International Treaties. Unauthorized reproduction or distribution of this AIA®
Document, or any portion of it, may result in severe civil and criminal
penalties, and will be prosecuted to the maximum extent possible under the law.
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§ 13.2.2 Add the Contractor’s Fee computed upon the Cost of the Work to the date
of termination at the rate stated in Section 5.1.2 or, if the Contractor’s Fee
is stated as a fixed sum in that section, an amount that bears the same ratio to
that fixed-sum Fee as the Cost of the Work at the time of termination bears to a
reasonable estimate of the probable Cost of the Work upon its completion; and
§ 13.2.3 Subtract the aggregate of previous payments made by the Owner.
§ 13.3 The Owner shall also pay the Contractor fair compensation, either by
purchase or rental at the election of the Owner, for any equipment owned by the
Contractor that the Owner elects to retain and that is not otherwise included in
the Cost of the Work under Section 13.2.1. To the extent that the Owner elects
to take legal assignment of subcontracts and purchase orders (including rental
agreements), the Contractor shall, as a condition of receiving the payments
referred to in this Article 13, execute and deliver all such papers and take all
such steps, including the legal assignment of such subcontracts and other
contractual rights of the Contractor, as the Owner may require for the purpose
of fully vesting in the Owner the rights and benefits of the Contractor under
such subcontracts or purchase orders.
§ 13.4 The Work may be suspended by the Owner as provided in Article 14 of AIA
Document A201-1997; in such case, the Guaranteed Maximum Price and Contract Time
shall be increased as provided in Section 14.3.2 of AIA Document A201-1997
except that the term “profit” shall be understood to mean the Contractor’s Fee
as described in Section 5.1.2 and Section 6.4 of this Agreement.
ARTICLE 14 MISCELLANEOUS PROVISIONS
§ 14.1 Where reference is made in this Agreement to a provision AIA Document
A201-1997 or another Contract Document, the reference refers to that provision
as amended or supplemented by other provisions of the Contract Documents.
§ 14.2 Payments due and unpaid under the Contract shall bear interest from the
date payment is due at the rate stated below, or in the absence thereof, at the
legal rate prevailing from time to time at the place where the Project is
located.
(Insert rate of interest agreed upon, if any.)
Five percent (5%) per annum
(Usury laws and requirements under the Federal Truth in Lending Act, similar
state and local consumer credit laws and other regulations at the Owner’s and
Contractor’s principal places of business, the location of the Project and
elsewhere may affect the validity of this provision. Legal advice should be
obtained with respect to deletions or modifications, and also regarding
requirements such as written disclosures or waivers.)
§ 14.3 The Owner’s representative is:
(Name, address and other information.)
Carl Monti
MannKind Corporation
One Casper Street
Danbury, CT 06810
Phone: (203) 796-3423
Fax: (203) 798-7740
cmonti@mannkindcorp.com
§ 14.4 The Contractor’s representative is:
 

