Exhibit 10.6
OPTION AGREEMENT
APOLLO GROUP, INC., OPTION GRANTOR
and
MACQUARIE RIVERPOINT AZ, LLC, OPTION HOLDER

 

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OPTION AGREEMENT
     THIS OPTION AGREEMENT (this “Agreement”) is made as of June 20, 2006 (the
“Agreement Date”) by and between APOLLO GROUP, INC., an Arizona corporation, a
duly organized and existing Arizona corporation, being hereafter referred to as
“Option Grantor”, and MACQUARIE RIVERPOINT AZ, LLC, a duly organized and
existing Delaware limited liability company, herein referred to as “Option
Holder” concerning the sale and assignment of all of the membership interests of
RIVERPOINT LOTS 1/3/5, LLC, a duly organized Arizona limited liability company
(“Riverpoint 1/3/5”) and RIVERPOINT LOT 2, LLC, a duly organized Arizona limited
liability company (“Riverpoint 2”). Riverpoint 1/3/5 and Riverpoint 2 are each
referred to in this Agreement as a “Company” and collectively as the
“Companies”.
RECITALS:
     WHEREAS, Option Grantor is the owner of one hundred percent (100%) of the
membership interests in the Companies (the “Membership Interests”).
     WHEREAS, Riverpoint 1/3/5 is the owner of that certain real property to be
improved, commonly known as Lot 1 and Lot 3 of Riverpoint, according to the plat
recorded in Book 566 of Maps, page 04, records of Maricopa County, Arizona
(“Lots l and 3”), and located at 4015 S. Riverpoint Parkway and 4050 S.
Riverpoint Parkway in Phoenix, Arizona, respectively.
     WHEREAS, Riverpoint 2 is the owner of that certain real property to be
improved, commonly known as Lot 2 of Riverpoint, according to the plat recorded
in Book 566 of Maps, page 04, records of Maricopa County, Arizona (“Lot 2”), and
located at 4025 S. Riverpoint Parkway in Phoenix, Arizona. Lots 1 and 3 and Lot
2 are hereinafter referred to as the “Real Property”. A site plan of the Real
Property is attached hereto as Exhibit “A”.
     WHEREAS, the Companies intend to improve the Real Property with a
multi-level parking garage, surface parking spaces, and an office tower with a
cafe (collectively, the “Improvements”) in accordance with and as more
particularly described in the plans and specifications listed on Exhibit “B” (as
modified by any Change Orders permitted under this Agreement, the “Plans and
Specifications”).
     WHEREAS, Option Grantor has agreed to grant to Option Holder an Option to
acquire the Membership Interests in the Companies following completion of the
Improvements on the terms and conditions set forth in this Agreement.
     WHEREAS, if Option Holder exercises its option to purchase the Membership
Interests, (i) Option Holder will cause the Companies to enter into a commercial
lease of the Real Property and completed Improvements (the “Assets”) in the form
attached hereto as Exhibit “C” (the “UOP Lease”) without modification with The
University of Phoenix, Inc, as tenant (“Tenant”) and (ii) Option Grantor shall
cause Tenant to enter into the UOP Lease and shall enter into a guarantee of the
UOP Lease.

 

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     WHEREAS, the UOP Lease shall have an initial term of twelve (12) years and
shall be guaranteed by Option Grantor.
     NOW, THEREFORE, in consideration of the foregoing and the mutual
undertakings set forth herein, and for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Option Grantor and
Option Holder hereby agree as follows:
     1. Recitals. Each of the recitals set forth above are incorporated herein
as covenants and agreements of the parties hereto.
     2. Construction of Improvements; Material Change Orders.
          (a) Option Grantor shall cause the Companies to construct the
Improvements substantially in accordance with the Plans and Specifications and
all applicable laws. If during the construction of the Improvements, the
Companies desire to, or are required by law or by governmental authorities with
jurisdiction over the Improvements to, make modifications to the Plans and
Specifications (i.e., “Change Orders”), the Companies retain the right to make
such Change Orders, provided that (a) the Companies disclose to Option Holder in
writing a complete accounting of all Change Orders, along with modifications to
the Plans and Specifications and/or the construction contract(s) required to
document such Change Order, and (b) if the Change Order is a Material Change
Order, as such term is defined herein, the Companies follow the process outlined
below. “Material Change Orders” is defined herein to mean any changes to the
Plans and Specifications that are not required by law or by governmental
authorities with jurisdiction over the Improvements and that do one or more of
the following:
               (i) Decrease the overall quality of the materials, workmanship or
equipment of the Improvements, which shall be determined by the project
architect in his sole and absolute judgment,
               (ii) Increase the frequency of on-going maintenance/replacement
or otherwise increase the cost of on-going maintenance/replacement of materials
and equipment for the Improvements,
               (iii) Decrease the aesthetic quality of the original
architectural design, which shall be determined by the project architect in his
sole and absolute judgment,
               (iv) Modify in more than an inconsequential manner any of the
Major Components of the central heating ventilation and air conditioning systems
and electrical (power and lighting) capacity. “Major Components” are thereby
defined to include all energy management systems, chillers, cooling towers, air
handler units, main switchboard, main mechanical switchboard and central air
distribution and collection ductwork and equipment. Major Components
specifically exclude changes to air distribution, collection, and energy
management components (including ductwork, VAV boxes, thermostats, etc.)
utilized to control, zone and ventilate heated and chilled air on each of the
Improvement’s 10 floors,
               (v) Alter the structural design of the Improvements, including
but not limited to the seismic or structural integrity of the Improvement’s
foundation, columns, beams, girders, floor slabs and ceiling joists,

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               (vi) Modify the floor to floor height or floor to ceiling height,
other than normal construction tolerances,
               (vii) Modify the exterior wall systems of the Improvements,
including design details for the pre-cast panels, glass, glazing, insulation,
flashings and other exterior claddings in such a manner as to decrease the life
expectancy of such components or to increase probability of water infiltration
inside the wall cavity,
               (viii) Modify in more than an inconsequential manner the life
safety design or life safety systems of the Improvements, including fire
sprinklers, smoke or fire detection systems, emergency power back-up systems,
and fire ingress and egress, or any other design or equipment change which
impacts human life safety,
               (ix) Modify the site plan or floor plan in such a manner to
decrease the rentable area below 265,000 rentable square feet of the office
tower or increase the rentable area above 290,000 (as measured in accordance
with the BOMA Standard defined below) or the number of surface and structured
parking spaces so that the parking ratio is less than 7.5 per 1,000 square feet
of rentable area,
               (x) Modify the site plan in such a manner to decrease or in any
adverse manner change the quality or means of ingress or egress to and from the
Improvements,
               (xi) Modify the specifications to decrease the number of cabs,
decrease weight capacities in more than an inconsequential manner, decrease the
cab dimensions, increase response time, decrease handling capacity or
transportation speeds of the elevators, or change the quantity or location of
stair shafts, or
               (xii) Modify in any adverse manner any warranty provisions,
defect liability periods and/or warranty maintenance obligations.
     If Change Orders made by the Companies are Material Change Orders, the
Companies shall provide to Roger Dahlin of Pritchard Associates (the
“Construction Monitor”) and Todd Felger of Principal Real Estate Investors, LLC,
copies of all documentation received from the General Contractor and architect
to disclose the reason for the change order, including without limitation, the
specific changes to the construction materials, specifications, and methods of
installation, any drawings depicting the Material Change Order, material data
sheets, if any, and information related to the cost of the Material Change
Order, if applicable. Upon receipt of such information, Option Holder shall have
two (2) business days to respond to such Material Change Order and instruct the
Companies in writing whether Option Holder approves or disapproves of such
Material Change Order, and if it disapproves the Material Change Order
specifying the reasons therefor. A failure by Option Holder to disapprove a
Material Change Order within such two (2) business day shall be deemed an
approval of such Material Change Order. Option Holder’s Construction Monitor
shall have the authority to approve or disapprove all Material Change Orders on
behalf of Option Holder, and the Construction Monitor’s written decisions or
failure to act shall be binding on Option Holder. In the event Option Holder
approves the Material Change Order, then the Companies may implement such
Material Change Order, without credit, offset or adjustment to the Purchase
Price.

