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                                                                    EXHIBIT 10.2


                         AGREEMENT FOR PURCHASE AND SALE




                                  March 9, 1999


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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
ARTICLE                                                                                   PAGE
<S>         <C>                                                                           <C>

ARTICLE 1   BASIC DEFINITIONS................................................................1

ARTICLE 2   PURCHASE AND exchange............................................................4

ARTICLE 3   CONDITIONS PRECEDENT............................................................12

ARTICLE 4   COVENANTS, WARRANTIES AND REPRESENTATIVES.......................................14

ARTICLE 5   DEPOSIT; DEFAULT................................................................23

ARTICLE 6   CLOSING.........................................................................29

ARTICLE 7   MISCELLANEOUS...................................................................39
</TABLE>


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                                List of Exhibits

*  Exhibit A-1--  Transferors & Properties (Sale Properties)
*  Exhibit A-2 -- Transferors & Properties (Exchange Properties)
*  Exhibit B --   Confirmation Letter
*  Exhibit C --   Disclosure Materials List & Statement
*  Exhibit D --   Title Allocations
*  Exhibit E --   Rent Rolls
*  Exhibit F--    Intentionally Omitted
*  Exhibit G --   Title Exceptions
*  Exhibit G-1 -- Excluded Exceptions
*  Exhibit G-2 -- Title Documents to be Obtained
*  Exhibit H-1 -- Allocated  Price (Sale Properties)
*  Exhibit H-2 -- Allocated Price (Exchange Properties)
*  Exhibit I --   Transfer Documents
*  Exhibit J      Press Release
*  Exhibit K --   Title Affidavit
*  Exhibit L --   Excluded Claims
*  Exhibit M --   [Intentionally Omitted]
*  Exhibit N --   Investigation Matters
*  Exhibit N-1 -- Credit Calculation Example
*  Exhibit O --   Indemnity Agreements
*  Exhibit P --   Year 2000 Action
*  Exhibit Q --   Insured Properties
*  Exhibit R --   Southwest Pavillion Property
*  Exhibit S --   Vacant Space
*  Exhibit T-1 -- Audit Documents
*  Exhibit T-2--  Audit Certificate
*  Exhibit U-1--  Assigned Insurance Property
*  Exhibit U-2--  Assigned Insurance
*  Exhibit U-3--  No Further Action Properties
*  Exhibit U-4--  Access and Remediation Agreement
*  Exhibit V--    Agreements
*  Exhibit W--    Litigation

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                       AGREEMENT FOR PURCHASE AND EXCHANGE


         THIS AGREEMENT FOR PURCHASE AND EXCHANGE is made and entered into as of
March 9, 1999, by and among AMB PROPERTY, L.P., a Delaware limited partnership
("AMBLP"), AMB PROPERTY II, L.P., a Delaware limited partnership ("AMB II" and
AMBLP are, collectively, as to the properties described on Exhibit A-2, the
"Exchangors," and as to the properties described on Exhibit A-1, the "Sellers"
and, together, the "Transferors"), and BPP RETAIL, LLC, a Delaware limited
liability company ("Buyer"). Transferors and their respective interests in the
Properties (as defined below) are identified more precisely on Exhibit A to this
Agreement.

                                    RECITALS

         A.       The Sellers hold ownership of a portfolio of properties listed
on Exhibit A-1 to this Agreement and defined below with greater specificity as
the " Sale Properties."

         B.       The Exchangors hold ownership of a portfolio of properties
listed on Exhibit A-2 to this Agreement and defined below with greater
specificity as the "Exchange Properties."

         C.       Buyer desires to acquire and each of Exchangors desires to
transfer, subject to the terms and conditions contained in this Agreement, the
entirety of its right, title and interest in the Exchange Properties.

         D.       Buyer desires to acquire and each of Sellers desires to sell,
subject to the terms and conditions contained in this Agreement, the entirety of
its right, title and interest in the Sale Properties.

                                    AGREEMENT

         NOW, THEREFORE, Buyer and Transferors do hereby agree as follows:


                                    ARTICLE 1
                                BASIC DEFINITIONS

         "Additional Exceptions" shall have the meaning set forth in Section
2.6(a).

         "Additional Title Exception Notice" shall have the meaning set forth in
Section 2.6(b).

         "Allocated Price" shall refer, as to each Sale Property, to the portion
of the Sale Purchase Price allocated to such Sale Property as set forth on
Exhibit H-1 to this Agreement, and as to each Exchange Property, to the portion
of the Exchange Price allocated to such Exchange Property as set forth on
Exhibit H-2 to this Agreement.

         "Closing Date" shall mean July 31, 1999 (as such date may be deferred
with respect to a particular Property pursuant to the terms of this Agreement);
provided, that Transferors shall have the right to (A) extend the Closing Date
for up to fifty (50) days and/or (B) accelerate the Closing Date by up to thirty
(30) ) days, upon not less than ten (10) business days notice prior to


                                       1
<PAGE>   5

the original Closing Date (if Transferors are extending the Closing Date) and
upon not less than thirty (30) days notice prior to an accelerated Closing Date
(if Transferors are accelerating the Closing Date).

         "Confirmation Letter" shall mean the letter in the form attached as
Exhibit B to this Agreement to be delivered by Buyer to Transferors on or prior
to the close of the prescribed Confirmation Period pursuant to Section 3.2
below.

         "Confirmation Period" shall mean the period commencing on the date of
this Agreement, and ending at 5:00 p.m., California time on April 8, 1999,
provided that the Confirmation Period may end earlier at Buyer's election upon
delivery by Buyer to Transferors of the Confirmation Letter (representing the
conclusive waiver by Buyer of any further Confirmation Period).

         "Contract Period" shall mean the period from the date of this Agreement
through and including the Closing Date (as the same may be extended pursuant to
this Agreement).

         "Contracts" shall mean all maintenance, service and other operating
contracts, equipment leases and other arrangements or agreements to which any
Transferors is a party affecting the ownership, repair, maintenance, management,
leasing or operation of the Properties.

         "Deferred Property" shall have the meaning set forth in Section 2.5(d)
below.

         "Deleted Property" shall have the meaning set forth in Section 2.5(d)
below.

         "Disclosure Materials" shall mean those materials described in Section
A of the Disclosure Materials List & Statement to which Buyer has been afforded
access and review rights prior to the date of this Agreement.

         "Disclosure Materials List & Statement" shall mean the statement set
forth as Exhibit C to this Agreement.

         "Exchange Price" shall have the meaning set forth in Section 2.2(b)
below.

         "Exchange Property" shall mean, with respect to each of the Properties
described on Exhibit A-2, the Real Property, the Personal Property and the
Intangible Property. Collectively, such Properties shall be referred to as the
"Exchange Properties."

         "Financial Statements" shall mean the historical income and expense
statements for the Properties for calendar years 1997 and 1998 (or such shorter
period as Transferors may have owned an applicable Property), which have been
provided to Buyer.

