Design-build Agreement

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EXHIBIT 10.26


DESIGN-BUILD AGREEMENT

THIS DESIGN-BUILD AGREEMENT ("Agreement") is entered into this day of , 2002 by and between WORKSTAGE LLC, a Delaware limited liability company, with an address of 4700 60th Street, Grand Rapids, Michigan 49512 ("Workstage"), and PayPal, Inc. a Delaware corporation, with an address of P.O. Box 45950, Omaha, Nebraska 68145 and an office at 303 Bryant Street, Mountain View, CA 94041 ("Owner").

BACKGROUND INFORMATION:

A. Workstage creates buildings for its customers by integrating and assembling pre-manufactured building components and providing on-site construction services.

B. Owner wishes to purchase a Workstage building.

Owner hires Workstage, and Workstage agrees to work for Owner as an independent contractor, on the following terms and conditions:

1. GENERAL PROVISIONS

1.1 The Owner and Workstage agree to proceed on the basis of trust, good faith and fair dealing. Workstage represents and warrants that it has the expertise to carry out the Work (as hereinafter defined) and it agrees to procure the architectural and engineering services set forth herein and to furnish construction and administration of the Work.

1.2 This Agreement is solely for the benefit of the parties hereto. This Agreement represents the entire agreement between the parties and supersedes all prior negotiations, representations or agreements, either written or oral. The parties hereto agree to look solely to each other with respect to the performance of the Agreement. This Agreement may be amended only by written instrument signed by both parties.

1.3 The following shall be a condition precedent to this Agreement: Owner's purchase of approximately 22.38 acres of land within Sarpy County, Nebraska pursuant to that certain Purchase and Sale Agreement by and between Owner and R.S. Land, Inc., a Nebraska corporation.

2. DEFINITIONS

2.1 The "Project" is the erection for Owner of a Workstage building as more specifically described in attached Exhibit A .

2.2 The "Work" consists of all of the Design Services (hereinafter defined) in accordance with Sections 3.1 and 3.2 below and the construction services in accordance with Section 3.3 below, including, but not limited to, all of the labor, materials and equipment necessary to complete the Project in accordance with the Contract Documents (hereinafter defined), whether completed or partially completed. Workstage shall be responsible for procuring the design and the construction of the Work consistent with the Owner's Program (hereinafter defined). Workstage shall exercise reasonable skill and judgment in the performance of the Work.

2.3 The "Site" is the place where the Project is located, as indicated on the Site description attached as Exhibit B .

2.4 The "Contract Documents" consist of this Agreement (including all Exhibits and Schedules), any amendments thereto, all Design and Construction Documents whether in existence at the time this Agreement is entered into or whether developed after the execution thereof and any Change Orders. It is the intent of the Owner and Workstage that the Contract Documents include all items necessary for proper execution and completion of the Work. The Contract Documents are complementary, and what is required by one shall be as binding as if required by

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all; performance by Workstage shall be required only to the extent consistent with and reasonably inferable from the Contract Documents as being necessary to produce the intended results. Words that have well-known technical or construction industry meanings are used in the Contract Documents in accordance with such recognized meanings, unless otherwise defined herein.

2.5 Owner has designated the person below as its designated representative for general management of this Agreement. Any reference to Owner herein is a reference to the person named below, but only in such person's capacity as a representative for Owner.

Name: Ryan Downs
Address: 11128 John Galt Boulevard, Omaha, NE 68137
Phone: (402) 935-2195
Fax: (402) 593-9097
E-mail: rdowns@paypal.com

For the purpose of notices, in Section 20.4, copies shall be sent to:

Rebecca L. Eisenberg
PayPal, Inc.
303 Bryant Street
Mountain View, CA 94041
Phone: (650) 864-8102
Fax: (650) 864-8225
Email: reisenberg@paypal.com

2.6 Workstage has designated the person below as its designated representative for general management of this Agreement. Any reference to Workstage herein is a reference to the person named below, but only in such person's capacity as a representative for Workstage.