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     In the event Option Holder disapproves of such Material Change Order, then
the Companies shall either (x) instruct the General Contractor that such change
order is not acceptable and complete the construction substantially in
accordance with the original Plans and Specifications (as modified by any prior
Change Orders permitted under this Agreement), (y) make modifications to the
Material Change Order to address the objections specified in the Option Holder’s
response and thereafter repeat the same notice provisions for approval by the
Option Holder, (z) make any change reflected in a Material Change Order that is
disapproved pursuant to this Section, in which event Option Holder’s sole remedy
shall be to terminate this Agreement, receive an immediate full refund of the
Option Payment less $75,000, which shall be paid to Option Grantor as
consideration for taking the Membership Interests off the market.
     (b) The Companies shall provide the Construction Monitor with reasonable
access to the Improvements to review the status of the construction. At a
minimum, Rick Mason, or any other person designated in writing by notice to
Option Holder as the project manager for the Companies (the “Project Manager”),
shall update Option Holder as to the construction progress at a meeting to take
place on the next business day following the monthly on-site meeting with the
Project Manager and the General Contractor superintendent; provided that the
Project Manager may reschedule such meeting, but will give the Construction
Monitor at least five (5) business days prior notice. The Project Manager will
deliver copies of the meeting minutes for the monthly on-site meeting and copies
of other materials related to such meeting within two (2) business days
following receipt thereof. All visits to the site by the Construction Monitor
shall be coordinated through the Project Manager. The Construction Monitor shall
not directly contact the project superintendent, architect or any other members
of the construction team regarding the Improvements or construction thereof.
     Within two (2) business days of Project Manager’s receipt thereof, the
Construction Monitor shall be provided copies of construction documentation
exchanged between the General Contractor and the Project Manager, including:
               (i) Copies of updated milestone calendars for completion of the
Improvements;
               (ii) Copies of any material testing or sample reports (i.e.
compaction reports, concrete core samples, etc.); and
               (iii) Copies of any modifications to Plans and Specifications as
a result of change orders.
     Notwithstanding the foregoing, (i) the Companies shall not be required to
provide copies of any General Contractor applications for payment and (ii) the
Companies shall only be required to furnish copies of all General Contractor or
subcontractor lien waivers following the completion of the Improvements.
     The Construction Monitor shall not access the job site at any time without
the advance permission of the Project Manager, which access shall not be
unreasonably withheld, delayed or conditioned. The Construction Monitor shall
take all reasonable steps to avoid disruption to the job site, construction
schedule, or superintendent management of the overall construction of the
Improvements and shall follow all reasonable restrictions or limitations imposed
by the Project Manager or the employees at the job site. Option Holder shall
indemnify, defend and hold

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harmless Option Grantor, the Companies, Project Manager and the General
Contractor for from and against any loss, cost, damage or expense as the result
of or arising from the Construction Monitor’s entry onto the Property or
exercise of the rights granted under this Section.
     Upon completion of the Improvements, the Construction Monitor shall also be
afforded an invitation to attend the construction walk-through along with the
Project Manager and the project superintendent at which a final punch list is
prepared. The Construction Monitor’s attendance at the walk-thru shall be as a
silent observer, but following the walk-thru Project Manager shall schedule a
meeting to afford the Construction Monitor any opportunity to provide input into
the documentation of the final punch list. The Construction Monitor’s
recommendations regarding final punch list shall include only items necessary to
conform the Improvements to the Plans and Specifications as modified by Change
Orders permitted under this Agreement, and the project architect shall determine
whether the recommended punch list items are necessary to conform the
Improvements to the Plans and Specifications. If the Construction Monitor
requests any punch list item that is inconsistent with or would require changes
to the Plans and Specifications, Option Grantor may accept or reject such item,
in its sole and absolute discretion, or may condition its acceptance of the item
on any terms the Companies deem appropriate, including without limitation,
Option Holder agreeing to pay any increased cost resulting from the requested
punch list item.
     3. Option to Purchase.
          (a) Option Grantor hereby grants to Option Holder, an exclusive and
irrevocable right and option (the “Option”) to purchase the Membership Interests
upon and subject to the terms, conditions and limitations hereafter set forth.
          (b) Option Grantor shall notify Option Holder the date that it
anticipates that Completion (as defined in the following sentence) of the
Improvements will occur (the “Estimated Completion Notice”). Option Grantor
shall provide written notice to Option Holder (and evidence of the completion of
each thereof) (the “Completion Notice”), within five (5) business days after the
last to occur of (i) final completion of the Improvements substantially in
accordance with the Plans and Specifications; (ii) receipt of a notice of
substantial completion from Option Grantor’s architect; and (ii) issuance of an
unconditional final certificate of occupancy from the City of Phoenix
(“Completion”). Option Holder may exercise the Option by giving written notice
(the “Option Exercise Notice”) of the exercise thereof to Option Grantor on or
before the later of (i) five (5) business days following delivery by Option
Grantor to Option Holder of the Completion Notice or (ii) sixty (60) days after
the delivery by Option Grantor to Option Holder of the Estimated Completion
Notice (the “Option Exercise Date”).
          (c) If the Option Exercise Date has not occurred on or before
September 30, 2007 (as the same may be extended for any Force Majeure Delay),
Option Holder, at its absolute discretion and as its sole remedy, may either
(i) terminate this Agreement by written notice and receive an immediate refund
of the Option Payment or (ii) extend from time to time and as often as Option
Holder elects the period for the Option Exercise Date to occur; provided,
however, that notwithstanding anything contained herein to the contrary, in no
event shall Option Holder be entitled to extend beyond March 30, 2008 (the
“Outside Expiration Date”). For purposes of this Agreement, a “Force Majeure
Delay” shall mean any delay caused by strike, other labor trouble, governmental
preemption of priorities or other controls in connection with a national or

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other public emergency, or shortages of fuel, supplies or labor resulting
therefrom or any other cause, similar to the above, beyond a party’s reasonable
control. Notwithstanding anything contained in this Agreement to the contrary,
if the Option Exercise Date has not occurred by the Outside Expiration Date
(without regard to any Force Majeure Event), the Option shall lapse, the Option
Payment shall be refunded to Option Holder, and Option Holder shall have no
further Option to purchase the Membership Interests.
          (d) The giving of the Option Exercise Notice shall create a valid and
binding contract between Option Grantor, as seller, and Option Holder, as
purchaser, whereby seller shall be bound to sell, and purchaser shall be bound
to purchase, the Membership Interests, upon and subject to the terms,
conditions, and limitations set forth in the form of purchase and sale agreement
attached hereto as Exhibit “D” (the “Purchase and Sale Agreement”), which Option
Grantor and Option Holder agree to execute without modification and deliver to
the other within five (5) business days after the exercise of the Option to
memorialize such contract.
          (e) From and after the date of this Agreement, and until the first to
occur of (i) the lapse or expiration of the Option or (ii) the Closing, Option
Grantor shall neither sell, transfer, convey or otherwise alienate the
Membership Interests, and the Companies shall neither sell, transfer, convey or
otherwise alienate the Assets or any part thereof or interest therein, nor grant
or create or suffer the creation of any mortgage, trust deed, lien, charge, or
encumbrance of or on the Assets or any part thereof or interest therein that
cannot be and is not released by Option Grantor at the Closing, nor grant or
enter into any lease of the Assets or any part thereof (other than licenses or
subleases that would otherwise be permitted under the terms of the UOP Lease).
          (f) From time to time after the date hereof and prior to Closing,
Option Holder shall be entitled to reasonable access to the Real Property and
the Improvements, after prior written notice to Project Manager; provided that
Project Manager may limit such entry to periods when Project Manager or his
designee is available to accompany Option Holder on its entry on to the Property
and may impose reasonable requirements intended to minimize interference with
the construction and insure safety to persons on-site. Option Holder shall not
create any liens on the Real Property or the Improvements by virtue of its
access to or entry thereon and will indemnify, defend, and hold Option Grantor
and the Companies harmless for, from and against all loss, cost, damage and
expense, including, but not limited to, claims asserted by third parties against
Option Grantor or the Companies to recover for personal injury or property
damage as a result of Option Holder’s entry onto or activities at the Real
Property and Improvements. In the course of its investigations Option Holder may
make reasonable inquiries to third parties, including, without limitation
parties to service contracts, municipal, local and other government officials
and representatives, but excluding architects, contractors and subcontractors in
which case communications shall be limited to those set forth in Section 2, and
Option Grantor and the Companies consent to such inquiries.
          (g) Prior to the Agreement Date, the Companies provided to Option
Holder the due diligence materials listed on Exhibit “E” (collectively, the “Due
Diligence Items”). Neither Option Grantor nor the Companies make any
representation as to the accuracy of any Due Diligence Item or the content
therein. The Companies are providing such reports to Option Holder for
informational purposes only. In the event the transaction contemplated herein
does