         "Hazardous Materials" shall mean any substances, materials, wastes,
pollutants or contaminants defined or listed in or subject to reporting,
investigation, permitting, remediation, licensing or other regulatory
requirements under any environmental laws or regulations, including, without
limitation, any inflammable explosives, radioactive materials, asbestos,
polychlorinated biphenyls, trichloroethylene, tetrachloroethylene,
perchloroethylene and other chlorinated solvents, petroleum products and
by-products and other substances with toxic or hazardous characteristics.


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         "Improvements" shall mean, as to each of the properties listed on
Exhibit A, the right, title and interest of the Transferors in ownership of such
property in any and all structures, buildings, facilities, parking areas or
other improvements situated on such property's Land and all related fixtures,
improvements, building systems and equipment (including, without limitation,
HVAC, security and life safety systems).

         "Intangible Property" shall mean, as to each Real Property, the right,
title and interest of the Transferors in ownership of such Real Property in: (a)
any and all permits, entitlements, filings, building plans, specifications and
working drawings, certificates of occupancy, operating permits, sign permits,
development rights and approvals, certificates, licenses, warranties and
guarantees, engineering, soils, pest control, survey, environmental, appraisal,
market and other reports relating to such Real Property and associated Personal
Property; (b) all trade names, service marks, tenant lists, advertising
materials and telephone exchange numbers identified with such Real Property; (c)
the Contracts and the Leases; (d) except as set forth on Exhibit L attached
hereto (the "Excluded Claims"), claims, awards, actions, remedial rights and
judgments, and escrow accounts relating to environmental remediation, to the
extent relating to such Real Property and associated Personal Property; (e) all
books, records, files and correspondence relating to such Real Property and
associated Personal Property; (f) to the extent assignable, the agreements
listed on Exhibit V attached hereto, including all purchase options, rights of
first refusal or first opportunity to purchase and similar rights contained
therein; and (g) all other transferable intangible property, miscellaneous
rights, benefits or privileges of any kind or character with respect to such
Real Property and associated Personal Property, including, without limitation,
under any REAs, provided that the Intangible Property shall not include any
Transferor's name or any right to the reference "AMB".

         "Investigation Matters" shall have the meaning set forth in Section
2.4(a) below.

         "Land" shall mean, as to each of the properties listed on Exhibit A,
the land component of the property as described with precision in the Title
Policies.

         "Leases" shall mean, as to each Real Property, all leases, concession
agreements, rental agreements or other agreements (including all amendments or
modifications thereto) which entitle any person to the occupancy or use of any
portion of the Real Property.

         "Material Adverse Matters Amount" shall refer, as to any Property, to
the amount, if any, as to which Buyer claims a credit against the Price with
respect to an Investigation Matter pursuant to Section 2.5 and Exhibit N
attached hereto.

         "Permitted Exceptions" shall mean the various matters affecting title
to the Properties that are approved or deemed approved by Buyer pursuant to
Section 2.6 below.

         "Personal Property" shall mean, as to each Real Property, all
furniture, furnishings, trade fixtures and other tangible personal property
directly or indirectly owned by the Transferors in ownership of such Real
Property that is located at and used exclusively in connection with the
operation of any Real Property.

         "Price" shall mean the Sale Purchase Price and the Exchange Price,
collectively.


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          "Property" shall mean, with respect to each of the properties
described on Exhibit A, the Real Property, the Personal Property and the
Intangible Property. Collectively, such properties shall be referred to as the
"Properties."

          "Real Property" shall mean, as to each property listed on Exhibit A,
the Land, the Improvements and all of Transferor's right, title and interest in
and to the rights, privileges, easements, and appurtenances to the Land or the
Improvements, including, without limitation, any air, development, water,
hydrocarbon or mineral rights held by any Transferors, all licenses, easements,
rights-of-way, claims, rights or benefits, covenants, conditions and servitude
and other appurtenances used or connected with the beneficial use or enjoyment
of the Land or the Improvements and all rights or interests relating to any
roads, alleys or parking areas adjacent to or servicing the Land or the
Improvements.

         "REAs" shall have the meaning set forth in Section 4.1(b)(viii) below.

         "Rent Rolls" shall refer to the information schedules attached as
Exhibit E to this Agreement pertaining to the Leases.

         "Sale Property" shall mean, with respect to each of the Properties
described on Exhibit A-1, the Real Property, the Personal Property and the
Intangible Property. Collectively, such Properties shall be referred to as the
"Sale Properties."

         "Sale Purchase Price" shall have the meaning set forth in Section
2.2(a) below.

         "Surveys" shall refer to Transferors' existing surveys with respect to
the Properties which have been delivered by Transferors to Buyer.

         "Title Company" shall mean Chicago Title Company; Attn: Pat Davisson
(Telephone: (415) 788-0871).

         "Title Policies" shall refer to Transferors' existing title insurance
policies with respect to the Properties, complete copies of which have been made
available by Transferors to Buyer.

         "1031 Exchange" shall have the meaning set forth in Section 6.6 below.



                                    ARTICLE 2
                              PURCHASE AND EXCHANGE

         SECTION 2.1 Purchase and Transfer. Exchangors agree to transfer the
Exchange Properties to Buyer by means of one or more 1031 Exchanges, and Buyer
agrees to acquire the Exchange Properties upon all of the terms, covenants and
conditions set forth in this Agreement. In furtherance of exchange, Buyer agrees
to cooperate in such 1031 Exchanges pursuant to and as provided in Section 6.6
below. Sellers agree to sell the Sale Properties to Buyer and Buyer agrees to
purchase or cause to be purchased the Sale Properties upon all of the terms,
covenants and conditions set forth in this Agreement.

         SECTION 2.2     Price.


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                  (a)    The aggregate purchase price for the Sale Properties
(the "Sale Purchase Price") shall be the sum of One Hundred Thirty Eight Million
Five Hundred Fifty Three Thousand Dollars (U.S. $138,553,000 subject to
adjustment in accordance with Sections 2.3 [Adjustments], 6.3 [Prorations] and
6.9 [Completion Events] below. The entire amount of the Sale Purchase Price so
adjusted shall be payable by Buyer to Sellers in cash on the Closing Date
through the escrow described in Section 6.1 below.

                  (b)    The aggregate price for the Exchange Properties (the
"Exchange Price") shall be the sum of One Hundred Seven Million Two Hundred
Thirteen Thousand Dollars (U.S. $107,213,000), subject to adjustment in
accordance with Sections 2.3 [Adjustments], 6.3 [Prorations] and 6.9 [Completion
Events] below. The entire amount of the Exchange Price so adjusted shall be
payable by Buyer to one or more exchange facilitators selected by Exchangors in
their sole discretion, in furtherance of one or more 1031 Exchanges, through
payment in cash of the entire balance of the Exchange Price on the Closing Date
through one or more escrows described in Section 6.1 below.

