Construction Services Agreement

EXHIBIT 10.9


AIA Document A121/CMc and AGC Document 565


STANDARD FORM OF AGREEMENT BETWEEN
OWNER AND CONSTRUCTION MANAGER
where the Construction Manager is also
THE CONSTRUCTOR


1991 EDITION-ELECTRONIC FORMAT


THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES: CONSULTATION WITH AN ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION. AUTHENTICATION OF THIS ELECTRONICALLY DRAFTED AIA DOCUMENT MAY BE MADE BY USING AIA DOCUMENT D401


The 1987 Edition of AIA Document A201, General Conditions of the Contract for Construction, is referred to herein. This Agreement requires modification if other general conditions are utilized.


Portions of this document are derived from AIA Document A111, Standard Form of Agreement Between the Owner and Contractor where the Basis of Payment is the Cost of the Work Plus a Fee, copyright 1920, 1925, 1951, 1958, 1961, 1963, 1967, 1974, 1978, (C) 1987 by The American Institute of Architects; other portions are derived from AGC Document 500. Copyright 1980 by The Associated General Contractors of American. Material in this document differing from that found in AIA Document A111 and AGC Document 500 is copyrighted 1991 by The American Institute of Architects and The Associated General Contractors of America. Reproduction of the material herein or substantial quotation of its provisions without written permission of AIA and AGC violates the copyright laws of the United States and will subject the violator to legal prosecution.


AGREEMENT


made as of the 12th day of July in the year 2002. This Agreement is intended to cover the services of the Construction Manager, whether performed before or after the date of this Agreement.


(In words, indicate day, month and year)


BETWEEN the Owner: (Name and address) Advancis Pharmaceutical Corporation 656 Quince Orchard Road, Suite 220 Gaithersburg, Maryland 20878


and the Construction Manager: (Name and address) Barclay White Skanska Inc. 1801 Research Boulevard, Suite 103 Rockville, Maryland 20850


The Project is: (Name, address and brief description) Construction of Tenant Improvements for Lot 4, Seneca Meadows, Gaithersburg, Maryland


The Architect is: (Name and address) Gaudreau, Inc 810 Light Street Baltimore, Maryland 21230


The Owner and Construction Manager agree as set forth below.


(C)1991 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C. 20006-5292. AIA DOCUMENT AIA121/CMC AND AGC DOCUMENT 565 - OWNER-CONSTRUCTION MANAGER AGREEMENT - 1991 EDITION - AIA(R)- AGC -(C)1991 - THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, 1957 E STREET, N.W., WASHINGTON, D.C., 20006-5209. WARNING: Unlicensed photocopying violates U.S. Copyright laws and is subject to legal prosecution. This document was electronically produced with permission of the AIA and can be reproduced in accordance with your license without violation until the date of expiration as noted below. expiration as noted below. User document: advancis form a121 version 2.aia - 7/11/2002. AIA License Number 1013483, which expires on 2/28/2003.


Electronic Format A121/CMc-1991


1


TABLE OF CONTENTS


ARTICLE 1 GENERAL PROVISIONS
1.1 Relationship of Parties
1.2 General Conditions


ARTICLE 2 CONSTRUCTION MANAGER'S RESPONSIBILITIES
2.1 Preconstruction Phase
2.2 Guaranteed Maximum Price Proposal and Contract Time
2.3 Construction Phase
2.4 Professional Services
2.5 Unsafe Materials


ARTICLE 3 OWNER'S RESPONSIBILITIES
3.1 Information and Services
3.2 Owner's Designated Representative
3.3 Architect
3.4 Legal Requirements


ARTICLE 4 COMPENSATION AND PAYMENTS FOR PRECONSTRUCTION PHASE
SERVICES
4.1 Compensation
4.2 Payments


ARTICLE 5 COMPENSATION FOR CONSTRUCTION PHASE SERVICES
5.1 Compensation
5.2 Guaranteed Maximum Price
5.3 Changes in the Work