Name: Donald M. Slaght
Address: 200 Campus Drive, Suite 200, Florham Park, NJ 07932
Phone: (973) 301-8520
Fax: (973) 966-8828
E-mail: dslaght@workstage.com

For the purpose of notices, in Section 20.4, copies shall be sent to:

Donald M. Slaght
Workstage LLC
200 Campus Drive, Suite 200
Florham Park, NJ 07932
Phone: (973) 391-9500
Fax: (973) 966-8828
E-mail: dslaght@workstage.com

3. WORKSTAGE SERVICES

3.1 Phase I Services Development of Owner's Program

3.1.1 Workstage shall assist the Owner in the development and preparation of the Owner's Program (hereinafter defined), which shall outline the objectives and requirements of the Owner with respect to the Project. Such program shall include budget and time criteria, space requirements, special equipment and systems, and Site requirements.

3.1.2 Workstage shall visit the Site, become familiar with the local conditions, and correlate observable conditions with the requirements of the Owner's Program.

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3.1.3 Workstage shall research diligently and review laws and regulations applicable to design and construction of the Project and correlate such laws and regulations with the Owner's Program requirements. In the performance of this obligation, Workstage shall meet with governmental authorities having or potentially having jurisdiction over the Project and make all commercially reasonable efforts to ensure that the design of the Project complies with applicable laws, codes, regulations and requirements, including, but not limited to, Title I of American with Disabilities Act 1990 and any and all fire safety laws, codes, regulations or requirements, including but not limited to all local, state and federal laws, codes, regulations and requirements. If Workstage experiences any hurdles in acquiring all necessary legal approval, it will notify Owner and at all times keep Owner appraised of any potential challenge or obstacle to full and complete legal approval and compliance, including obtaining all applicable licenses and permits.

3.1.4 In development of the Owner's Program, Workstage shall ascertain Owner's requirements of the Project and shall verify and review such requirements with the Owner. Workstage's review shall also provide to the Owner a preliminary evaluation of the Site with regard to access, traffic, drainage, parking, building placement and other considerations affecting the building, as well as information regarding applicable government laws, regulations and requirements. Workstage shall also propose architectural, civil, structural, mechanical, electrical and other systems for review by the Owner.

3.1.5 Design services required under this Agreement shall be performed by licensed, independent design professionals. The standard of care for architectural and engineering services performed under this Agreement shall be the highest degree of care and skill used by design professionals practicing under the same time and locality conditions. Since the design professional is independent from Workstage, the design professional services shall be procured and the payment shall be made pursuant to separate agreements between Workstage and the design professional. The design professional for the Project (the "Architect") is:

Name: Integrated Architects, Inc.
Address: 4090 Lake Drive
Grand Rapids, MI 49546
Phone: 616-574-0220

The contractual obligations of such professional persons or entities are undertaken and performed in the interest of Workstage. Workstage shall be responsible to the Owner for acts and omissions of Workstage's employees, subcontractors and their agents and employees, and other persons, including the Architect and other design professionals, performing any portion of Workstage's obligations under this Section 3.

3.1.6 Based upon a review and analysis of the functional and organizational relationships, requirements and objectives for the Project, Workstage shall provide a written program of the requirements for Owner's approval (the "Owner's Program").

3.2 Phase II Services Design Services

3.2.1 Upon the execution of this Agreement, Workstage shall commence the Work and shall provide a time schedule, which shows the activities of the Owner and Workstage necessary to meet the Owner's completion requirements as set forth in Section 7 (the "Project Schedule") which is attached hereto as Exhibit C and incorporated herein by reference. The Project Schedule should indicate the time (numbers of days) for starting and completing the various stages of the Work set forth in Section 3.2 and 3.3 and allowing sufficient time for all necessary approvals and inspections as reasonably required under the Contract Documents.