         SECTION 2.3     Adjustments. In addition to the prorations and credits
contemplated by Section 6.3 below, (a) the Price shall be decreased by the
aggregate amount of the Allocated Prices of any Deleted Properties, (b) the
portion of the Price payable on the Closing Date shall be reduced by the
Allocated Price of any Deferred Properties, and (c) the Price shall be decreased
by the aggregate amount of any adjustments effected pursuant to Sections 2.5 and
2.6 below.

         SECTION 2.4     Buyer's Review and Transferors' Disclaimer.

                  (a) Buyer acknowledges that Transferors have afforded Buyer
and its agents and representatives an opportunity to review all of the
Disclosure Materials prior to the date of this Agreement and, subject to the
express terms of this Agreement, that Buyer has completed such review to its
satisfaction. Buyer has assumed fully the risk that Buyer has failed completely
and adequately to review and consider any or all of such materials. But for
Buyers' expression of satisfaction with the content of the Disclosure Materials,
Buyer would not have entered into this Agreement; but for Buyer's expression of
such satisfaction and assumption of any risk as to the character of its review
and consideration of the Disclosure Materials, Transferors would not have
entered into this Agreement. Nevertheless, during the Confirmation Period, Buyer
shall be permitted to make a further review of information relating solely to
the matters described on Exhibit N attached hereto (the "Investigation Matters")
to determine whether any Material Adverse Matters Amounts exist with respect to
the Properties and the extent of any such Material Adverse Matters Amount.
Following the Confirmation Period, Buyer shall have no further right of
inspection and review with respect to the Properties except solely for the
purpose of assisting Buyer in its management transition as provided in Sections
4.2(m) and (o) and Section 6.10. The rights and obligations of the parties
arising out of Buyer's determination and assertion prior to the close of the
Confirmation Period that such Material Adverse Matters Amounts do exist shall be
limited and solely governed by the provisions of Section 2.5 below and Exhibit N
attached hereto.

                  (b) Buyer's exercise of the rights of review and confirmation
set forth in subsection (a) shall be subject to the following limitations: (i)
any entry onto any Property by Buyer, its agents or representatives, shall be
during normal business hours, following not less


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than 24 hours' prior notice to Transferors and, at Transferors' discretion,
accompanied by a representative of Transferors; (ii) Buyer shall not conduct any
drilling, test borings or other disturbance of any Property for review of soils,
compaction, environmental, structural or other conditions without Transferors'
prior written consent (which may be withheld in Transferor's sole and absolute
discretion); (iii) any discussions or interviews with any third party, any
partner of any Transferors, any tenants of a Property or their respective
personnel, at Transferors' election, shall be conducted in the presence of
Transferors or their representatives; (iv) any discussions or interviews with
employees at any Property shall be limited to designated senior employees and,
at Transferors' election, shall be conducted in the presence of Transferors or
their representatives; (v) Buyer shall exercise reasonable diligence not to
disturb the use or occupancy or the conduct of business at any Property; (vi)
prior to any entry upon the Property by Buyer or any of its agents,
representatives or consultants for the purpose of conducting any inspections,
investigations or tests, Buyer shall deliver to Transferors a certificate of
insurance evidencing that Buyer carries a liability insurance policy in an
amount not less than $5,000,000, which liability insurance policy names each
Transferors as an additional insured; and (vii) Buyer shall indemnify, defend
and hold Transferors harmless from all loss, cost, and expense relating to
personal injury or property damage resulting from any entry or inspections
performed by Buyer, its agents or representatives. Subject to the provisions of
this Agreement, Transferors shall at all times use all reasonable efforts (but
at no material cost to Transferors) to provide Buyer with access or information
that Buyer may reasonably request concerning the Properties, but Transferors
shall bear no liability if Transferors are not able to afford Buyer such access
or information despite such reasonable efforts.

                  (c)    Buyer acknowledges (i) that Buyer has entered into this
Agreement with the intention of making and relying upon its own investigation of
the physical, environmental, economic and legal condition of the Properties,
(ii) that, other than those specifically set forth in Article IV below or in any
document to be delivered pursuant to Section 6.1 below, Transferors are not
making and have not at any time made any warranty or representation of any kind,
expressed or implied, with respect to the Properties, including, without
limitation, warranties or representations as to habitability, merchantability,
fitness for a particular purpose, title (other than Transferors' limited
warranty of title set forth in the Deeds), zoning, tax consequences, latent or
patent physical or environmental condition, utilities, operating history or
projections, valuation, projections, compliance with law or the truth, accuracy
or completeness of the Disclosure Materials, (iii) that other than those
specifically set forth in Article IV below or in any document to be delivered
pursuant to Section 6.1 below, Buyer is not relying upon and is not entitled to
rely upon any representations and warranties made by Transferors or anyone
acting or claiming to act on any of Transferors' behalf, (iv) that the
Disclosure Materials include soils, environmental and physical reports prepared
for Transferors by third parties as to which Buyer has no right of reliance,
Buyer has conducted an independent evaluation and Transferors have made no
representation whatsoever as to accuracy, completeness or adequacy (provided,
however, that nothing herein shall be deemed to limit Buyer's right to seek to
obtain from the third parties which prepared such reports the right to rely on
such reports at no cost to Transferors), and (v) that the Disclosure Materials
include economic projections which reflect assumptions as to future market
status and future Property income and expense with respect to the Properties
which are inherently uncertain and as to which Transferors have not made any
guaranty or representation whatsoever. Buyer further acknowledges that it has
not received from Transferors any accounting, tax, legal, architectural,
engineering, property management or other


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advice with respect to this transaction and is relying solely upon the advice of
its own accounting, tax, legal, architectural, engineering, property management
and other advisors. Except as provided in the representations and warranties of
Transferors set forth in Article IV below and except as otherwise expressly set
forth in this Agreement or in any document to be delivered pursuant to Section
6.1 below, based upon the order of Buyer's familiarity with and due diligence
relating to the Properties and pertinent knowledge as to the markets in which
the Properties are situated and in direct consideration of Transferors' decision
to sell or exchange the Properties to Buyer for the Price and not to pursue
available disposition alternatives, Buyer shall purchase the Properties in an
"as is, where is and with all faults" condition on the Closing Date and assumes
fully the risk that adverse latent or patent physical, environmental, economic
or legal conditions may not have been revealed by its investigations.
Transferors and Buyer acknowledge that the compensation to be paid to
Transferors for the Properties has taken into account that the Property is being
sold or exchanged subject to the provisions of this Section 2.4. Transferors and
Buyer agree that the provisions of this Section 2.4 shall survive closing.