ARTICLE 6 COST OF THE WORK FOR CONSTRUCTION PHASE
6.1 Costs To Be Reimbursed
6.2 Costs Not To Be Reimbursed
6.3 Discounts, Rebates and Refunds
6.4 Accounting Records


ARTICLE 7 CONSTRUCTION PHASE
7.1 Progress Payments
7.2 Final Payment


ARTICLE 8 INSURANCE AND BONDS
8.1 Insurance Required of the Construction Manager
8.2 Insurance Required of the Owner
8.3 Performance Bond and Payment Bond


ARTICLE 9 MISCELLANEOUS PROVISIONS
9.1 Dispute Resolution for the Preconstruction Phase
9.2 Dispute Resolution for the Construction Phase
9.3 Other Provisions


ARTICLE 10 TERMINATION OR SUSPENSION
10.1 Termination Prior to Establishing Guaranteed Maximum Price
10.2 Termination Subsequent to Establishing Guaranteed Maximum
Price
10.3 Suspension


ARTICLE 11 OTHER CONDITIONS AND SERVICES


ATTACHMENTS: AMENDMENT NO. 1 TO AGREEMENT BETWEEN OWNER AND CONSTRUCTION
MANAGER


(C)1991 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C. 20006-5292. AIA DOCUMENT AIA121/CMC AND AGC DOCUMENT 565 - OWNER-CONSTRUCTION MANAGER AGREEMENT - 1991 EDITION - AIA(R)- AGC -(C)1991 - THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, 1957 E STREET, N.W., WASHINGTON, D.C., 20006-5209. WARNING: Unlicensed photocopying violates U.S. Copyright laws and is subject to legal prosecution. This document was electronically produced with permission of the AIA and can be reproduced in accordance with your license without violation until the date of expiration as noted below. expiration as noted below. User document: advancis form a121 version 2.aia - 7/11/2002. AIA License Number 1013483, which expires on 2/28/2003.


Electronic Format A121/CMc-1991


2


Standard Form of Agreement Between Owner and Construction
Manager Where the Construction Manager is also the Constructor


ARTICLE 1
GENERAL PROVISIONS


1.1 RELATIONSHIP OF PARTIES


The Construction Manager accepts the relationship of trust and confidence established with the Owner by this Agreement, and covenants with the Owner to furnish the Construction Manager's reasonable skill and judgment and to cooperate with the Architect in furthering the interests of the Owner. The Construction Manager shall furnish construction administration and management services and use the Construction Manager's best efforts to perform the Project in an expeditious and economical manner consistent with the interests of the Owner. The Owner shall endeavor to promote harmony and cooperation among the Owner, Architect, Construction Manager and other persons or entities employed by the Owner for the Project.


See Insert 1.1


1.2 GENERAL CONDITIONS


For the Construction Phase, the General Conditions of the Contract shall be the 1997 Edition of AIA Document A201, General Conditions of the Contract for Construction, as amended in the form attached. For the Preconstruction Phase, or in the event that the Preconstruction and Construction Phases proceed concurrently, AIA document A201 shall apply to the Preconstruction Phase only as specifically provided in this Agreement. The term "Contractor" as used in AIA Document A201 shall mean the Construction Manager.


ARTICLE 2
CONSTRUCTION MANAGER'S
RESPONSIBILITIES


The Construction Manager shall perform the services described in this Article. The services to be provided under Paragraphs 2.1 and 2.2 constitute the Preconstruction Phase services. If the Owner and Construction Manager agree, after consultation with the Architect, the Construction Phase may commence before the Preconstruction Phase is completed, in which case both phases shall proceed concurrently.


2.1 PRECONSTRUCTION PHASE


2.1.1 PRELIMINARY EVALUATION


The Construction Manager shall provide a preliminary evaluation of the Owner's program and Project budget requirements, each in terms of the other.