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3.2.2 Upon the execution of this Agreement, Workstage shall prepare a budget which shall indicate the total cost of design and construction of the Project and all available allowances (collectively referred to as "Project Budget") which is attached hereto as Exhibit D and incorporated herein by reference. The Project Budget shall be prepared by qualified professionals, cost estimators or contractors retained by and acting in the interest of Workstage.

3.2.3 Based upon Workstage's review and analysis of the Owner approved Owner's Program, Workstage shall submit to Owner, for Owner's approval in accordance with the Project Schedule, Design Documents consistent with the Owner's Program for the performance of the Work. The "Design Documents" consist of all plans, drawings, specifications and other conceptualized documents establishing the size, quality and character of the entire Project, its architectural, structural, mechanical and electrical systems, and the materials and such other elements of the Project as may be appropriate to accurately and completely describe the Owner's Program.

3.2.4 One set of the Design Documents shall be promptly furnished to the Owner. Upon delivery of the Design Documents and the Project Schedule and the Project Budget, Owner shall timely review such documents for its approval in its sole discretion.

3.2.5 Workstage agrees that it will use commercially reasonable efforts to provide that the design it creates will satisfy the functional requirements of the Owner as set forth in the Owner's Program.

3.3 Phase III Services Construction Services

3.3.1 The construction services to be performed hereunder shall commence as provided on the Project Schedule.

3.3.2 Within ten (10) days after the Commencement Date (hereinafter defined), Workstage shall submit for review and approval by Owner:

3.3.2.1 An updated Project Schedule with any applicable changes made in accordance with Section 3.3.7 below,

3.3.2.2 A preliminary schedule of required submittals and the times for submitting, reviewing and processing each submittal, and

3.3.3 A Schedule of Values in accordance with Section 9.1 below.

3.3.4 Workstage shall submit Construction Documents for review and approval by the Owner. When Workstage submits the Construction Documents, Workstage shall identify in writing all material changes and deviations that have taken place from the Design Documents or the Contract Documents in existence. "Construction Documents" shall include drawings, specifications, and other documents and electronic data setting forth in detail the requirements for construction of the Work, and shall:

3.3.4.1 be consistent with the intent of the Owner's Program and the Design Documents;

3.3.4.2 provide information for the use of those in the building trades; and

3.3.4.3 include documents customarily required for regulatory agency approvals.

3.3.5 Pursuant to the terms of this Agreement, Workstage shall provide or cause to be provided and shall pay for design services, construction services, installation, labor, materials, equipment, tools, construction equipment and machinery, water, heat, utilities, transportation and other facilities and services necessary for proper execution and completion of the Work as

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provided hereunder, whether temporary or permanent and whether or not incorporated or to be incorporated in the Work.

3.3.6 Workstage shall comply with laws and ordinances legally enacted at the date of execution of the Agreement which govern the proper performance of the Work.

3.3.7 Workstage shall maintain the Project Schedule in accordance with the Contract Time (hereinafter defined). The Project Schedule shall indicate the dates for the start and completion of the various stages of the construction, including the dates when information and approvals are required from the Owner. It shall be updated and delivered with each Payment Request (hereinafter defined) for Owner's acceptance and approval. Subject to Section 7.3 below, Workstage shall adhere to the Project Schedule and any changes made to such will not change the Contract Time unless mutually agreed to and evidenced by a Change Order.

3.3.8 Workstage shall be responsible for all construction means, methods, techniques, sequences and procedures, and for coordinating all portions of the Work.

3.3.8.1 Workstage shall be responsible for initiating, maintaining and supervising all safety precautions and programs in connection with the Work, including safety of all persons and property during performance of the Work. This requirement will apply continuously with respect to the Work at the Site and not be limited to normal working hours.