                  (d)    Consistent with the foregoing and subject solely to the
express covenants and indemnities set forth in this Agreement and the
representations set forth in Section 4.1 or in any document to be delivered
pursuant to Section 6.1 below (as such covenants, indemnities and
representations are limited pursuant to Section 4.4 hereof), effective as of the
Closing Date, Buyer, for itself and its agents, affiliates, successors and
assigns, hereby releases and forever discharges Transferors, their respective
members, beneficial owners, agents, affiliates, successors and assigns
(collectively, the "Releasees") from any and all rights, claims and demands at
law or in equity, whether known or unknown at the time of this agreement, which
Buyer has or may have in the future, arising out of the physical, environmental,
economic or legal condition of the Properties, including, without limitation,
all claims in tort or contract and any claim for indemnification or contribution
arising under the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. Section 9601, et. seq.) or any similar federal, state
or local statute, rule or ordinance relating to liability of property owners for
environmental matters. Without limiting the foregoing, Buyer, upon closing,
shall be deemed to have waived, relinquished and released Transferors and all
other Releasees from and against any and all matters arising out of latent or
patent defects or physical conditions, violations of applicable laws and any and
all other acts, omissions, events, circumstances or matters affecting the
Properties, except for breach of the express covenants and indemnities set forth
in this Agreement and the representations and warranties set forth in Section
4.1 or in any document to be delivered pursuant to Section 6.1 (as such
covenants, indemnities and representations are limited pursuant to Section 4.4
hereof). For the foregoing purposes, Buyer hereby specifically waives the
provisions of Section 1542 of the California Civil Code and any similar law of
any other state, territory or jurisdiction. Section 1542 provides:

         A general release does not extend to claims which the creditor does not
         know or suspect to exist in his favor at the time of executing the
         release, which if known by him must have materially affected his
         settlement with the debtor.


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Buyer hereby specifically acknowledges that Buyer has carefully reviewed this
subsection and discussed its import with legal counsel and that the provisions
of this subsection are a material part of this Agreement.

                                 ________________

                                      Buyer

                  (e)    Subject to the express covenants and indemnities set
forth in this Agreement and the representations of Transferors set forth in
Section 4.1 or in any document to be delivered pursuant to Section 6.1 (as such
covenants, indemnities and representations are limited pursuant to Section 4.4
hereof), Buyer shall indemnify, defend and hold Transferors harmless from and
against any and all losses, damages, causes of action, costs and expenses
(including without limitation, reasonable attorneys' fees and costs), claims and
liabilities in connection with or relating directly or indirectly to the
Properties to the extent arising out of or resulting from acts or omissions
occurring from and after the Closing Date. Transferors shall indemnify, defend
and hold Buyer harmless from and against any and all losses, damages, causes of
action, costs and expenses (including, without limitation, reasonable attorneys'
fees and costs), claims and liabilities in connection with claims brought by
third parties unaffiliated to Buyer (i) for physical injury to persons or
physical damage to property to the extent such injury or damage occurred on the
Properties and arose out of or resulted from acts or omissions of Transferors
that took place prior to the Closing Date, (ii) with respect to acts or
omissions of Transferors that took place prior to the Closing Date and that are
actually insured under an insurance policy carried by Transferors (and then only
to the extent of the proceeds actually paid under such policy, Transferors
agreeing to use commercially reasonable efforts to realize such insurance
proceeds) and (iii) with respect to each of the matters which are listed on
Exhibit W attached hereto as such list may be amended from time to time during
the Contract Period by Transferors (and provided to Buyer) to reflect new
litigation filed against Transferors during the Contract Period (the foregoing
items (i), (ii) and (iii) being collectively referred to as "Claims"); provided
that Transferors' indemnity contained in this Section 2.4(e) shall not apply to
any Claims relating to or arising out of or in connection with the environmental
condition of the Properties whether or not such Claim may be covered by
Transferors' environmental insurance policies.

         SECTION 2.5     Material Adverse Matters Amounts.

                  (a)    On or prior to the close of the Confirmation Period,
Buyer shall deliver to Transferors the Confirmation Letter in the form attached
as Exhibit B to this Agreement confirming Buyer's satisfaction as to the absence
of any Material Adverse Matters Amounts other than as specified in the
Confirmation Letter and waiving any further right or need to conduct further
review or investigation for such purposes. Buyer's failure to deliver to
Transferors on or prior to the close of the Confirmation Period an executed
Confirmation Letter in the form attached as Exhibit B, without modification or
qualification in any manner whatsoever (whether material or immaterial) --
excepting an enumeration and explanation of identified Material Adverse Matters
Amounts, shall be deemed conclusively as Buyer's confirmation of the absence of
any Material Adverse Matters Amounts.


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<PAGE>   12

                  (b)    If the Confirmation Letter identifies any Material
Adverse Matters Amounts, the Confirmation Letter shall set forth: (i) the
identity of any Properties as to which Buyer has identified any Material Adverse
Matters Amounts, (ii) the nature of the Investigation Matter for each affected
Property which resulted in such Material Adverse Matters Amounts and (iii)
reasonably detailed evidence of the existence of such Material Adverse Matters
Amount and Buyer's rationale for and calculation of the Material Adverse Matters
Amounts set forth.

                  (c)    If the Confirmation Letter does so identify Material
Adverse Matters Amounts, then, for a period ending five (5) business days
following the close of the Confirmation Period, Buyer and Transferors shall
negotiate in good faith (but otherwise as a matter within each party's sole
discretion) to determine whether the parties can reach a mutually acceptable
reduction in the Price. The parties further acknowledge that neither
participation in nor any statements made in the course of such discussions shall
represent or be interpreted as an admission or agreement as to the existence,
character or measure of any Material Adverse Matters Amount.

                  (d)    In any event, if the parties are not able to reach and
execute a written agreement evidencing a mutually satisfactory Price adjustment
within such five (5) business day negotiation period, Transferors shall provide
Buyer with written notice (the "Election Notice") within an additional period of
three (3) business days informing Buyer that Transferors, in Transferors' sole
discretion: (i) dispute the existence or measure of Material Adverse Matters
Amounts as to Properties identified in the Election Notice, (ii) accept Buyer's
calculation of the Material Adverse Matters Amounts, in which case the Price
shall be reduced by the Material Adverse Matters Amount set forth in Buyer's
calculation, or (iii) withdraw Properties identified in the Election Notice from
the sale or exchange to Buyer; provided, however, that Transferors shall not be
permitted to withdraw any Property unless the Material Adverse Matters Amount
claimed by Buyer exceeds $200,000 with respect to such Property and exceeds
$750,000 with respect to all of the Properties (in which event Transferors, in
Transferors' discretion, may withdraw such Properties as to which Material
Adverse Matters Amounts are claimed until the claimed Material Adverse Matters
Amounts for the remaining Properties is less than or equal to $750,000). Any
Property identified as the subject of dispute under clause (i) above shall be
referred to as a "Deferred Property." Any Property withdrawn under clause (iii)
above shall be referred to as a "Deleted Property."