2.1.2 CONSULTATION


The Construction Manager with the Architect shall jointly schedule and attend regular meetings with the Owner and Architect. The Construction Manager shall consult with the Owner and Architect regarding site use and improvements, and the selection of materials, building systems and equipment. The Construction Manager shall provide recommendations on construction feasibility; actions designed to minimize adverse effects of labor or material shortages; time requirements for procurement, installation and construction completion; and factors related to construction cost including estimates of alternative designs or materials, preliminary budgets and possible economies.


2.1.3 PRELIMINARY PROJECT SCHEDULE


When Project requirements described in Subparagraph 3.1.1 have been sufficiently identified, the Construction Manager shall prepare, and periodically update, a preliminary Project schedule for the Architect's review and the Owner's approval. The Construction Manager shall obtain the Architect's approval of the portion of the preliminary Project schedule relating to the performance of the Architect's services. The Construction Manager shall coordinate and integrate the preliminary Project schedule with the services and activities of the Owner, Architect and Construction Manager. As design proceeds, the preliminary


(C)1991 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C. 20006-5292. AIA DOCUMENT AIA121/CMC AND AGC DOCUMENT 565 - OWNER-CONSTRUCTION MANAGER AGREEMENT - 1991 EDITION - AIA(R)- AGC -(C)1991 - THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, 1957 E STREET, N.W., WASHINGTON, D.C., 20006-5209. WARNING: Unlicensed photocopying violates U.S. Copyright laws and is subject to legal prosecution. This document was electronically produced with permission of the AIA and can be reproduced in accordance with your license without violation until the date of expiration as noted below. expiration as noted below. User document: advancis form a121 version 2.aia - 7/11/2002. AIA License Number 1013483, which expires on 2/28/2003.


Electronic Format A121/CMc-1991


3 Project schedule shall be updated to indicate proposed activity sequences and durations, milestone dates for receipt and approval of pertinent information submittal of a Guaranteed Maximum Price proposal preparation and processing of shop drawings and sample delivery of materials or equipment requiring long-lead time procurement, Owner's occupancy requirements showing portions of the Project having occupancy priority, and proposed date of Substantial Completion. If preliminary Project schedule updates indicate that previously approved schedules may not be met, the Construction Manager take all necessary action to place the Work back in accordance with the Project schedule.


2.1.4 PHASED CONSTRUCTION


The Construction Manager shall make recommendations to the Owner and Architect regarding the phased issuance of Drawings and Specifications to facilitate phased construction of the Work, if such phased construction is appropriate for the Project, taking into consideration such factors as economies, time of performance, availability of labor and materials, and provisions for temporary facilities.


2.1.5 PRELIMINARY COST ESTIMATES


2.1.5.1 When the Owner has sufficiently identified the Project requirements and the Architect has prepared other basic design criteria, the Construction Manager shall prepare, for the review of the Architect and approval of the Owner, a preliminary cost estimate utilizing area, volume or similar conceptual estimating techniques.


2.1.5.2 When Schematic Design Documents have been prepared by the Architect and approved by the Owner, the Construction Manager shall prepare for the review of the Architect and approval of the Owner, a more detailed estimate with supporting data. During the preparation of the Design Development Documents, the Construction Manager shall update and refine this estimate at appropriate intervals agreed to by the Owner, Architect and Construction Manager.


2.1.5.3 When Design Development Documents have been prepared by the Architect and approved by the Owner, the Construction Manager shall prepare a detailed estimate with supporting data for review by the Architect and approval by the Owner. During the preparation of the Construction Documents, the Construction Manager shall update and refine this estimate at appropriate intervals agreed to by the Owner, Architect and Construction Manager.


2.1.5.4 If any estimate submitted to the Owner exceeds previously approved estimates or the Owner's budget, the Construction Manager shall make appropriate recommendations to the Owner and Architect.