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not close for any reason other than a default by Option Grantor, Option Holder
shall promptly return the Due Diligence Items and any copies thereof to the
Companies.
     On or before 5:00 p.m. (Central Time) on the date which is the tenth (10th)
business day following the Agreement Date (the “Approval Date”), if Option
Holder disapproves of any of the Due Diligence Items or the Assets, for any
reason or for no reason, this Agreement shall terminate without any liability on
the part of either party and the Option shall lapse. In the event of such
termination and lapse, the Option Payment shall be immediately returned to
Option Holder, and Option Holder shall promptly return to the Companies all Due
Diligence Items and any copies of same. If by 5:00 p.m. (Central Time) on the
Approval Date Option Holder does not deliver an approval notice to Option
Grantor (the “Approval Notice”), there shall be a conclusive presumption that
Option Holder has disapproved the Due Diligence Items or the Assets, this
Agreement shall terminate without any liability on the part of either party, and
the Option Payment shall be immediately returned to Option Holder. If by 5:00
p.m. (Central Time) on the Approval Date, Option Holder delivers an Approval
Notice, then Option Holder will be deemed to have approved of the Due Diligence
Items and the Assets, Option Holder shall have no further right to terminate
this Agreement and it shall remain in full force and effect, and the Option
Payment shall be non-refundable except as otherwise expressly provided in this
Agreement.
     4. Option Payment.
          (a) In consideration of the granting of the Option by Option Grantor
to Option Holder hereunder, Option Holder shall deposit with the Title Company
the sum of Four Million No/100 Dollars ($4,000,000.00) (the “Option Payment”).
          (b) The Option Payment shall be paid on or before the date which is
three (3) business days after the Agreement Date, by wire transfer of
immediately available funds in U.S. dollars via the federal bank wire transfer
system, to the Phoenix office of First American Title Insurance Company, Attn:
Carol Peterson, 2425 E. Camelback Road, Suite 300, Phoenix, AZ 85016 (telephone:
602/567-8109; fax: 602/567-8101) (the “Title Company”).
          (c) The Option Payment shall remain in escrow with the Title Company
until first to occur of (i) the Closing, (ii) the termination of this Agreement
or the lapse or termination of the Option or (iii) the termination of the
Purchase and Sale Agreement. The Option Payment shall be invested by the Title
Company as directed by Option Holder, and all earnings thereon shall become part
of the Option Payment and disbursed to the party entitled to receive the Option
Payment. If the transaction contemplated by the Purchase Agreement closes,
Option Holder shall receive a credit against the Purchase Price at Closing in an
amount equal to the interest earned on the Option Payment from the date of
deposit with the Title Company through the date of the Closing.
          (d) Upon the Approval Date the Option Payment shall be non-refundable
to Option Holder, unless or except if any of the following events shall occur on
or before the Closing Date in which event the Option Payment shall be
immediately refunded to Option Holder:

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                    (1) This Agreement is terminated pursuant to Section 2(a),
Section 3(c), Section 3(g), Section 9(a) or Section 10(q);
                    (2) On or after the Agreement Date there shall be (A) a
violation of Environmental Law (defined below) related to the Assets, except
where such violation would not have a material adverse effect or (B) the
presence or release of Hazardous Materials (defined below) on or from the Assets
or the migration of Hazardous Materials onto the Assets from adjacent property
if such presence, release or migration is in violation of any Environmental Law
unless such violation is remedied prior to the Option Exercise Date. If Option
Grantor discovers that Hazardous Materials have migrated onto the Assets from
adjacent property prior to Closing, Option Grantor shall take such actions as it
deems reasonably appropriate against the adjoining landowner(s) from whose
property the Hazardous Substance originated.
                    (3) The termination of this Agreement by Option Holder as
the result of a filing by or against Tenant or Option Grantor of a petition for
order of relief in bankruptcy for the purpose of bankruptcy, liquidation or
reorganization under any law relating to bankruptcy whether now existing or
hereafter enacted (including, without limitation, any petition filed by or
against Tenant under any one or more of the following Chapters of the Bankruptcy
Reform Act of 1978, 11 U.S.C. §§ 101 1330 as amended: Chapter 7, Chapter 11 or
Chapter 13) except that, in the case of a filing against Tenant or Option
Grantor of such a petition, Option Holder may not terminate this Agreement if
the petition is dismissed or discharged on or before sixty (60) days after the
filing thereof;
                    (4) Any condemnation of any portion of the Assets; or
                    (5) An Exception to Warranty Notice has been given by Option
Grantor and Option Holder elects to terminate this Agreement in accordance with
the provisions of Section 8(c) hereof;
     If any of the conditions set forth in items (1) through (5) above occur,
the Option Deposit shall be immediately returned to Option Holder; otherwise the
Option Payment shall be released to Option Grantor upon the earlier to occur of
(i) the Closing under the Purchase and Sale Agreement or (ii) the expiration,
termination or lapse of the Option pursuant to this Agreement. Following the
exercise of the Option and the execution of the Purchase and Sale Agreement, the
parties respective rights to the Purchase and Sale Agreement shall be governed
by the terms of the Purchase and Sale Agreement.
     5. Purchase Price. Subject to the adjustment below, the purchase price at
which Option Grantor, as seller shall sell and the Option Holder, as purchaser,
shall purchase the Membership Interests, pursuant to the contract created by the
exercise of the Option (the “Purchase Price”) shall be $70,800,000.00 (Seventy
Million Eight Hundred Thousand and No/100 US Dollars). The Option Payment also
shall be paid to Option Grantor at Closing, and the Option Holder shall receive
a credit against the Purchase Price in an amount equal to the interest earned on
the Option Payment from the date of deposit with the Title Company through the
date of the Closing. The Purchase Price was determined based on the lease
revenue to be derived assuming the office tower constructed as part of the
Improvements will contain a net rentable area of 267,949 square feet. Within
thirty (30) days following the Estimated

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Completion Notice, Option Grantor shall provide Option Holder with a
certification of the rentable area of the office tower measured by Carpenter
Sellers Associates in accordance with “American National Standard ASNI/BOMA
Z65.1-1996: Standard Method for Measuring Floor Area in Office Buildings” issued
by the Building Owners and Managers Association International (the “BOMA
Standard”). The rent under the UOP Lease shall be determined based on the net
rentable area of the Building calculated in accordance with the BOMA Standard,
and therefore, the Purchase Price shall be adjusted at closing to equal the
rentable area of the office tower as set forth in such certification multiplied
by $264.23 US dollars.
     6. Assignment of Membership Interests. Upon the exercise of the Option as
provided in Section 3 and the Closing under the Purchase and Sale Agreement, the
Membership Interests shall be assigned and conveyed to Option Holder in
accordance with the Purchase and Sale Agreement.
     7. The Closing. Upon the exercise of the Option as provided in Section 3,
the closing of the transaction (the “Closing”) shall be held and delivery of all
items shall be made under the terms and conditions of the Purchase and Sale
Agreement through an escrow with the Title Company, on the date which is five
(5) business days after the Option Holder’s exercise of the Option, or such
earlier date prior thereto as Option Grantor, as seller and Option Holder, as
buyer, may mutually agree in writing (the “Closing Date”). The Closing Date may
not be extended without the prior written approval of both Option Grantor, as
seller and Option Holder, as buyer.
     8. Representations and Warranties.
          (a) On the date hereof and again on the Closing Date, Option Grantor
hereby represents and warrants to Option Holder as follows:
               (i) Option Grantor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Arizona.
               (ii) Each of the Companies is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Arizona.
               (iii) The Companies collectively own and hold 100% of all right,
title and interest in and to the Assets.
               (iv) Option Grantor is the sole member of each of the Companies
and owns 100% of the Membership Interests. Option Grantor holds all right, title
and interest to the Membership Interests, free of all liens, encumbrances or any
other defects of title whatsoever, and the Membership Interests were not issued
in violation of the preemptive rights of any person or any agreement or laws by
which the Option Grantor at the time of issuance was bound. There are no
outstanding options, warrants, rights, calls, commitments, conversion rights,
rights of exchange, rights of redemption, subscriptions, claims, agreements,
obligations, convertible or exchangeable securities or other plans or
commitments, contingent or otherwise, relating to the Membership Interests,
except as may be provided in the Operating Agreements of the Companies. Option
Grantor has delivered to Option Holder true, complete and correct copies of the
Articles of Organization and the Operating Agreements of the Companies and the
same have