                  (e)    If Transferors have elected to dispute the calculation
of any Material Adverse Matters Amounts under subsection (d)(i) above, such
dispute shall be submitted promptly to arbitration pursuant to Section 7.5
below. Buyer and Transferors, respectively, shall remain fully obligated to
purchase and sell or exchange, as applicable, both the Deferred Properties and
all other Properties (excepting any Deleted Properties) on the terms and
conditions set forth in this Agreement, provided that (i) the Price payable on
the Closing Date applicable to all other Properties shall be reduced by the
Allocated Price of the Deferred Properties, (ii) the Closing Date with respect
to the Deferred Properties shall be deferred to that date ten (10) business days
following the issuance of a final decision in arbitration, (iii) an amount equal
to five percent (5%) of the Allocated Price for each Deferred Property shall be
retained by Title Company as a continuing Deposit subject to disposition in
accordance with Section 5.1 below as to such Deferred Property and (iv) the
Allocated Price with respect to each Deferred Property shall be subject to any
reduction determined in arbitration.


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                  (f)    Subject to the provisions of Section 2.8, if a Property
is designated as a Deleted Property, Buyer and Transferors, respectively, shall
have no further obligation to purchase or sell or exchange, as applicable, the
Deleted Properties, shall remain obligated to purchase or sell or exchange, as
applicable, all other Properties and the Price payable on the Closing Date
applicable to all other Properties shall be reduced by the Allocated Prices of
the Deleted Properties.

         SECTION 2.6     Title Exceptions.

                  (a)    Buyer acknowledges that prior to the date hereof,
Transferors have provided to Buyer access to copies of the Title Policies, as
well as copies of the exception documents referred to in the Title Policies and
copies of the Surveys of the Properties, to the extent such exceptions are in
Transferors' immediate possession. Buyer also acknowledges that Transferors have
requested Title Company to deliver to Buyer updated title reports to the Title
Policies, as well as copies of any exception documents relating to exceptions
that are reflected in such updates that have not otherwise been provided to
Buyer prior to the date hereof; provided that Transferors shall have no
liability hereunder if Buyer is unable to obtain copies of any such documents
and Buyer shall have no rights hereunder with respect thereto. Buyer may
continue to secure during the Confirmation Period any additional title or survey
updates desired by Buyer (and will use reasonable efforts to provide the copies
of such updates to Transferors promptly after receipt of same by Buyer). As used
herein, the term "Additional Exceptions" shall mean (i) any title exceptions or
survey exceptions or qualifications identified by Title Company that are not
within the definition of Permitted Exceptions, (ii) the items listed on Exhibit
G-2 to the extent they materially and adversely affect the use, occupancy or
value of a Property, provided that such items shall not be deemed to materially
and adversely affect the use, occupancy and value of a Property to the extent
Buyer has approved (or is deemed to have approved) exceptions on such Property
or other Properties which are substantially similar in all material respects,
(iii) matters shown on surveys described in the Exhibit G Title Policies (as
defined in Exhibit G) or, if such surveys cannot be located or otherwise
obtained, on new surveys obtained by Buyer, for the Properties identified on
Exhibit G-2 which were not shown on the surveys for such Properties delivered or
made available to Buyer, if applicable, and which materially and adversely
affect the use, occupancy or value of a Property, provided that such items shall
not be deemed to materially and adversely affect the use, occupancy and value of
a Property to the extent Buyer has approved (or is deemed to have approved) such
matters on such Property or other Properties which are substantially similar in
all material respects, and (iv) with respect to any Property as to which the
Title Company will not agree at least ten (10) business days prior to the end of
the Confirmation Period to issue a survey endorsement referring to the same
survey as is referenced in Transferors' most recent Exhibit G Title Policy (for
such Property), any variance established by Buyer from the legal descriptions
insured in Transferors' most recent Exhibit G Title Policies to the surveys
described in such Title Policies (other than variances relating to the Civic
Excluded Lot or Southwest Pavillion Pad (as such terms are defined in Exhibit A
) as previously disclosed to Buyer or otherwise actually known to Buyer as of
the date hereof). Buyer, in any event, shall endeavor in good faith (but at no
out-of-pocket cost to Buyer) to cause the Title Company to delete or insure over
any Additional Exceptions to Buyer's reasonable satisfaction prior to Buyer's
expression of such matters in an Additional Title Exception Notice (as described
below). Buyer shall have the right to request that the Title Company provide at
Buyer's sole cost and expense any reinsurance or endorsements Buyer shall
reasonably request


                                       10
<PAGE>   14

with respect to Permitted Exceptions, Additional Exceptions or otherwise,
provided that the issuance of such reinsurance or endorsements shall not be a
condition to or delay the closing except as otherwise provided in this
Agreement.

                  (b)    Buyer shall have the right to deliver a notice to
Transferors identifying any Additional Exceptions (the "Additional Title
Exception Notice") by the earlier of (i) five (5) business days after Scott
Verges becomes aware of the matter constituting an Additional Exception or (ii)
the close of the Confirmation Period. Buyer's failure to deliver any such notice
in timely fashion shall be deemed an approval of any such Additional Exceptions.
Buyer shall have no right to deliver an Additional Title Exception Notice
following the close of the Confirmation Period. If Buyer delivers an Additional
Title Exception Notice within such period, Buyer and Transferors shall promptly
attempt to agree upon the method or cost to cure or remove such Additional
Exception or, if not susceptible to cure or removal, an appropriate reduction in
the Allocated Price for the affected Property. If Transferors and Buyer are
unable to agree upon a resolution within five (5) business days following
Transferors' receipt of an Additional Title Exception Notice, Transferors shall
elect, at its option and by written notice given not later than the date of
Transferors' delivery of an Election Notice under Section 2.5(d) above, (i) to
terminate this Agreement with respect to the affected Property, in which event
such Property shall be treated as a Deleted Property or (ii) to submit the
existence of the Additional Exception, the character of a satisfactory cure or
the measure of appropriate price reduction to arbitration in accordance with the
terms of Section 7.5, in which case the Property shall be treated as a Deferred
Property. Notwithstanding the foregoing, Buyer shall not have the right to
object to any Additional Exception if Title Company is willing to affirmatively
insure or endorse over such Additional Exception at Transferors' expense, and
the Title Company is acting in a commercially reasonable manner in providing
such affirmative insurance or endorsement and Buyer reasonably approves the form
and substance of such affirmative insurance or endorsement.

                  (c)    "Permitted Exceptions" shall include and refer to the
title exceptions set forth in Exhibit G attached hereto. Notwithstanding the
foregoing, Transferors shall remove or cause the Title Company to remove or,
except with respect to Deed of Trust Liens (as herein defined), endorse over by
endorsement reasonably satisfactory to Buyer, at Transferors' sole cost and
expense, on or prior to the Closing Date and there shall not be treated as
Permitted Exceptions: (i) any liens of any mortgages or deeds of trust securing
indebtedness of Transferors or its affiliates (collectively, "Deed of Trust
Liens") and any other liens for monetary obligations (including mechanic's
liens, but excluding (A) mechanic's liens filed by contractors or any other
parties which are working for tenants under Leases or for Transferors where the
obligation to pay such contractors or other parties is directly or indirectly an
obligation of such tenants (but only to the extent (x) such obligation is not
subject to reimbursement or payment by Transferors or its affiliates and (y)
such tenant has neither filed for protection under applicable bankruptcy laws
nor abandoned its premises) or which arise in connection with work as to which
Buyer is to receive a credit at the closing (but only to the extent of such
credit) or has agreed to assume the obligation which is the subject of such
lien, and (B) any other liens which, in the aggregate, exceed Thirty-Five
Thousand Dollars ($35,000) for a particular Property, which arise following the
date of Buyer's execution and delivery of this Agreement and which were not
created by or acquiesced in by Transferors, any affiliate of Transferors, or any
partner, member, officer, director, employee, agent or representative of either
such party) that are not assumed by Buyer