2.1.6 SUBCONTRACTORS AND SUPPLIERS


The Construction Manager shall develop subcontractor interest in the Project and shall furnish to the Owner and Architect for their information a list of possible subcontractors, including suppliers who are to furnish materials or equipment fabricated to a special design, from whom proposals will be requested for each principal portion of the Work. The Architect will promptly reply in writing to the Construction Manager if the Architect or Owner know of any objection to such subcontractor or supplier. The receipt of such list shall not require the Owner or Architect to investigate the qualifications of proposed subcontractors or suppliers, nor shall it waive the right of the Owner or Architect later to object to or reject any proposed subcontractor or supplier.


2.1.7 LONG-LEAD TIME ITEMS


The Construction Manger shall recommend to the Owner and Architect a schedule for procurement of long-lead time items which will constitute part of the Work as required to meet the Project schedule. If such long-lead time items are procured by the Owner, they shall be procured on terms and conditions acceptable to the Construction Manager. Upon the Owner's acceptance of the Construction Manager's Guaranteed Maximum Price proposal, all contracts for such items shall be assigned by the Owner to the Construction Manager, who shall accept responsibility for such items as if procured by the Construction Manager. The Construction Manager shall expedite the delivery of long-lead time items.


2.1.8 EXTENT OF RESPONSIBILITY


The Construction Manger does not warrant or guarantee estimates and schedules except as may be included as part of the Guaranteed Maximum Price. The recommendations and advice of the Construction Manager concerning design alternatives shall be subject to the review and approval of the Owner and the Owner's professional consultants. It is not the Construction Manager's responsibility to ascertain that the Drawings and Specifications are in accordance with


(C)1991 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C. 20006-5292. AIA DOCUMENT AIA121/CMC AND AGC DOCUMENT 565 - OWNER-CONSTRUCTION MANAGER AGREEMENT - 1991 EDITION - AIA(R)- AGC -(C)1991 - THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, 1957 E STREET, N.W., WASHINGTON, D.C., 20006-5209. WARNING: Unlicensed photocopying violates U.S. Copyright laws and is subject to legal prosecution. This document was electronically produced with permission of the AIA and can be reproduced in accordance with your license without violation until the date of expiration as noted below. expiration as noted below. User document: advancis form a121 version 2.aia - 7/11/2002. AIA License Number 1013483, which expires on 2/28/2003.


Electronic Format A121/CMc-1991


4


applicable laws, statutes, ordinances, building codes, rules and regulations. However, if the Construction Manager recognizes that portions of the Drawings and Specifications are at variance therewith, the Construction Manager shall promptly notify the Architect and Owner in writing.


2.1.9 EQUAL EMPLOYMENT OPPORTUNITY AND AFFIRMATIVE ACTION


The Construction Manager shall comply with applicable laws, regulations and special requirements of the Contract Documents regarding equal employment opportunity and affirmative action programs.


2.1.10 REVIEW OF CONTRACT DOCUMENTS


See Insert 2.1.10


2.2 GUARANTEED MAXIMUM PRICE PROPOSAL AND CONTRACT TIME


2.2.1 When the Drawings and Specifications are sufficiently complete, the Construction Manager shall propose a Guaranteed Maximum Price, which shall be the sum of the estimated Cost of the Work and the Construction Manager Fee.


2.2.2 As the Drawings and Specifications may not be finished at the time the Guaranteed Maximum Price proposal is prepared, the Construction Manager shall provide in the Guaranteed Maximum Price for further development of the Drawings and Specifications by the Architect that is consistent with the Contract Documents and reasonably inferable therefrom. Such further development does not include such things as changes in scope, systems, kinds and qualities of materials, finishes or equipment, all of which, if required, shall be incorporated by Change Order.


2.2.3 The estimated Cost of the Work shall include the Construction Manager's contingency, a sum established by the Construction Manager for the Construction Manager's exclusive use to cover costs arising under Subparagraph 2.2.2 and other costs which are properly reimbursable as costs of the Work, but not the basis for a Change Order.