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not been amended or modified, except as provided, and remain in full force and
effect. All of the rights with respect to the operation or management of the
Companies are set forth in such documents. There are no officers in the
Companies.
               (v) The execution, delivery and performance by the Option Grantor
of this Agreement and the Purchase and Sale Agreement have been duly and validly
approved by all necessary company action and no other actions or proceedings on
the part of the entities constituting Option Grantor are necessary to authorize
this Agreement or the Purchase and Sale Agreement or the transactions
contemplated hereby and thereby. No consent, waiver, approval, or authorization
of, or filing, registration, or qualification with, or notice to, any
governmental instrumentality or any other person or entity is required to be
made, obtained, or given by the entities constituting Option Grantor in
connection with the execution, delivery, and performance of this Agreement or
the Purchase and Sale Agreement or, if required, such consent or action has been
obtained or taken. The entities constituting Option Grantor have full power and
authority to own and grant the option, to own and sell the Membership Interests,
and to enter into this Agreement and the Purchase and Sale Agreement and to
consummate the transactions contemplated in such documents. This Agreement, the
Purchase and Sale Agreement, and all closing documents executed by Option
Grantor which are to be delivered to Option Holder at the Closing Date are, or
at the Closing Date will be, duly authorized, executed, and delivered by Option
Grantor, are, or at the Closing Date will be, legal, valid, and binding
obligations of Option Grantor, enforceable in accordance with its terms, except
to the extent that the enforceability thereof may be limited, or otherwise
affected by the application of rules of law or general principles of equity
governing specific performance, injunctive relief or other equitable remedies
(regardless of whether enforceability is considered in a proceeding in equity or
at law) and by bankruptcy, reorganization, insolvency, moratorium and other
similar laws enacted for the relief of debtors generally, from time to time in
effect, and other similar laws or decisions of courts affecting creditors’
rights or remedies generally, are sufficient to convey title, and do not violate
any provisions of any agreement to which Option Grantor is a party or to which
it is subject.
               (vi) The execution and delivery of this Agreement and the
Purchase and Sale Agreement, and the performance by Option Grantor under this
Agreement and the Purchase and Sale Agreement, do not and will not conflict with
or result in a breach of (with or without the passage of time or notice or both)
the terms of Option Grantor’s organizational documents, any judgment, order or
decree of any governmental authority binding on Option Grantor, and, to Option
Grantor’s knowledge, do not breach or violate any applicable law, rule or
regulation of any governmental authority. The execution, delivery and
performance by Option Grantor under this Agreement and the Purchase and Sale
Agreement will not result in a breach or violation of (with or without the
passage of time or notice or both) the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which Option Grantor is a party or by which
Option Grantor is bound or to which the Assets are subject. Neither Option
Grantor nor the Companies have granted any rights, options, rights of first
refusal, or any other agreements of any kind, which are currently in effect, to
purchase or to otherwise acquire the Assets or any part thereof or any interest
therein, except for rights under this Agreement and the Purchase and Sale
Agreement or any rights disclosed by the Permitted Exceptions (defined in the
Purchase and Sale Agreement).

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               (vii) To Option Grantor’s knowledge, Option Grantor has not
breached any material provision of, nor is it in default under the terms of, any
material contract to which it is a party or under which it has any rights or by
which it is bound. Neither Option Grantor nor the Companies have received any
written notice of any violation of or default under or with respect to any law,
governmental regulation or rule or order of any governmental authority that is
applicable in any way to the business or operation of Option Grantor.
               (viii) To Option Grantor’s knowledge, (A) the Assets are free and
clear of all liens or encumbrances other than the Permitted Exceptions (defined
in the Purchase Agreement), (B) there are no public plans or proposals for
changes in road grade, access or improvements which would affect the Assets or
result in any general or specific assessment against it other than any expansion
of the I-10 right of way, which is currently in the study phase pursuant to the
I-10 Corridor Improvement Study (the “I-10 Expansion”), and (C) no condemnation
proceedings, eminent domain proceedings or similar actions or proceedings are
now pending or threatened against the Assets. Notwithstanding the foregoing,
Option Holder acknowledges that Option Grantor and its affiliates own other lots
in the Riverpoint development that are not part of the Assets (the “Riverpoint
Lots”), and nothing in this Agreement shall limit the right of the owner of such
lots to make any improvements or changes to the Riverpoint Lots. The preceding
sentence shall in no way limit Option Holder’s right, as the possible owner of
the Assets, to appear and participate in any public proceedings related to the
Riverpoint Lots.
               (ix) To Option Grantor’s knowledge, there is no action, suit or
proceeding pending or to Option Grantor’s knowledge, threatened against the
Companies or the Assets.
               (x) The Companies are classified as disregarded entities for
Federal income tax purposes. The Companies have not made a “check the box”
election to be treated as a corporation for Federal income tax purposes. All
Federal income taxes and state and other tax returns and reports of the
Companies required by law to be filed as of the Closing Date will have been duly
filed as of such date, and all taxes imposed upon the Companies or any of its
properties, assets or income which are due and payable or claimed by any taxing
authority to be due and payable have been paid or reserved for as of the Closing
Date, other than taxes, assessments, fees and charges being contested by the
Companies in good faith using appropriate procedures. There are no claims for
taxes pending against the Companies, and there are not now in force any waivers
or agreements by the Companies for the extension of time for the assessment of
any tax, nor has any such waiver or agreement been requested by the Internal
Revenue Service (the “Service”) or any other taxing authority. The federal
income tax returns of the Companies have not been examined by the Service. The
Companies have paid or are withholding and will pay when due to the proper
taxing authorities all withholding amounts required to be withheld with respect
to all taxes on income, unemployment, social security or other similar programs
or benefits with respect to salary and other compensation of directors, officers
and employees of the Companies, if any.
               (xi) Except for the UOP Lease, there will not be any other leases
affecting the Assets at the Closing (other than licenses or subleases permitted
under the terms of the UOP Lease).

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               (xii) The Option Grantor will prior to the Closing deliver to
Option Holder copies of the financial statements for each of the Companies as of
June 30, 2006 (collectively, the “Financial Statements”). Each of the Financial
Statements has been or will be prepared on a modified cash basis with
depreciable assets being recorded on an income tax basis, and each presents
fairly the financial position of the applicable Company, as of its date and the
results of their operations, as the case may be. Since March 31, 2006, there has
been no circumstance, event, occurrence, change or effect that has had a
materially adverse effect on the financial condition of the Companies, other
than, in each case, as a result of (a) changes in general economic conditions
nationally, regionally or within the market in which the Assets are located; and
(b) changes in the real estate industry generally and the office building
leasing market specifically. Except as set forth in the Financial Statements,
the Companies have no material liabilities, debts, claims or obligations,
whether accrued, absolute, contingent or otherwise, whether due or to become
due, other than (A) real estate taxes and assessments not yet due and payable,
(B) obligations, duties and responsibilities under items disclosed by the
Permitted Exceptions, (C) trade payables in the ordinary course,
(D) obligations, duties and responsibilities under applicable laws and (E) costs
incurred in connection with the construction of the Improvements.
               (xiii) Option Grantor has received no notice that the current or
intended use of the Assets violates, or that following completion of the
Improvements the Assets will violate, in any material respect any governmental
law, rules, regulations or codes, or any covenants or restrictions encumbering
the Companies or the Assets.
               (xiv) Except as disclosed in writing to Option Holder or as
disclosed in the environmental reports, if any, pertaining to the Assets
provided by Option Grantor, or received by Option Holder as a result of Option
Holder’s tests, Option Grantor has no knowledge of (1) any violation of
Environmental Laws related to the Assets, except where such violation would not
have a material adverse effect or (2) the presence or release of Hazardous
Materials on or from the Assets in violation of any Environmental Law. The term
“Environmental Laws” includes without limitation the Resource Conservation and
Recovery Act and the Comprehensive Environmental Response Compensation and
Liability Act and other federal laws governing the environment as in effect on
the date of this Agreement or such later date as of which this representation is
effective pursuant to the terms hereof, together with their implementing
regulations and guidelines as of the date of this Agreement or such later date
as of which this representation is effective pursuant to the terms hereof, and
all state, regional, county, municipal and other local laws, regulations and
ordinances that are equivalent or similar to the federal laws recited above or
that purport to regulate Hazardous Materials. The term “Hazardous Materials”
includes petroleum, including crude oil or any fraction thereof, natural gas,
natural gas liquids, liquified natural gas, or synthetic gas usable for fuel (or
mixtures of natural gas or such synthetic gas), and any substance, material
waste, pollutant or contaminant listed or defined as hazardous or toxic under
any Environmental Laws.
               (xv) Other than this Agreement, the documents delivered pursuant
hereto, matters disclosed in the title policy and title commitment, the UOP
Lease and such other contracts and agreements disclosed to Option Holder
(including, but not limited to the construction contracts related to
construction of the Improvements), to Option Grantor’s