                                       11
<PAGE>   15

(for such purposes, all assessments collected with ad valorem real estate taxes
and which are paid in installments and are not delinquent as of the Closing Date
shall be assumed by Buyer (subject to the provisions of Section 6.3) and
represent Permitted Exceptions); provided, however, that with respect to any
liens identified in clause (B) above, (1) Transferors shall have the right, in
Transferors' sole discretion, to (x) remove or cause the Title Company to remove
or endorse over by endorsement reasonably satisfactory to Buyer, such lien at
Transferors' sole cost and expense on or prior to the Closing Date, or (y)
terminate this Agreement with respect to the affected property in which event
such Property shall be treated as a Deleted Property, and (2) such liens shall
not be Permitted Exceptions unless consented to by Buyer; and (ii) any title
matters created in violation of Transferors' covenant set forth in Section
4.2(e) below.

                  (d)    Transferors shall have no obligation to execute any
affidavits or indemnifications in connection with the issuance of Buyer's title
insurance excepting only the affidavit attached hereto as Exhibit K and such
other customary affidavits as to authority, the rights of tenants in occupancy,
the status of mechanics' liens and other affidavits or indemnifications
reasonably necessary to address matters of title which Transferors are obligated
to remove or cure pursuant to this Section 2.6.

         SECTION 2.7     [Intentionally Omitted]

         SECTION 2.8     Reinstatement Right. Notwithstanding anything to the
contrary contained in this Agreement, if Transferors elect to treat a Property
as a Deleted Property under Sections 2.5, 2.6 or 4.4 of this Agreement, Buyer
shall have the right, by providing Transferors with written notice given within
three (3) business days after receipt of Transferors' notice designating a
Property as a Deleted Property, to cause such Property to no longer be treated
as a Deleted Property and to purchase such Property in accordance with this
Agreement, in which event the specific condition giving rise to Transferors'
treatment of such Property as a Deleted Property shall be deemed waived by Buyer
and Buyer shall not receive any adjustment to the Allocated Price for such
Property or have any right to deliver a Claim Notice as a result of such
condition.


                                    ARTICLE 3
                              CONDITIONS PRECEDENT

         SECTION 3.1     Conditions.

                  (a)    Notwithstanding anything in this Agreement to the
contrary, Buyer's obligation to purchase a particular Property shall be subject
to and contingent upon the satisfaction or waiver of the following conditions
precedent with respect to such Property:

                         (i)       The willingness, upon the sole condition of
the payment of any regularly scheduled premium, of the Title Company (or another
title insurance company reasonably satisfactory to Buyer) to issue Owner's
Policies of Title Insurance in the form of the Title Policy issued to the
applicable Transferor with respect to each Property in connection with the
initial public offering of the stock of the Company (as herein defined) ("IPO")
or, if no Title Policy was issued for a Property in connection with the IPO,
then the Title Policy issued upon the acquisition of the Property by the
applicable Transferor (or the party that contributed such


                                       12
<PAGE>   16

Property to the Transferor at the IPO (a "Contributor") (or such other form(s)
as may be reasonably satisfactory to Buyer)), and with all of the endorsements
issued in any Title Policy issued by the Title Company for a particular Property
insuring Buyer (or Buyer's permitted assignee or nominee) that title to the
applicable Real Property is vested of record in Buyer (or Buyer's permitted
assignee or nominee) on the Closing Date subject only to the printed conditions
and exceptions of such policies (but deleting (by endorsement or otherwise),
where permitted under applicable laws or regulations and at Buyer's expense, any
co-insurance, creditors rights and so-called "standard" exceptions) and the
Permitted Exceptions applicable to such Real Property. Transferors will
cooperate and use reasonable efforts (but at no out-of-pocket cost to
Transferors) to assist Buyer in obtaining all endorsements contained in the
Title Policies (whether issued in connection with the IPO or an acquisition).
Without limiting the foregoing, if the Title Company (and, to the extent
applicable, a different title insurance company if one other than the Title
Company previously issued any such endorsement) refuses to issue such
endorsement to Buyer at closing with respect to a matter insured against under
the Title Policies, upon request of Buyer, Transferors will assert a claim
against such insurer at Buyer's expense and direction with the goal of enabling
Buyer to obtain such endorsement from such title company. Nothing contained in
the second, third, or fourth sentence of this Section 3.1(a)(i) shall be
construed as expanding the provisions of the first sentence of this Section
3.1(a)(i) or Section 2.6 or be considered a condition to Buyer's obligation to
purchase any of the Properties and Transferors shall have no liability
whatsoever if they are unable to cause a title company to issue any such
endorsement;

                         (ii)      With respect to a particular Property, such
Property has not been designated a Deleted Property pursuant to this Agreement;
and

                         (iii) Transferors' performance or tender of performance
of all material obligations under this Agreement with respect to the applicable
Property, including Transferors' covenants under Section 4.2 with respect to
such Property.

                  (b)    Notwithstanding anything in this Agreement to the
contrary, Transferors' obligation to sell or exchange a particular Property or
all of the Properties, as the case may be, shall be subject to and contingent
upon the satisfaction or waiver of the following conditions precedent:

                         (i)       With respect to a particular Property, such
Property has not been designated a Deleted Property pursuant to this Agreement;
and

                         (ii)      Buyer's performance or tender of performance
of all material obligations under this Agreement.

         SECTION 3.2     Failure or Waiver of Conditions Precedent.

                  (a)    If any of the conditions set forth in Section 3.1(a)(i)
or (iii) is not fulfilled or waived by Buyer with respect to a particular
Property, Buyer may, by written notice to Transferors, terminate this Agreement
with respect to the applicable Property and such Property shall be treated as a
Deleted Property. If the condition set forth in Section 3.1(b)(ii) is not
fulfilled or waived, Transferors may, by written notice to Buyer, terminate this
Agreement,


                                       13
<PAGE>   17

whereupon all rights and obligations hereunder of each party shall be at an end.
Either party may, at its election, at any time or times on or before the date
specified for the satisfaction of the condition, waive in writing the benefit of
any of the conditions set forth in Section 3.1(a) and 3.1(b) above. In any
event, Buyer's consent to the close of escrow with respect to a Property
pursuant to this Agreement shall waive any remaining unfulfilled conditions for
the benefit of Buyer with respect to such Property.