3.3.8.2 Workstage shall comply with all applicable laws, ordinances, rules, regulations and lawful orders of any public authority having jurisdiction for the safety of persons or property or to protect them from damage, injury or loss in connection with the Work. Workstage shall erect and maintain, as required by law based upon existing conditions and progress of the Work, all reasonable safeguards for safety and protection including posting danger signs and other warnings against hazards, promulgating safety regulations and notifying owners and users of adjacent utilities.

3.3.8.2.1 Workstage shall designate a responsible member of its organization at the Site whose duty shall be the prevention of accidents. This person shall also be the Project Manager (hereinafter defined) unless otherwise designated in writing by Workstage to Owner.

3.3.9 The Contract Price (as hereinafter defined) shall include all sales, consumer, use, employment and similar taxes applicable to the Work. If requested by Owner, Workstage shall promptly provide Owner copies of all receipts for such taxes paid.

3.3.10 Workstage shall pay royalties and license fees for patented designs, processes or products in connection with the Work. Workstage shall defend suits or claims for infringement of patent rights and shall hold the Owner harmless from loss on account thereof, but shall not be responsible for such defense or loss when a particular design, process or product of a particular manufacturer is required by the Owner. However, if Workstage has knowledge that the use of a required design, process or product in connection with the Work is an infringement of a patent, Workstage shall be responsible for such loss unless such information is promptly furnished to the Owner.

3.3.11 Workstage shall maintain at the Site for the Owner one set of Construction Documents, Change Orders and other modifications, in good order and regularly updated to record the completed construction. These shall be delivered to the Owner upon final completion of the Project.

3.3.12 In connection with the Work, the Contract Price shall include costs associated with obtaining, on a timely basis, the building permit and other permits and governmental fees,

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licenses, certificates, approvals and inspections necessary for proper execution and completion of the Project and compliance with laws and regulations that protect the environment, or human health and safety, as well as with other laws and regulations that may apply to the Project in any matter.

3.3.13 Following Substantial Completion (hereinafter defined), collaborate with Owner to prepare and complete Punchlist Work (hereinafter defined) in accordance with Section 7.1 below.

3.3.14 Workstage shall deliver all written warranties and equipment manuals with respect to the Work to Owner upon final completion of the Project.

3.3.15 Upon final completion of the Project, Workstage shall produce and deliver to Owner a reproducible record set of "as built" plans and specifications reflecting significant changes in the Work made during construction and the Project as actually built.

3.3.16 The Site and surrounding area shall be kept free from accumulation of waste materials or rubbish caused by Workstage's operations under this Agreement. At the completion of the Work, Workstage shall promptly remove from the Site waste materials, rubbish, Workstage's tools, construction equipment, machinery, and surplus materials and leave the Site and surrounding area in a neat and clean manner.

3.3.17 Workstage shall coordinate with the utility companies to install water mains, sewer mains, telephones, gas mains, power poles, lines transformers, or to connect utilities to the Project. The expense of delivering such utilities to the site will be paid for by Owner, separate and apart from the terms of this Agreement, on the condition that Workstage presents to Owner all plans and potential expenses before they are made or committed to by Workstage.

3.3.18 Workstage will be responsible for staffing a field office with the expertise necessary to properly execute the supervision and construction of the Project. Workstage shall be responsible for providing a competent Project Manager and Superintendent for the duration of the Project (the "Key Personnel"). The Key Personnel will be the on-Site point of contacts for Workstage and will coordinate construction efforts with the Project Executive and the Owner. The Key Personnel assume all duties and responsibilities for supervision and scheduling of all facets of construction including those of any subcontractors or suppliers for the Project. The Key Personnel shall be satisfactory to Owner, in its reasonable opinion, and shall not be removed or replaced, unless the Key Personnel are unable to perform their duties due to illness or injury. In such case, Key Personnel of similar experience and qualifications shall be substituted. Workstage shall be additionally responsible for providing on the Project labor foremen and workmen skilled in the crafts and trades that they are supervising or performing.

3.3.19 Workstage shall confine operations at the Site to areas permitted by law, ordinances, permits, and the Contract Documents and shall not unreasonably encumber the Site with any materials or equipment.