AIA Document A111™ — 1997. Copyright © 1920, 1925, 1951, 1958, 1961, 1963, 1967,
1974, 1978, 1987 and 1997 by The American Institute of Architects. All rights
reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and
International Treaties. Unauthorized reproduction or distribution of this AIA®
Document, or any portion of it, may result in severe civil and criminal
penalties, and will be prosecuted to the maximum extent possible under the law.
This draft was produced by AIA software at 16:53:46 on 03/08/2005 under Order
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(Name, address and other information.)
Jerry Agresti, Senior Project Manager
Torcon, Inc.
328 Newman Springs Road
Red Bank, NJ 07701
Phone: (732) 704-9800
Fax: (732) 704-9811
gagresti@torcon.com
§ 14.5 Neither the Owner’s nor the Contractor’s representative shall be changed
without ten days’ written notice to the other party.
§ 14.6 ASSIGNMENT. No assignment of or subcontract under this Agreement or any
portion thereof or any money due or which may become due hereunder will be made
by Contractor without the prior written consent of Owner. In addition to
constituting a default under this Agreement, any assignment or attempted
assignment made in violation of this section will be null and void and the
assignee will acquire no rights thereunder. If Owner does consent in writing to
an assignment of or subcontract under this Agreement, the assignee or
subcontractor will be bound to the terms of this Agreement, including
specifically and without limitation the insurance provisions contained herein.
If any assignment or subcontract is made in breach of this Agreement, Contractor
will be liable to Owner for all damages resulting therefrom. Notwithstanding
anything to the contrary contained herein, Owner may assign this Agreement
without the consent of Contractor. In connection with the sale or financing of
the Project, Contractor shall execute and deliver, and (if appropriate)
acknowledge, any and all documents and instruments reasonably required by Owner
or any purchaser or lender, including but not limited to, reasonable
modifications to this Agreement, consents, estoppel certificates, and
subordination of any rights, interests and claims under this Agreement, at law
or otherwise, to the liens, benefits, rights and privileges of (i) any deed of
trust of record at the time of execution of this Agreement, and (ii) the primary
construction lender for the Project. Contractor subordinates all of its lien
rights that it may have or acquire under this Agreement or otherwise as to the
Work or the Project to the lien and security interest securing payment of sums
now or hereafter borrowed by Owner from any lender. Contractor shall execute
such additional documents as may be requested from time to time by the Owner or
any lender to evidence the provisions hereof, and shall in its subcontracts
obtain an agreement from Subcontractors and any other parties furnishing labor
or materials for the Work to subordinate their liens to such aforesaid sums.
Subject to Contractor’s reasonable approval, the provisions of the Contract
Documents shall be superseded in whole or in part by any conflicting provision
of the loan agreement entered into in good faith by Owner relative to the
construction financing of the Project
§ 14.7 ENTIRE AGREEMENT. This Agreement, together with the Contract Documents
which are incorporated herein by reference, constitute the entire Agreement
between the parties. Neither this Agreement nor the Contract Documents may be
amended or supplemented except by written instrument duly executed by both
parties hereto. No estimates or bids of Contractor preceding this Agreement and
no verbal agreement or conversation with any representative of Owner, either
before or after execution of this Agreement, will affect or modify any of the
terms or provisions contained in this Agreement or the Contract Documents..
§ 14.8 WAIVER. No consent or waiver, express or implied, by either party to this
Agreement relating to any breach or default by the other in the performance of
any obligation hereunder will be deemed or construed to be a consent to or
waiver of any other breach or default by such party. Failure on the part of
either party to complain of any act or failure to act of the other party or to
declare the other party in default irrespective of how long such failure
continues will not constitute a waiver of the rights of such party.
§ 14.9 TIME. Time is of the essence of this Agreement and each provision herein
contained.
§ 14.10 WORDS AND HEADINGS. Words used herein will include the plural as well as
the singular. Words used in the masculine gender include the feminine and
neuter. The section headings used herein are for convenience only and will have
no affect upon the construction or interpretation of any part of this document.
§ 14.11 INDEPENDENT CONTRACTOR. Contractor will be an independent contractor
with respect to the Work, and neither Contractor nor anyone employed by
Contractor will be deemed for any purpose to be the agent, employee,
 