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knowledge, there are no material contracts or agreements of any kind relating to
the Companies or the Assets to which Option Holder or the Companies will be
bound after the Closing Date.
               (xvi) As of the date of this Agreement, Option Holder is not
aware of any circumstances that would require the treatment of the transaction
contemplated by this Agreement as a “reportable transaction” (within the meaning
of Treasury Regulation Section 1.6011-4) and therefore does not presently intend
to treat the transaction as such. If in the future, the IRS publishes any
guidance that describes this transaction, or any substantially similar
transaction, as being a “listed transaction” (within the meaning of Treasury
Regulation Section 1.6011-4), or if there is any change in law that requires
Option Holder to treat this transaction as a “reportable transaction,” Option
Holder reserves the right to treat this transaction as such.
               (xvii) Neither the Tenant, nor the Companies, nor the Option
Grantor has (i) made a general assignment for the benefit of creditors,
(ii) filed any voluntary petition in bankruptcy or suffered the filing of any
involuntary petition by its respective creditors which is not dismissed within
sixty (60) days, (iii) suffered the appointment of a receiver to take possession
of all or substantially all of its respective assets, (iv) suffered the
attachment or other judicial seizure of all, or substantially all, of its
respective assets, (v) admitted in writing its inability to pay their respective
debts as they become due, or (vi) made an offer of settlement, extension or
composition to its creditors generally.
               (xviii) The Operating Agreements of the Companies are in full
force and effect, a true and correct copy thereof was delivered to Option Holder
with the Due Diligence Items and there are no dissolution, termination or
liquidation proceedings pending or contemplated with respect to the Companies
or, prior to the Closing, Option Grantor.
               (xix) Other than Lot 5 (defined in Section 11 below), the
Companies have no business and have engaged in no activity other than the direct
ownership and operation of the Real Property and construction of the
Improvements and have never leased or owned, directly or indirectly, any other
real property other than the Real Property, and the Companies have not conveyed
any interest in the Real Property to any third party since the date the Title
Policy (defined on Exhibit “E”) was issued.
               (xx) Neither Option Grantor nor the Companies have received any
written notice of any casualty with respect to the Assets.
               (xxi) To Option Grantor’s knowledge, the Companies have not been
cited, fined or otherwise noticed of any asserted past or present failure to
comply with any laws, regulations or orders relating to the Assets which have
not been cured and to Option Grantor’s knowledge, no proceeding with respect to
any such violation is pending or threatened.
               (xxii) For federal and state income tax purposes, the Assets has
been treated as owned by Option Grantor.
               (xxiii) Neither Option Grantor nor the Companies are
(a) currently identified on the Specially Designated Nationals and Blocked
Persons List maintained by the Office of Foreign Assets Control, Department of
the Treasury (“OFAC”) and/or on any other similar list maintained by OFAC
pursuant to any authorizing statute, executive order or

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regulation (collectively, the “List”), and (b) a person or entity with whom a
citizen of the United States is prohibited to engage in transactions by any
trade embargo, economic sanction, or other prohibition of United States law,
regulation, or Executive Order of the President of the United States. None of
the funds or other assets of the Companies constitute property of, or are
beneficially owned, directly or indirectly, by any Embargoed Person (as
hereinafter defined), and (c) the members and managers of the Companies are not
Embargoed Persons.
               (xxiv) Neither of the Companies is required to file reports
pursuant to Sections 12(g) or 15(d) of the Securities Exchange Act of 1934, as
amended.
               (xxv) There are no claims pending, or to the Option Grantor’s
knowledge, threatened, against any manager, officer, employee or agent of either
Company or any person which could give rise to any claim for indemnification
against either of the Companies.
               (xxvi) Neither of the Companies has ever had any, nor currently
has, any employees. Neither of the Companies is a party to, nor maintains, any
employee benefit plan or employee welfare plan (within the meaning of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), and none
of the Subsidiaries has any obligation to contribute to any multi-employer plan
(within the meaning of ERISA).
               (xxvii) Neither of the Companies own, control or hold with the
power to vote, directly or indirectly, any shares of capital stock or beneficial
interest in any corporation, partnership, limited liability company,
association, joint venture or other entity.
     The term “Embargoed Person” means any person, entity or government subject
to trade restrictions under the International Emergency Economic Powers Act, 50
U.S.C. §1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq.,
and any Executive Orders or regulations promulgated thereunder with the result
that the investment in Option Grantor is prohibited by law or Option Grantor is
in violation of law.
     This Section shall not apply to any person to the extent that such person’s
interest in Option Grantor is through a U.S. Publicly-Traded Entity. As used in
this Agreement, “U.S. Publicly-Traded Entity” means a Person (other than an
individual) whose securities are listed on a national securities exchange, or
quoted on an automated quotation system, in the United States, or a wholly-owned
subsidiary of such a person.
     To the extent that any of the representations and warranties made by Option
Grantor pursuant to this Section 8 or elsewhere in this Agreement are made to
Option Grantor’s knowledge, Option Holder acknowledges and agrees that such
representations and warranties are based on the actual (as distinguished from
implied, imputed or constructive) knowledge of William J. Swirtz and Rick Mason
as of the date of the Agreement and that such individuals have made such
representations and warranties without making, or being under any duty to make,
any investigation or inquiry whatsoever with respect thereto. Option Holder
acknowledges that Mr. Swirtz and Mr. Mason are named solely for the purpose of
defining and narrowing the scope of Option Grantor’s knowledge and not for the
purpose of imposing any liability on or creating any duties running from such
individual to Option Holder. Option Holder covenants that it will bring