3.3.20 In connection with the Work, Workstage shall at all times be responsible for the conduct and discipline of its employees and to the extent within its reasonable control any Subcontractor or persons employed by Subcontractors. All workmen must have sufficient knowledge, skills and experience to perform properly the work assigned to them.

3.3.21 Workstage is solely responsible for scheduling and coordinating the performance and furnishing of the Work which will include coordinating of construction required in connection with construction performed and equipment supplied by Owner. Any construction

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subcontract, sub-agreement, supply or material contract entered into by Workstage shall be for the benefit of the Owner.

3.3.22 Workstage shall provide customary assistance to Owner in the utilization of equipment or systems such as preparation of operation and maintenance manuals, training personnel for operation and maintenance, and construction during operation.

4. WORKSTAGE RESPONSIBILITIES

4.1 Workstage shall examine and carefully study the Contract Documents and will perform the Work in accordance with the Contract Documents. Workstage represents and warrants to Owner that all materials and equipment furnished under the Contract will be new and of good quality and that all Work will be of good quality, free from faults and defects and in conformance with the Contract Documents and applicable laws, ordinances and regulations. All Work not so conforming to these standards may be considered defective. All such defective Work, including substitutions of materials requiring Owner approval hereunder, but not approved by Owner, shall be corrected by Workstage in accordance with Section 14 hereof. If required by Owner, Workstage shall furnish satisfactory evidence as to the kind and quality of materials and equipment.

4.2 Workstage shall visit the Site and become familiar with and become satisfied as to the general, local and Site conditions that may affect cost, progress, performance and furnishing of the Work.

4.3 Workstage agrees that it is familiar with and will use commercially reasonable efforts to comply with all federal, state and local laws and regulations that may affect cost, progress, performance and furnishing of the Work. If Workstage experiences any hurdles in complying with this Section 4.3, it will notify Owner and at all times keep Owner appraised of any potential challenge or obstacle to such compliance.

4.4 Workstage represents and warrants that it will carefully study all reports of explorations and tests of subsurface conditions at the Site and all drawings of physical conditions in or relating to existing surface structures at the Site.

4.4.1 Notwithstanding anything stated in Section 4.4 hereinabove, if conditions encountered at the Site are found, as determined by an independent engineering investigator, to be (1) subsurface or otherwise concealed physical conditions which differ materially from those indicated in the Contract Documents or as provided for in Section 5.4 below, or (2) unknown physical conditions of an unusual nature, which differ materially form those ordinarily found to exist and generally recognized as inherent in construction activities of the character provided for in the Contract Documents, then the Contract Price and Contract Time shall be equitably adjusted by Change Order.

4.5 Workstage shall, in accordance with Section 3.3.14, pass through to Owner all manufacturers' product warranties applicable to components of the Project as listed on Exhibit E attached hereto, and notwithstanding anything contained herein, Workstage shall have no liability and gives no warranty for any item covered by a manufacturers' product warranty passed on to Owner. Workstage represents and warrants that all warranties listed on Exhibit E attached hereto are assignable and shall be assigned to Owner.

4.6 Workstage represents and warrants that exclusive and lien-free title to the Work, materials, and equipment covered by a Payment Request will pass to Owner by incorporation in construction or upon receipt of payment by Workstage, whichever occurs last.

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4.7 Workstage may only make substitutions of materials and/or equipment with consent of the Owner and in accordance with a Change Order. By making requests for substitutions, Workstage:

4.7.1.1 represents and warrants that Workstage has investigated the proposed substitute product and determined that it is equal or superior to that specified in the Contract Documents;

4.7.1.2 represents and warrants that Workstage will provide the same warranty for the substitution that Workstage would provide for the item specified in the Contract Documents;

4.7.1.3 certifies and warrants that cost data presented is complete and includes all related costs, and waives claims for additional costs related to the substitution which subsequently b ...