AIA Document A111™ — 1997. Copyright © 1920, 1925, 1951, 1958, 1961, 1963, 1967,
1974, 1978, 1987 and 1997 by The American Institute of Architects. All rights
reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and
International Treaties. Unauthorized reproduction or distribution of this AIA®
Document, or any portion of it, may result in severe civil and criminal
penalties, and will be prosecuted to the maximum extent possible under the law.
This draft was produced by AIA software at 16:53:46 on 03/08/2005 under Order
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servant or representative of Owner in the performance of the Work. Contractor
acknowledges and agrees that Owner will have no direction or control over the
means, methods, procedures or manner of the Work performed by Contractor or any
of it subcontractors, or any of their employees, vendors or suppliers.
§ 14.12 SEVERABILITY. If any section, sentence, clause or phrase contained in
this Agreement shall become illegal, null or void, against public policy or
otherwise unenforceable for any reason, or shall be held by any court of
competent jurisdiction to be illegal, null or void, against public policy, or
otherwise unenforceable, the remaining sections, sentences, clauses or phrases
contained in this Agreement shall not be affected thereby.
§ 14.13 REPRESENTATIONS AND WARRANTIES. The Contractor represents and warrants
the following to Owner (in addition to any other representations and warranties
contained in the Contract Documents) as a material inducement to the Owner to
execute this Agreement, which representations and warranties shall survive the
execution and delivery of this Agreement, any termination of this Agreement and
the final completion of the Work:
     .1 the Contractor is financially solvent, able to pay all debts as they
mature and possessed of sufficient working capital to complete the Work, perform
all obligations hereunder and comply with all Applicable Laws;
     .2 the Contract contains a Contract Sum and a Guaranteed Maximum Price
sufficient to allow the Contractor to comply with all Applicable Laws;
     .3 the Contractor is able to furnish the plant, tools, materials, supplies,
equipment and labor required to complete the Work and perform its obligations
hereunder and has sufficient experience and competence to do so;
     .4 the Contractor is authorized to do business in the State of Connecticut
and is properly licensed by all necessary governmental and public and
quasi-public authorities having jurisdiction over the Contractor and over the
Work and the Project;
     .5 the Contractor’s execution of this Agreement and performance thereof is
within the Contractor’s duly authorized powers;
     .6 the Contractor’s duly authorized representative has visited the site of
the Project and is familiar with the local conditions under which the Work is to
be performed and has correlated observations with the requirements of the
Contract Documents;
     .7 the Contractor is a sophisticated contractor who possesses a high level
of experience and expertise in the business administration, construction,
construction management and superintendence of projects of the size, complexity
and nature of this particular Project and will perform the Work with the care,
skill and diligence of such a contractor;
     .8 the Project as designed in the Contract Documents; (a) is capable of
being constructed as contemplated thereby and (b) shall be constructed in
conformity with all governmental regulations, the Contract Documents and
generally accepted industry standards, practices and principles in effect at the
time of performance; and
     .9 As of the date of issuance of a Certificate of Substantial Completion
for the Work, that the Project as constructed:
          (a) meets and complies in all material respects with all applicable
state and local building codes and all other governmental regulations as
required by the Contract Documents;
          (b) does not violate in any material respect any governmental
regulations;
          (c) contains no Hazardous Substances which are not permitted by
governmental regulations;
          (d) fully meets all requirements of the Contract Documents; and
 

AIA Document A111™ — 1997. Copyright © 1920, 1925, 1951, 1958, 1961, 1963, 1967,
1974, 1978, 1987 and 1997 by The American Institute of Architects. All rights
reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and
International Treaties. Unauthorized reproduction or distribution of this AIA®
Document, or any portion of it, may result in severe civil and criminal
penalties, and will be prosecuted to the maximum extent possible under the law.
This draft was produced by AIA software at 16:53:46 on 03/08/2005 under Order
No.1000148073_1 which expires on 11/22/2005, and is not for resale.

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15

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          (e) including, without limitation, materials, articles and equipment
furnished by the General Contractor under this Contract, will be free of
deficiencies and defects for the period set forth in Section 3.5 of the General
Conditions or as otherwise specified in the Contract Documents.
§ 14.14 COUNTERPARTS. For the convenience of the parties to the Contract
Documents, this Agreement may be executed in several original counterparts, each
of which shall together constitute but one and the same Agreement.
§ 14.15 NEUTRAL INTERPRETATION. This Agreement is deemed to be jointly prepared
by all the parties hereto and shall not be construed against any particular
party. Rather, this Agreement shall be construed as if it were jointly prepared
by all the parties.
§ 14.16 EXHIBITS AND ADDENDA. All exhibits, riders or addenda attached hereto
are incorporated herein by reference.
§ 14.17 CONFIDENTIALITY. Contractor agrees that it will not, without the prior
written approval of the Owner, publicize the fact that the Owner has entered
into this Contract, or disclose, confirm or deny any details of the Contract
Documents. Contractor agrees that it will not use Owner’s name in connection
with Contractor’s publicity with respect to the Project without the prior review
and written approval in each instance by the Owner. Contractor shall also insert
the terms of this provision in all contracts and/or agreements executed in
connection with the services to be performed under the Contract Documents and
require that its Subcontractors do the same.
§ 14.18 EXCULPATION. Contractor agrees to look solely to the assets of Owner in
the Project for the enforcement of any claims against Owner, and Contractor
further agrees that none of the officers, directors, employees, partners,
members, managers or shareholders of Owner assume any personal liability for any
of the obligations under the Contract Documents entered into on behalf of Owner,
and the obligations hereunder are not binding upon, nor shall resort be had to
the private property of any of the foregoing.
ARTICLE 15 ENUMERATION OF CONTRACT DOCUMENTS
§ 15.1 The Contract Documents, except for Modifications issued after execution
of this Agreement, are enumerated as follows:
§ 15.1.1 The Agreement is this executed 1997 edition of the Standard Form of
Agreement Between Owner and Contractor, AIA Document A111-1997.
§ 15.1.2 The General Conditions are the 1997 edition of the General Conditions
of the Contract for Construction, AIA Document A201-1997.
§ 15.1.3 The Supplementary and other Conditions of the Contract are those
contained in the Project Manual dated      , and are as follows:

         
Document
  Title   Pages

§ 15.1.4 The Specifications are those contained in the Project Manual dated as
in Section 15.1.3, and are as follows:
(Either list the Specifications here or refer to an exhibit attached to this
Agreement.)

Title of Specifications exhibit:
§ 15.1.5 The Drawings are as follows, and are dated            unless a
different date is shown below:
(Either list the Drawings here or refer to an exhibit attached to this
Agreement.)

Title of Drawings exhibit:
§ 15.1.6 The Addenda, if any, are as follows:

         
Number
  Date   Pages

 

AIA Document A111™ — 1997. Copyright © 1920, 1925, 1951, 1958, 1961, 1963, 1967,
1974, 1978, 1987 and 1997 by The American Institute of Architects. All rights
reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and
International Treaties. Unauthorized reproduction or distribution of this AIA®
Document, or any portion of it, may result in severe civil and criminal
penalties, and will be prosecuted to the maximum extent possible under the law.
This draft was produced by AIA software at 16:53:46 on 03/08/2005 under Order
No.1000148073_1 which expires on 11/22/2005, and is not for resale.

User Notes: 520366.02   (2480353336)

16

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Portions of Addenda relating to bidding requirements are not part of the
Contract Documents unless the bidding requirements are also enumerated in this
Article 15.
§ 15.1.7 Other Documents, if any, forming part of the Contract Documents are as
follows:(List here any additional documents, such as a list of alternates that
are intended to form part of the Contract Documents. AIA Document A201-1997
provides that bidding requirements such as advertisement or invitation to bid,
Instructions to Bidders, sample forms and the Contractor’s bid are not part of
the Contract Documents unless enumerated in this Agreement. They should be
listed here only if intended to be part of the Contract Documents.)
Exhibit “A” – General Conditions of the Contract for Construction (AIA Document
A201-1997, as modified)
Exhibit “B” – Project Schedule
Exhibit “C” – GMP Estimate/Schedule of Values
Exhibit “D” – List of Allowances
Exhibit “E” – List of Plan Sheets
ARTICLE 16 INSURANCE AND BONDS
(List required limits of liability for insurance and bonds. AIA Document
A201-1997 gives other specific requirements for insurance and bonds.)

     
Type of insurance
  Limit of liability ($ 0.00)