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no action of any kind against such individual, and in no event shall Mr. Swirtz
or Mr. Mason be personally liable for any representation or warranty contained
herein.
          (b) Option Holder hereby represents and warrants to Option Grantor as
of the Agreement Date and again as of the Closing Date as follows:
               (i) Option Holder is a limited liability company, duly organized
and validly existing under the laws of the State of Delaware and will at Closing
be qualified to do business in the State of Arizona.
               (ii) The execution, delivery and performance by Option Holder of
this Agreement and the Purchase and Sale Agreement have been duly and validly
approved by all necessary corporate or other applicable action. No consent,
waiver, approval, or authorization of, or filing, registration, or qualification
with, or notice to, any governmental instrumentality or any person or entity is
required to be made, obtained, or given by Option Holder in connection with the
execution, delivery, and performance of this Agreement or the Purchase and Sale
Agreement or, if required, such consent or action has been obtained or taken.
Option Holder has full power and authority to enter into this Agreement and the
Purchase and Sale Agreement and to consummate the transactions contemplated in
such documents. This Agreement, the Purchase and Sale Agreement and all
documents executed by Option Holder which are to be delivered to Option Grantor
at the Closing Date are, or at the Closing Date will be, duly authorized,
executed, and delivered by Option Holder, and are, or at the Closing Date will
be, legal, valid, and binding obligations of Option Holder enforceable against
Option Holder in accordance with their respective terms, except to the extent
that the enforceability thereof may be limited, or otherwise affected by the
application of rules of law or general principles of equity governing specific
performance, injunctive relief or other equitable remedies (regardless of
whether enforceability is considered in a proceeding in equity or at law) and by
bankruptcy, reorganization, insolvency, moratorium and other similar laws
enacted for the relief of debtors generally, from time to time in effect, and
other similar laws or decisions of courts affecting creditors’ rights or
remedies generally, and do not and at the Closing Date will not violate any
provisions of any agreement to which Option Holder is a party or to which it is
subject.
               (iii) Option Holder shall furnish all of the funds for the
purchase of the Option (other than funds, if any, supplied by institutional
lenders which will hold valid mortgage liens against the Property) and such
funds will not be from sources of funds or properties derived from any unlawful
activity.
               (iv) Option Holder does not intend to treat the transaction
contemplated by the Purchase and Sale Agreement as being a “reportable
transaction” (within the meaning of Treasury Regulation Section 1.6011-4).
               (v) Option Holder is a sophisticated investor with substantial
experience in investing in assets of the same type as the Membership Interests
and the Assets and has such knowledge and experience in financial and business
matters that Option Holder is capable of evaluating the merits and risks of an
investment in the Membership Interests.
               (vi) The execution and delivery of this Agreement and the
Purchase and Sale Agreement, and the performance by Option Holder under this
Agreement and the

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Purchase Agreement, do not and will not conflict with or result in a breach of
(with or without the passage of time or notice or both) the terms of any of
Option Holder’s organizational documents, any judgment, order or decree of any
governmental authority binding on Option Holder, and, to Option Holder’s
knowledge, do not breach or violate any applicable law, rule or regulation of
any governmental authority. The execution, delivery and performance by Option
Holder under this Agreement and the Purchase and Sale Agreement will not result
in a breach or violation of (with or without the passage of time or notice or
both) the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument to which Option Holder is a party or by which Option Holder is bound.
               (vii) Option Holder has not (i) made a general assignment for the
benefit of creditors, (ii) filed any voluntary petition in bankruptcy or
suffered the filing of any involuntary petition by its creditors, (iii) suffered
the appointment of a receiver to take possession of all or substantially all of
its assets, (iv) suffered the attachment or other judicial seizure of all, or
substantially all, of its assets, (v) admitted in writing its inability to pay
its debts as they become due, or (vi) made an offer of settlement, extension or
composition to its creditors generally.
               (viii) Option Holder and each member of Option Holder (a) is not
currently identified on the List, and (b) is not a person or entity with whom a
citizen of the United States is prohibited to engage in transactions by any
trade embargo, economic sanction, or other prohibition of United States law,
regulation, or Executive Order of the President of the United States. None of
the funds or other assets of Option Holder constitute property of, or are
beneficially owned, directly or indirectly, by any Embargoed Person, and (c) the
members and managers of Option Holder are not Embargoed Persons.
     This Section shall not apply to any person to the extent that such person’s
interest in Option Holder is through a U.S. Publicly-Traded Entity.
          (c) If at any time after the date of this Agreement, either party
learns of any facts or circumstances which would render any of the foregoing
representations and warranties untrue, then such party shall promptly notify the
other party of all such facts and circumstances (an “Exception to Warranty
Notice”) and the party receiving such notice shall, within five (5) business
days following receipt of an Exception to Warranty Notice have the right, as its
sole and exclusive remedy, to elect to (i) terminate this Agreement, and if
Option Holder is the party receiving the Exception to Warranty Notice, it shall
be entitled to receive an immediate refund of the Option Payment (otherwise the
Option Payment shall be released to Option Grantor at Closing in accordance with
the Purchase and Sale Agreement); or (ii) waive any claim against the party
providing such notice arising out of or related to the information disclosed in
the Exception to Warranty Notice and proceed with the transaction, in which case
the representation or warranty shall be deemed modified as necessary to conform
with the additional information disclosed in the Exception to Warranty Notice.
If any party receiving an Exception to Warranty Notice fails to timely elect in
writing to terminate this Agreement within the five (5) business day period as
set forth above in this Section 8(c), it shall be deemed an election to proceed
in accordance with clause (i) above.

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     9. Remedies.
          (a) If Option Grantor shall be in default hereunder, Option Holder
shall deliver a written notice to Option Grantor on or before the Closing
stating with particularity the alleged default of Option Grantor and the action
required by Option Grantor to cure such default, whereupon Option Grantor shall
have ten (10) days after receipt of such written notice in which to cure the
alleged default (and the Closing Date shall be delayed, if necessary, until the
end of such ten (10) day period), and in the event such default is not cured
within such ten (10) day period, Option Holder may elect to either: (i) waive
such default by Option Grantor or (ii) terminate this Agreement by written
notice to Option Grantor, in which case the Option Payment shall be returned to
Option Holder, Option Grantor shall reimburse Option Holder for Option Holder’s
out-of-pocket due diligence costs to third parties upon presentation to Option
Grantor of actual third party invoices, not to exceed $500,000; or (iii) enforce
specific performance of this Agreement; provided, however, that any such action
must be filed and served not later than ninety (90) days after the Closing Date,
or the remedy of specific performance shall be deemed waived; and further
provided that if specific performance is not a legally available remedy because
Option Grantor has conveyed the Membership Interests to a third party other than
Option Holder or the Companies have conveyed title to the Property to a third
party other than Option Holder, then Option Holder shall be entitled to exercise
any and all other remedies available at law or in equity. In no event (other
than under the provision to clauses (ii) and (iii) above) shall Option Grantor
be liable to Option Holder for any actual, punitive, speculative, consequential
or other damages. Nothing in this Section shall limit Option Holder’s rights to
indemnification specifically set forth in this Agreement or Option Holder’s
right to recover from Option Grantor costs and fees set forth in Section 10(g).
          (b) If Option Holder breaches this Agreement, Option Grantor’s sole
and exclusive remedy will be to terminate this Agreement, such termination to be
effective immediately upon Option Grantor giving written notice of termination
to Option Holder. Upon such termination, Option Grantor will be entitled to
receive the Option Payment, as liquidated damages and not as a penalty, the
parties agreeing and stipulating that the exact amount of damages would be
extremely difficult to ascertain and that the Option Payment constitutes a
reasonable and fair approximation of such damages. Nothing in this Section shall
limit Option Grantor’s rights to indemnification specifically set forth in this
Agreement or Option Grantor’s right to recover from Option Holder costs and fees
set forth in Section 10(g).
     10. Miscellaneous.
               (a) Notices. Any notice required or permitted to be given under
this Agreement shall be in writing and shall be deemed to be an adequate and
sufficient notice if given in writing and service is made either by (i) personal
delivery, in which case the service shall be deemed received the date of such
personal delivery, (ii) nationally recognized overnight air courier service,
next day delivery, prepaid, in which case the notice shall be deemed to have
been received one (1) business day following delivery to such nationally
recognized overnight air courier service, or (iii) at the time of being sent by
facsimile if delivery thereof is confirmed by sender’s receipt of a transmission
report, generated by sender’s facsimile machine, which confirms that the
facsimile was successfully transmitted in its entirety and provided the
facsimile

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was forwarded prior to 5:00 pm at the location of the recipient, and to the
following addresses or facsimile numbers:
If to Option Grantor or the Companies:
c/o Apollo Development Company
4615 East Elwood Street, MSC 900086,
Phoenix, Arizona 85040,
Attn: William J. Swirtz
Fax: (480) 966-5394
With a copy to:
Snell & Wilmer
One Arizona Center
Phoenix, Arizona 85004-2202
Attn: Jody K. Pokorski, Esq.
Fax: (602) 382-6070
If to Option Holder:
Principal Real Estate Investors, LLC
711 High Street
Des Moines, Iowa 50392-1360
Attn: Kevin Anderegg
Fax: 866-850-4022
With a copy to:
Macquarie Real Estate, Inc.
One North Wacker Drive
9th Floor
Chicago, IL 60606
Attn.: Kristin Marsilje
Fax: 312-499-8686
With a copy to:
Mayer, Brown, Rowe & Maw LLP
71 S Wacker Drive
Chicago, Illinois 60606
Attn: Ronald Dietrich
Fax: 312-706-8703
or such other address as either party may from time to time specify in writing
to the other.