2.2.4 BASIS OF GUARANTEED MAXIMUM PRICE


The Construction Manager shall include with the Guaranteed Maximum Price proposal a written statement of its basis, which shall include:


.1 A list of the Drawings and Specifications including all
addenda thereto and the Conditions of the Contract, which were
used in preparation of the Guaranteed Maximum Price Proposal.


.2 A list of allowances and a statement of their basis.


.3 A list of the clarifications and assumptions made by the
Construction Manager in the preparation of the Guaranteed
Maximum Price proposal to supplement the information contained
in the Drawings and Specifications.


.4 The proposed Guaranteed Maximum Price, including a statement
of the estimated cost organized by trade categories,
allowances, contingency, and other items and the fee that
comprise the Guaranteed Maximum Price including a statement of
the General Condition items.


.5 The Date of Substantial Completion upon which the proposed
Guaranteed Maximum Price is based, and a schedule of the
Construction Documents issuance dates upon which the date of
Substantial Completion is based.


.6 The specified date for Substantial Completion of the Work and
a schedule for the progress of the Work with interim milestone
dates.


2.2.5 The Construction Manager shall meet with the Owner and Architect to review the Guaranteed Maximum Price proposal and the written statement of its basis. In the event that the Owner or Architect discovers any inconsistencies or inaccuracies in the information presented, they shall promptly notify the Construction Manager, who shall make appropriate adjustments to the Guaranteed Maximum Price proposal, its basis or both.


2.2.6 Unless the Owner accepts the Guaranteed Maximum Price proposal in writing on or before the date specified in the proposal for such acceptance and so notifies


(C)1991 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C. 20006-5292. AIA DOCUMENT AIA121/CMC AND AGC DOCUMENT 565 - OWNER-CONSTRUCTION MANAGER AGREEMENT - 1991 EDITION - AIA(R)- AGC -(C)1991 - THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, 1957 E STREET, N.W., WASHINGTON, D.C., 20006-5209. WARNING: Unlicensed photocopying violates U.S. Copyright laws and is subject to legal prosecution. This document was electronically produced with permission of the AIA and can be reproduced in accordance with your license without violation until the date of expiration as noted below. expiration as noted below. User document: advancis form a121 version 2.aia - 7/11/2002. AIA License Number 1013483, which expires on 2/28/2003.


Electronic Format A121/CMc-1991


5


the Construction Manager, the Guaranteed Maximum Price proposal shall not be effective without written acceptance by the Construction Manager.


2.2.7 Prior to the Owner's acceptance of the Construction Manager's


Guaranteed Maximum Price proposal and issuance of a Notice to Proceed, the Construction Manager shall not incur any cost to be reimbursed as part of the Cost of the Work, except as the Owner may specifically authorize in writing.


2.2.8 Upon acceptance by the Owner of the Guaranteed Maximum Price proposal, the Guaranteed Maximum Price and its basis shall be set forth in Amendment No.1. The Guaranteed Maximum Price shall be subject to additions and deductions by a change in the Work as provided in the Contract Documents and the date of Substantial Completion shall be subject to adjustment as provided in the Contract Documents.


2.2.9 The Owner shall authorize and cause the Architect to revise the Drawings and Specifications to the extent necessary to reflect the agreed-upon assumptions and clarifications contained in Amendment No. 1. Such revised Drawings and Specifications shall be furnished to the Construction Manager in accordance with schedules agreed to by the Owner, Architect and Construction Manager. The Construction Manager shall promptly notify the Architect and Owner if such revised Drawings and Specifications are inconsistent with the agreed-upon assumptions and clarifications.


2.2.10 The Guaranteed Maximum Price shall include in the Cost of the Work only those taxes which are enacted at the time the Guaranteed Maximum Price is established.