§ 16.1 Without limiting Contractor’s liability to Owner or third parties
hereunder, Contractor agrees to maintain the following insurance coverages with
insurance carriers with A.M. Best rating of at least A-VII or otherwise
acceptable to Owner, in Owner’s sole discretion:
§16.1.1 All insurance coverages required by federal, state or local laws and
statutes, including Worker’s Compensation Insurance and Employers’ Liability
Insurance. The Employers’ Liability Insurance shall have a minimum coverage of
at least $500,000 for each person;
§16.1.2 Comprehensive or Commercial General Liability Insurance, including
coverage for Products and Completed Operations, Errors and Omissions, and
Blanket Contractual Liability for obligations undertaken by Contractor to Owner
under this Agreement. Such Comprehensive General Liability Insurance shall
provide for minimum Combined Bodily Injury and Property Damage Coverage Limits
of at least $3,000,000, per occurrence, and name Owner as Additional Insured;
§16.1.3 Comprehensive Automobile Liability Insurance including coverage for
Hired & Non-Owned Automobile Liability, with Combined Bodily Injury and Property
Damage Coverage Limits, per occurrence, of at least $1,000,000, naming Owner as
Additional Insured; and
§16.1.4 Comprehensive Crime Policy, including Employees Dishonest/Fidelity
coverage for all Contractor’s employees, officers and agents, and On-Premises
(Loss Inside the Premises) and In-Transit (Loss Outside the Premises) Coverage
shall have a minimum of at least $2,000,000, per occurrence.
§16.1.5 Contractor agrees to require all Subcontractors who are providing design
services as part of their scope of the Work to maintain professional liability
(errors and omissions) coverage for a minimum coverage of at least $2,000,000
per occurrence. If such insurance is furnished as part of a “claims made”
policy, Contractor agrees to require the Subcontractor furnishing such insurance
to renew the coverage annually for a period of three (3) years following
Substantial Completion of the Work.
§16.2 All insurance must include a Primary & Non-Contributing Endorsement.
§16.3 Prior to performance of any services or commencement of any Work under
this Agreement, Contractor shall furnish to Owner Certificates of Insurance
evidencing such required insurance coverages and naming Owner as Additional
Insured (for coverages required by items 16.1.2 and 16.1.3 above). Said
Certificates will include a
 

AIA Document A111™ — 1997. Copyright © 1920, 1925, 1951, 1958, 1961, 1963, 1967,
1974, 1978, 1987 and 1997 by The American Institute of Architects. All rights
reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and
International Treaties. Unauthorized reproduction or distribution of this AIA®
Document, or any portion of it, may result in severe civil and criminal
penalties, and will be prosecuted to the maximum extent possible under the law.
This draft was produced by AIA software at 16:53:46 on 03/08/2005 under Order
No.1000148073_1 which expires on 11/22/2005, and is not for resale.

User Notes: 520366.02   (2480353336)

17

--------------------------------------------------------------------------------

 

provision whereby the Insurance Carrier is required to provide, directly to
Owner, thirty (30) days advance written notice before termination, change or
cancellation or coverage take effect for such policies evidenced on such
Certificates, regardless of whether cancelled by the Contractor, Insured, or
Insurance Carrier.
Language to the effect that “Insurance Carrier will endeavor to provide advance
notice of cancellation or termination and failure to mail such notice shall
impose no obligation or liability of any kind upon the Insurance Carrier, its
agents or representatives,” is not acceptable.
The insurer of each policy shall waive (by written endorsement where necessary),
and Contractor hereby waives, all rights of recovery or subrogation against
Owner which might arise with regard to damage or loss which is insured against
under any insurance policies in force and effect at the time of the damage or
loss.
[Signatures on next page]
This Agreement is entered into as of the day and year first written above and is
executed in at least two original copies, of which one is to be delivered to the
Contractor and the other to the Owner.

                                    OWNER       CONTRACTOR    
 
                    MannKind Corporation       Torcon, Inc.    
 
                   
By:
  /s/ Hakan S. Edstrom        By:   /s/ Ben Torcivia, Jr.     
 
                   
 
  Name: Hakan S. Edstrom           Name: Ben Torcivia, Jr.    
 
  Title: President and Chief Operating Officer           Title: Co-President    
 
                   
By:
  /s/ Alfred E. Mann                 
 
                   
 
  Name: Alfred E. Mann                
 
  Title: Chairman of the Board and Chief Executive Officer                
 
                                 

 

AIA Document A111™ — 1997. Copyright © 1920, 1925, 1951, 1958, 1961, 1963, 1967,
1974, 1978, 1987 and 1997 by The American Institute of Architects. All rights
reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and
International Treaties. Unauthorized reproduction or distribution of this AIA®
Document, or any portion of it, may result in severe civil and criminal
penalties, and will be prosecuted to the maximum extent possible under the law.
This draft was produced by AIA software at 16:53:46 on 03/08/2005 under Order
No.1000148073_1 which expires on 11/22/2005, and is not for resale.

User Notes: 520366.02   (2480353336)

18