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          (b) Brokers and Finders. If Option Holder exercises the Option and
purchases the Membership Interests under the Purchase and Sale Agreement, Option
Grantor shall pay a commission in accordance with the terms of the Purchase and
Sale Agreement.
          (c) Successors and Assigns. Except as set forth in this Section, this
Agreement shall be binding upon, and inure to the benefit of, the parties hereto
and their respective successors, heirs, administrators and assigns. Without
being relieved of any liability under this Agreement, Option Holder reserves the
right to acquire the Membership Interests in any entity controlled by,
controlling or under common control with Option Holder, upon written notice to
Option Grantor given at least five (5) business days prior to the Closing Date.
Except as set forth in the preceding sentence, Option Holder may not assign its
rights hereunder to any person or entity without Option Grantor’s prior written
consent, which may be conditioned or withheld in Option Grantor’s sole and
absolute discretion. Any assignment consented to by Option Grantor shall not
relieve Option Holder of Option Holder’s continuing covenants and obligations
under this Agreement. Any purported assignment of Option Holder’s rights
hereunder that does not comport with the foregoing shall be strictly prohibited
and shall be deemed void. Except as set forth in the following sentence, Option
Grantor may not assign any of its rights hereunder to any person or entity
without Option Holder’s prior written consent, which may be conditioned or
withheld in Option Holder’s sole and absolute discretion.
          (d) Amendments and Terminations. Except as otherwise provided herein,
this Agreement may be amended or modified by, and only by, a written instrument
executed by Option Grantor and Option Holder.
          (e) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Arizona.
          (f) Merger of Prior Agreements. This Agreement supersedes all prior
agreements and understandings between the parties hereto relating to the subject
matter hereof.
          (g) Enforcement. In the event either party hereto fails to perform any
of its obligations under this Agreement or in the event a dispute arises
concerning the meaning or interpretation of any provision of this Agreement, the
defaulting party or the party not prevailing in such dispute, as the case may
be, shall pay any and all costs and expenses incurred by the other party in
enforcing or establishing its rights hereunder, including, without limitation,
court costs and reasonable attorneys’ fees. Option Holder and Option Grantor
both acknowledge each has been advised by counsel as to their respective rights,
duties and obligations in this Agreement and have had ample opportunity to
negotiate same. Thus, both Option Holder and Option Grantor acknowledge that any
ambiguity in this Agreement should not necessarily be resolved against the
drafter of this Agreement.
          (h) Time of the Essence. Time is of the essence of this Agreement.
          (i) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but such counterparts when taken
together shall constitute but one Agreement.

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          (j) Survivability. All representations and warranties by the
respective parties contained herein or made in writing pursuant to this
Agreement are intended to and shall remain true and correct as of the time of
Closing, shall be deemed to be material, and shall survive the execution and
delivery of this Agreement for a period of one (1) year from the Closing Date
except that all representations and warranties related to taxes, including,
without limitation Section 8(a)(x), shall survive for a period equal to thirty
(30) days after the applicable statute of limitation expires. All statements
contained in any certificate or other instrument delivered at any time by or on
behalf of Option Grantor in connection with the transaction contemplated hereby
shall constitute representations and warranties hereunder.
          (k) Memorandum of Option. Concurrently with the execution of this
Agreement, Option Grantor, Option Holder and the Companies shall execute a
recordable Memorandum of Option in the form attached hereto as Exhibit “F” (the
“Memorandum”). Option Holder is hereby authorized to record such Memorandum in
the public records of the County and State where the Assets are located. At the
time of any bona fide termination of Option Holder’s rights under this
Agreement, Option Holder shall execute and record a document evidencing such
termination. Contemporaneously with the execution of this Agreement, Option
Holder shall execute and deliver to Title Company, a Notice of Termination of
Option and Quit-Claim Deed in the form attached hereto as Exhibit “G” (the
“Termination”), releasing any and all interests of Option Holder under the
Memorandum. If the Option expires or lapses or is terminated, Option Grantor may
instruct Title Company in writing (with a copy to Option Holder) that the
Termination is to be recorded and unless Option Holder notifies Title Company
within ten (10) days following receipt of such instruction that it disputes that
the Option has expired, lapses or terminate, then Title Company shall (a) insert
the recording information for the Memorandum in the Termination, and then
(b) record the Termination in the official records of Maricopa County, Arizona,
and Option Holder expressly and irrevocably releases Title Company from
liability for doing so to the extent done in good faith. In addition, at the
time of the termination of Option Holder’s rights under this Agreement, at
Option Grantor’s reasonable request, Option Holder shall also execute and record
any other documents evidencing such termination.
          (l) Proper Execution. The submission by Option Grantor to Option
Holder of this Agreement in unsigned form shall have no binding force and
effect, shall not constitute an option, and shall not confer any rights or
impose any obligations upon either Option Holder or Option Grantor irrespective
of any reliance thereon, change of position or partial performance until both
Option Holder and Option Grantor shall have executed and delivered to the other
party this Agreement.
          (m) Exclusivity. Option Grantor agrees to not actively solicit offers
to purchase the Membership Interests and agrees to prohibit the Companies from
actively soliciting offers to purchase the Assets or any portion thereof, from
other prospective purchasers on or after the execution date of this Agreement,
unless Option Holder defaults under the terms of this Agreement, or either party
terminates this Agreement according to the terms contained herein or Option
Holder fails to exercise the Option prior to the Option Exercise Date.
          (n) Personal Liability. There shall be no personal liability imposed
on the individuals who have executed this Agreement (or the attached exhibits).

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          (o) Time Periods. Except as expressly provided for in this Agreement,
the time for performance of any obligation or taking any action under this
Agreement will be deemed to expire at 5:00 p.m. (Central Time) on the last day
of the applicable time period provided for in this Agreement. If the time for
the performance of any obligation or taking any action under this Agreement
expires on a Saturday, Sunday or legal holiday, the time for performance or
taking such action will be extended to the next succeeding day which is not a
Saturday, Sunday or legal holiday.
          (p) Publicity. Prior to the Closing, Option Holder and Option Grantor
shall refrain from generating or participating in a publicity statement for an
audience other than Option Holder’s existing or prospective capital clients, a
press release or other public notice regarding this transaction or designed to
inform third parties of this transaction or the terms hereof unless (i) such
statement is jointly issued or approved by the parties or (ii) is required under
applicable laws, rules, regulations or ordinances or by order of a court or
other tribunal having jurisdiction over such disclosure and prior written notice
to the other party is given at least 24 hours in advance of the date of such
press release or public notice or (iii) is required to enforce the terms of this
Agreement. Regardless of whether any statement is issued prior to the Closing
(by or with the approval of both parties) or following the Closing, it shall
reflect that the sale involves the transfer of the Membership Interests and not
the Assets This provision shall survive the Closing.
          (q) Conditions. Option Holder’s obligations under this Agreement are
contingent upon the approval of the Investment Committee of Principal Real
Estate Investors, LLC and the board of directors of Macquarie Office Trust (the
“Transaction Approvals”). Option Grantor acknowledges Option Holder will not
seek the Transaction Approvals until the Approval Date has passed and Option
Holder has failed to exercise its right of termination of this Agreement. Option
Holder makes no representation with regard to the likelihood of obtaining the
Transaction Approvals. Option Holder shall have a period of ten (10) business
days after the Approval Date to obtain the Transaction Approvals. If for any
reason the Investment Committee or board of directors does not approve this
Agreement or the transaction contemplated herein, this Agreement shall
terminate, the Title Company shall return the Option Payment to Option Holder
and neither party shall have any further obligations or rights hereunder. If
Option Holder fails to notify Option Grantor and Title Company prior to the
expiration of such 10 business day period that the Transaction Approvals have
been obtained, then Option Holder shall be deemed not to have obtained the
Transaction Approvals, this Agreement shall terminate, the Title Company shall
return the Option Payment to Option Holder and neither party shall have any
further obligations or rights hereunder except as expressly set forth herein.
          (r) Like-Kind Exchange. Option Holder and Option Grantor agree that,
at either party’s election, the sale of the Membership Interests shall be
structured as an exchange of like-kind properties under Section 1031 of the
Internal Revenue Code of 1986, as amended (the “Code”), and the regulations and
proposed regulations thereunder. The parties agree that such election, must be
made at least five (5) business days prior to the Closing Date and shall not
extend the Closing Date. If such an election is made by one of the parties
hereto, the non-electing party shall reasonably cooperate with the electing
party. The electing party shall in all events be responsible for all costs and
expenses related to the Section 1031 exchange and shall fully indemnify, defend
and hold the non-electing party harmless from and against any and all