2.3 CONSTRUCTION PHASE


2.3.1 GENERAL


2.3.1.1 The Construction Phase shall commence on the earlier of:


(1) the Owner's acceptance of the Construction Manager's Guaranteed
Maximum Price proposal and issuance of a Notice to Proceed, or


(2) the Owner's first authorization to the Construction Manger to:


(a) award a subcontract, or


(b) undertake construction Work with the Construction Manger's
own forces, or


(c) issue a purchase order for materials of equipment required
for the Work.


2.3.2 ADMINISTRATION


2.3.2.1 Those portions of the Work that the Construction Manager does not customarily perform with the Construction Manager's own personnel shall be performed under subcontracts or by other appropriate agreements with the Construction Manager. The Construction Manager shall obtain bids from Subcontractors and from suppliers of materials or equipment fabricated to a special design for the Work from the list previously reviewed and, after analyzing such bids, shall deliver such bids to the Owner and Architect. The Owner shall then determine, with the advice of the Construction Manager and subject to the reasonable objection of the Architect, which bids will be accepted. The Owner may designate specific persons or entities from whom the Construction Manager shall obtain bids; however, if the Guaranteed Maximum Price has been established, the Owner may not prohibit the Construction Manager from obtaining bids from other qualified bidders. The Construction Manager shall not be required to contract with anyone to whom the Construction Manager has reasonable objection.


2.3.2.2 If the Guaranteed Maximum Price has been established and a specific bidder among those whose bids are delivered by the Construction Manager to the Owner and Architect (1) is recommended to the Owner by the Construction Manager; (2) is qualified to perform that portion of the Work; (3) has submitted a bid which conforms to the requirements of the Contract Documents without reservations or exceptions, but the Owner requires that another bid be accepted, then the Construction Manager may require that a change in the Work be issued to adjust the Contract Time and the Guaranteed Maximum Price by the difference between the bid of the person or entity recommended to the Owner by the Construction Manager and the amount of the subcontract or other agreement actually signed with the person or entity designated by the Owner.


2.3.2.3 Subcontracts and agreements with suppliers furnishing materials or equipment fabricated to a special design shall conform to the payment provisions of Subparagraphs 7.1.8 and 7.1.9 and shall not be awarded on the basis of cost plus a fee without the prior consent of the Owner.


(C)1991 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W., WASHINGTON, D.C. 20006-5292. AIA DOCUMENT AIA121/CMC AND AGC DOCUMENT 565 - OWNER-CONSTRUCTION MANAGER AGREEMENT - 1991 EDITION - AIA(R)- AGC -(C)1991 - THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA, 1957 E STREET, N.W., WASHINGTON, D.C., 20006-5209. WARNING: Unlicensed photocopying violates U.S. Copyright laws and is subject to legal prosecution. This document was electronically produced with permission of the AIA and can be reproduced in accordance with your license without violation until the date of expiration as noted below. expiration as noted below. User document: advancis form a121 version 2.aia - 7/11/2002. AIA License Number 1013483, which expires on 2/28/2003.


Electronic Format A121/CMc-1991


6


2.3.2.4 The Construction Manager shall schedule and conduct weekly or other regular periodic meetings at which the Owner, Architect, Construction Manager and appropriate Subcontractors can discuss the status of the Work. The Construction Manager shall prepare and promptly distribute meeting minutes.


2.3.2.5 Promptly after the Owner's acceptance of the Guaranteed Maximum Price proposal, the Construction Manager shall prepare a schedule in accordance with Paragraph 3.10 of AIA Document A201, including the Owner's occupancy requirements.


2.3.2.6 The Construction Manager shall provide monthly written reports to the Owner and Architect on the progress of the entire Work. The Construction Manager shall maintain a daily log containing a record of weather, Subcontractors working on the site, number of workers, Work accomplished, problems encountered and other similar relevant data as the Owner may reasonably require. The log shall be available to the Owner and Architect.

...