                  (b)    Notwithstanding the foregoing, if Buyer desires to
terminate this Agreement with respect to a Property based upon a failure of the
condition set forth in Section 3.1(a)(i) or (iii) above, Transferors shall have
a period of 30 days within which to cure such failure or, if such failure cannot
reasonably be cured within 30 days, an additional reasonable time period of up
to an additional 60 days (for a total of 90 days), so long as such cure has been
commenced within such 30 days and is at all times diligently pursued. If
Transferors have not cured such failure within such cure period then Buyer may
elect to terminate this Agreement with respect to the affected Property, in
which event such Property shall be treated as a Deleted Property.


                                    ARTICLE 4
                    COVENANTS, WARRANTIES AND REPRESENTATIVES

         SECTION 4.1     Transferors' Warranties and Representations. Each of
Transferors expresses to Buyer the representations and warranties set forth
below as of the date of this Agreement, provided that each of such
representations and warranties shall be deemed expressly qualified by any
information set forth on the Disclosure Materials List & Statement or contained
in the Disclosure Materials, and any information set forth on the Disclosure
Materials List & Statement or contained in the Disclosure Materials shall be
deemed an exception to each and all of Transferors' representations and
warranties set forth herein.

                  (a)    Each of Transferors represents and warrants with
respect to itself as follows:

                         (i)       The Transferor (and Transferor's general
partners, if Transferor is a limited partnership, and each of its constituent
members, if Transferor is a limited liability company) is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization and the Transferor is qualified to do business in each state in
which Real Property owned by such Transferor is located to the extent the
failure to so qualify would have a material and adverse effect on Transferor's
performance of its obligations under this Agreement. The Transferor has full
power and lawful authority to enter into and carry out the terms and provisions
of this Agreement and to execute and deliver all documents which are
contemplated by this Agreement, and all actions of the Transferor necessary to
confer such power and authority upon the persons executing this Agreement (and
all documents which are contemplated by this Agreement) on behalf of the
Transferor have been taken;

                         (ii)      Except with respect to the third party
consents expressly described in or contemplated under this Agreement or
expressly required under any agreements included in Intangible Property, the
Transferor's execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby and the performance of the Transferor's


                                       14
<PAGE>   18

obligations under the instruments required to be delivered by the Transferor at
the closing, do not and will not require the consent, approval or other
authorization of, or registration, declaration or filing with, (collectively,
"Consents") any governmental authority (excepting the recordation of closing
documents contemplated in this Agreement and any filings required under
applicable state or federal securities or tax laws) or any other person or
entity, except such Consents as will be obtained on or before closing or as to
which the failure to obtain would not have a material and adverse effect on
Transferor's performance of its obligations under this Agreement, and do not and
will not result in any material violation of, or material default under, any
term or provision of any agreement, instrument, mortgage, loan agreement or
similar document to which the Transferor is a party or by which the Transferor
is bound. Subject to the foregoing, all partnership, limited liability company,
board of directors and shareholder approvals required for Transferor to enter
into this Agreement and to consummate the transactions described in this
Agreement have been obtained;

                         (iii)     There is no litigation, investigation or
proceeding pending or, to the best of the Transferor's knowledge, contemplated
or threatened against the Transferor which would impair or adversely affect the
Transferor's ability to perform its obligations under this Agreement or any
other instrument or document related hereto; and

                         (iv)      The Transferor is not a "foreign person" as
defined in Internal Revenue Code 1445(f)(3).

                  (b)    Each of Transferors represents and warrants as follows
with respect to each Property owned by such Transferor:

                         (i)       As of the date of this Agreement, Transferor
has no knowledge that, and has received no written notice from any governmental
authorities that eminent domain proceedings for the condemnation of any Property
or any part of a Property are pending;

                         (ii)     As of the date of this Agreement, Transferor
has no knowledge that, and has received no written notice of any threatened or
pending litigation against Transferor other than routine matters covered by
Transferor's insurance or other matters which would not materially and adversely
affect any Property;

                         (iii)     As of the date of this Agreement, Transferor
has received no written notice from any governmental authority that the
improvements constituting any Property are presently in material violation of
any applicable building codes where such violation has not been cured in all
material respects;

                         (iv)      As of the date of this Agreement, Transferor
has received no written notice from any governmental authority that any Property
is presently in material violation of any applicable zoning, land use or other
law, order, ordinance, rule or regulation affecting the Property which violation
has not been cured, that any investigation has been commenced or is contemplated
with respect to any such possible failure of compliance and Transferor has not
received written notice from any insurance company or Board of Fire Underwriters
any written notice of any defect or inadequacy in connection with a Property or
its operation where such defect or inadequacy has not been cured in all material
respects;


                                       15
<PAGE>   19

                         (v)       There are no Contracts involving payment in
excess of $25,000 per annum with respect to any Property that will be binding
upon Buyer after the closing, other than such Contracts that are cancelable by
the owner of the Property within 30 days after written notice from such owner
without penalty or premium (other than penalties or premiums that will be paid
by Transferor on or before the closing);

                           (vi)     As of the date of this Agreement, except as
set forth in the environmental reports included within the Disclosure Materials
and any reports or studies prepared by or for Buyer, Transferor has received no
written notice of the presence or release of any Hazardous Materials presently
deposited, stored, or otherwise located on, under, in or about any Property
which require reporting to any governmental authority or are otherwise not in
compliance with environmental laws, regulations and orders;

                           (vii)   The Rent Rolls constituting Exhibit E to this
Agreement completely and accurately identify as to each Lease as of February 15,
1999: the expiration date of the current term of the Lease; the amount of any
security deposit held by Transferor; the current base rental payable under such
Lease and future rent escalations; the amount of additional rent (i.e., cost
recovery) currently billed to the tenant under the Lease; and the approximate
rentable area of the premises. As of February 15, 1999, each Lease identified on
the Rent Roll was, to the best of Transferor's knowledge, in full force and
effect and, to the best of Transferor's knowledge, Transferor was not in
material default thereunder. As of March 1, 1999, Transferor had not received
written notice of any material default by Transferor under any Leases, which
default had not been cured in all material respects, and Transferor has not
delivered any default notice to a tenant under any Lease and, to Transferor's
knowledge and except as set forth in the delinquency reports provided by
Transferors to Buyer, Transferor was not aware of any other default by a tenant
under a Lease as to which default Transferor would customarily have delivered a
notice of default to such tenant but has not done so, which defaults have not
been cured in all material respects. Transferor has delivered or made available
to Buyer copies of all Leases of more than 14,000 square feet or any amendments
thereto executed on or before the date of this Agreement;

                           (viii)  As of the date of this Agreement, Transferor
has received no written notice that Transferor or any other party is in default
under any reciprocal easement agreement or declaration of covenants, conditions,
and restrictions or any other similar instrument or agreement affecting any of
the Properties (collectively, the "REAs"), which default has not been cured in
all Material respects;

                           (ix)    Transferor has not granted any option or
right of first refusal or first opportunity to acquire any fee or ground
leasehold estate of any portion of the Properties;

                           (x)     As of the date of this Agreement, the
Financial Statements delivered to Buyer by Transferor are true and correct in
all material respects;