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liability, claims, damages, expenses (including reasonable attorneys’ and
paralegal fees and reasonable attorneys’ and paralegal fees on appeal),
proceedings and causes of action of any kind or nature whatsoever arising out
of, connected with or in any manner related to such 1031 exchange that would not
have been incurred by the non-electing party if the transaction were a purchase
for cash. The provisions of the immediately preceding sentence shall survive
closing and the transfer of title to the Membership Interests to Option Holder.
Notwithstanding anything to the contrary contained in this paragraph, any such
Section 1031 exchange shall be consummated through the use of a facilitator or
intermediary so that the non-electing party shall in no event be requested or
required to acquire title to any property other than the Membership Interests.
     11. Lot 5.
          (a) In addition to Lots 1 and 3, Riverpoint 1/3/5 owns Lot 5 of
Riverpoint, according to the plat recorded in Book 566 of maps, page 04, records
of Maricopa County, Arizona (“Lot 5”). Prior to the Closing, Riverpoint 1/3/5
shall convey Lot 5 to Option Grantor or to another entity designated by Option
Grantor (the “Lot 5 Owner”), and shall assign, convey or otherwise transfer to
the grantee of Lot 5 the following:
               (i) Tracts A through L, Riverpoint, according to Book 566 of
Maps, page 04, records of Maricopa County, Arizona (the “Median Tracts”);
               (ii) all of Riverpoint 1/3/5’s right, title and interest in any
rights, privileges and easements appurtenant to Lot 5 and the Median Tracts,
including, without limitation, all minerals, oil, gas and other hydrocarbon
substances as well as all development rights, air rights, water, water rights
(and water stock, if any) relating to Lot 5 and the Median Tracts and owned by
Riverpoint 1/3/5 and any easements, rights-of-way or other appurtenances used in
connection with the beneficial use and enjoyment of Lot 5 or the Median Tracts;
               (iii) all of Riverpoint 1/3/5’s right, title and interest in any
improvements then-located on Lot 5 and the Median Tracts, including, without
limitation, all buildings and structures located on Lot 5 and the Median Tracts,
all apparatus, equipment and appliances used in connection with the operation or
occupancy of Lot 5 and the Median Tracts, such as heating and air conditioning
systems and facilities used to provide any utility services, refrigeration,
ventilation, garbage disposal, recreation or other services on Lot 5 and the
Median Tracts;
               (iv) all of Riverpoint 1/3/5’s right, title and interest in any
apparatus, equipment or appliances which are a part of the improvements on Lot 5
and the Median Tracts;
               (v) the Riverpoint 1/3/5’s interest in any contracts or
agreements, utility contracts or other rights relating to the ownership of Lot 5
and the Median Tracts, the improvements on any Lot 5 and the Median Tracts or
the Lot 5 personal property;
               (vi) the rights and obligations as “Declarant” under the
Declaration of Covenants, Conditions, Easements and Restrictions for Riverpoint
Business Park (the “CC&Rs”), including, but not limited to, the rights and
obligations held by Declarant as the Approving Agent and as the Operator, as
such terms are defined therein;

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               (vii) the rights and obligations of Riverpoint 1/3/5 under that
certain Lease (No. 84051-001) dated January 1, 2004, by and between Riverpoint
1/3/5, as landlord, and the City of Phoenix, as tenant (the “Lift Station
Lease”); and
               (viii) the rights and obligations of Riverpoint 1/3/5 under that
certain City of Phoenix, Arizona Revocable Permit No. RP-04002-05-I, issued by
the City of Phoenix Street Transportation Department to Riverpoint 1/3/5, as
permittee, recorded on March 12, 2004 as Document No. 2004-0255408 in the
Official Records of Maricopa County Recorder and that certain City of Phoenix
Street Improvements Maintenance Agreement MH-04002, by and between the City of
Phoenix, an Arizona municipal corporation, and Riverpoint Lots 1/3/5, LLC, an
Arizona limited liability company, dated March 5, 2004, and recorded on
March 12, 2004 as Document No. 2004-0255409 in the Official Records of Maricopa
County Recorder (collectively the “City Permits”).
(Lot 5 and the items described in items (i) through (viii) above are referred to
at the “Lot 5 Property.”
          (b) Lot 5, the Median Tracts and any improvements thereon and rights
appurtenant thereto shall be conveyed by special warranty deed to the Lot 5
Owner; provided, however, that notwithstanding any warranty of title set forth
in the special warranty deed or otherwise, Riverpoint 1/3/5 shall only be liable
for a breach such warranty or any other claim relating to the status of title
for the Lot 5 Property to the extent that coverage for such claim is available
under the Title Policy, it being understood and agreed that the parties intend
that Riverpoint 1/3/5 will not have any obligation to pay for or reimburse the
Lot 5 Owner for any claims relating to a breach of warranty of title other than
out of proceeds actually received by Riverpoint 1/3/5 from the Title Policy.
          (c) In connection with the assignment of the Membership Interests to
Option Holder, Option Grantor shall indemnify, defend and hold harmless Option
Holder for from and against all claims related to the ownership by Riverpoint
1/3/5 of the Lot 5 Property, including, but not limited to claims related to or
arising out of (i) the construction of improvements on Lot 5, and (ii) any
actions undertaken by Riverpoint 1/3/5 as the Declarant under the CC&Rs;
(iii) the ownership and maintenance of the Median Tracts; (iv) the Lift Station
Lease; or the (v) the City Permits. This indemnity shall survive the Closing.
          (d) Option Grantor reserves the right to change the name of Riverpoint
1/3/5 to “Riverpoint Lots 1/3, LLC” prior to Closing.
[ Remainder of page intentionally left blank; signature page follows.]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

            Option Holder:

MACQUARIE RIVERPOINT AZ, LLC,
a Delaware limited liability company

  By:   Macquarie Office (US) No. 2 Corporation, a Minnesota corporation, its
sole member and manager             By:   /s/ Simon Jones         Its: Chief
Executive Officer                Option Grantor:

APOLLO GROUP, INC., an Arizona corporation
      By:   /s/ William J. Swirtz         Its: Authorized Officer             

          ACCEPTED AND APPROVED:

RIVERPOINT LOTS 1/3/5, LLC, an Arizona
limited liability company

By:   Apollo Group, Inc., its sole member and manager           By:   /s/ Kenda
B. Gonzalez       Its: Chief Financial Officer              By:   /s/ William J.
Swirtz       Its: Authorized Officer             

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          RIVERPOINT LOT 2, LLC, an Arizona limited
liability company

By:   Apollo Group, Inc., its sole member and manager           By:   /s/ Kenda
B. Gonzalez       Its: Chief Financial Officer            By:   /s/ William J.
Swirtz       Its: Authorized Officer             

JOINDER
Macquarie Office (US) No 2 Corporation, a Minnesota corporation joins in and
executes this Agreement solely for the purpose of guaranteeing Option Holder’s
obligations to indemnify, defend and hold harmless Option Grantor pursuant to
Sections 2(b) and 3(f) of this Agreement and for the payment of costs and fees
pursuant to Section 10(g), only to the extent that any of such obligations are
not covered by insurance proceeds and not to exceed the amount of $500,000.
Macquarie Office (US) No 2 Corporation, a Minnesota corporation.

                  By:   /s/ Simon Jones         Its: Chief Executive Officer   
       

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TABLE OF CONTENTS

                      Page  
 
           
1.
  Recitals     2  
2.
  Construction of Improvements; Material Change Orders     2  
3.
  Option to Purchase     5  
4.
  Option Payment     7  
5.
  Purchase Price     8  
6.
  Assignment of Membership Interests     9  
7.
  The Closing     9  
8.
  Representations and Warranties     9  
9.
  Remedies     16  
10.
  Miscellaneous     17  
11.
  Lot 5     21  

-i-