                           (xi)    With respect to the matters contained in the
Disclosure Materials List & Statement and the Disclosure Materials, to
Transferor's knowledge, Transferor has not willfully and intentionally omitted
to state any material facts required to be stated therein or willfully and
intentionally made any untrue statement of a material fact, which would render
the


                                       16
<PAGE>   20

Disclosure Materials List & Statement or the Disclosure Materials materially
misleading. Transferor has not willfully and intentionally failed to deliver or
make available to Buyer all of the following documents in Transferor's immediate
possession and has not instructed any third party not to deliver any such
documents to Buyer: (x) reports regarding the environmental condition of the
Properties or (y) reports obtained in connection with the acquisition of a
Property regarding the physical condition and legal compliance of such Property;
and

                         (xii)     Transferor has taken the steps described on
Exhibit P attached hereto in an effort to cause all computer hardware and
software at each Property which is the direct responsibility of Transferor (and
not the responsibility of a tenant, vendor or other third party) and which
controls utility and other physical operating functions including, without
limitation, alarm and other security systems, irrigation systems, lighting
systems, health safety systems and similar functions (the "Owner's Computer
Systems"), to at all times hereafter provide the following functions: (a)
consistently handle date information before, during and after January 1, 2000
including, without limitation, accepting date input, providing date output and
performing calculations on dates or portions of dates; (b) function accurately
in accordance with the specifications for such computer hardware or software and
without interruption before, during and after January 1, 2000, without any
change in operations associated with the advent of the new century; (c) respond
to two digit date input in a way that resolves any ambiguity as to century in a
disclosed, defined and predetermined matter; and (d) store and provide output
data information in ways that are unambiguous as to century. To Transferor's
knowledge, as of the date of this Agreement, the cost to correct any failure of
the Owner's Computer Systems to provide the foregoing functions would not be
material (provided, that no representation or warranty is made with respect to
any such failure for reasons other than the advent of the new century).

         Subject to the provisions of Section 4.4, each of the Transferors shall
be jointly and severally liable for the breach of any representation and
warranty of a Transferor set forth in this Section 4.1.

                                    * * * * *

For the foregoing purposes, the terms "Transferors' knowledge" or "Transferor's
knowledge" or words of similar effect shall mean the current actual, subjective
knowledge of Messrs. John Diserens, Michael Coke, Blake Baird and David Fries
(collectively, the "Knowledge Persons"), in each case without independent
investigation or inquiry, but after inquiry of the current asset managers who
are employees of Transferors in its retail division. Such individuals' knowledge
shall not include information or material which may be in the possession of any
of the Transferors or the named individuals, but of which the named individuals
are not actually aware. Transferors shall have no liability for the breach of
any representations or warranties absent an arbitrated or judicial finding that
the named individuals knowingly withheld information from Buyer with respect to
the subject matter of the representation or warranty or falsified information
delivered to and relied upon by Buyer and that such action amounted to a
violation of a representation or warranty expressly set forth in this Agreement.
None of the named individuals whose sole knowledge is imputed to a Transferors
under this Section nor any party other than the Transferors affording a
representation shall bear responsibility for any breach of such representation.


                                       17
<PAGE>   21

         SECTION 4.2     Transferors' Covenants. Transferors hereby covenants
and agrees as follows:

                  (a)    During the Contract Period, Transferors will exercise
reasonable and good faith efforts (i) to operate and maintain the Properties in
a manner consistent with current practices and (ii) to comply, where such
compliance is the obligation of Transferors (and not of a tenant or other party)
in all material respects with all material laws and regulations applicable to
the Properties;

                  (b)    During the Contract Period, Transferors will not sell
or otherwise dispose of any significant items of Personal Property unless
replaced with an item of like value, quality and utility;

                  (c)    During the Contract Period, Transferors shall not enter
into or modify any Contracts relating to the operation or maintenance of a
Property, except for (i) those entered into in the ordinary course of business
with parties which are not affiliates of Transferors and (A) which are
cancelable upon not more than thirty (30) days prior notice without penalty or
premium or (B) which require payments to the applicable vendor of $25,000 or
less per year and which, in the aggregate for any individual Property, require
payments to the applicable vendors of $50,000 or less per year, or (ii) those
otherwise approved by Buyer, which approval shall not be unreasonably withheld
and shall be deemed given if Buyer should fail to approve or disapprove proposed
Contract matters in writing within 5 business days following Transferor's
written request (which shall include all material information necessary to allow
Buyer to make an informed decision). At Buyer's written request provided at
least five (5) business days prior to the Closing Date, Transferors shall
deliver notice of termination on the Closing Date as to any and all Contracts
that Buyer desires to terminate, provided that such termination shall be
effective following any notice or waiting period for such termination described
in the Contract and that Transferors shall not be required to bear any
termination or cancellation fee or charge that may be assessed under such
Contract based upon an early termination. Notwithstanding the foregoing,
Transferors shall terminate all property management agreements and exclusive
leasing agreements applicable to the Properties as of the Closing Date, at
Transferors' expense;

                  (d)    During the Contract Period, Transferors will not
execute or modify in any material fashion any Leases pertaining to premises in
excess of 5,000 rentable square feet or any ground lease, other than with
Buyer's prior consent, which shall be deemed given if Buyer (in the person of
Burnham Pacific Properties, Inc.'s chief investment officer or chief operating
officer) should fail to approve or disapprove proposed lease matters in writing
within 5 business days following Transferors' written request (which shall
include all material information necessary to allow Buyer to make an informed
decision). Buyer shall exercise its rights of approval of leasing matters
reasonably and in good faith. With respect to new Leases or Lease amendments
pertaining to premises of 5,000 rentable square feet or less, Transferors shall
have the right to enter into new Leases or amendments without any need to obtain
Buyer's consent, provided that (A) such new Lease or amendment is entered into
on an arm's length basis and the applicable Transferors believes in its good
faith reasonable discretion that it is entering into such new Lease or
modification on market terms (B) such new Lease or amendment does not provide
for a cap on the pass through of cost recoveries or exclude the recovery of
management fees, (C) such new Lease or amendment does not contain a material
change to the assignment provision of


                                       18
<PAGE>   22

Transferors' standard lease form in use at the applicable Property (the
"Standard Form"), (D) with respect to a new Lease, Transferors initiated
negotiations with such tenant using the Standard Form and any changes thereto
are consistent with Transferors' standard leasing practices, and (E) Buyer is
provided with a copy of the executed Lease or modification documents within a
reasonable period after such documents are executed. Transferors shall use
reasonable efforts to continue to seek leases for the Properties in a manner
consistent with present practice;

                  (e)    During the Contract Period, Transferors shall not
voluntarily create, consent to or acquiesce in the creation of liens or
exceptions to title without Buyer's prior written consent, provided that Buyer
shall not unreasonably withhold or delay consent to any proposed matters
affecting title necessary to maintain or enhance the value of the pertinent
Property;

                  (f)    During the Contract Period, Transferors shall maintain
its currently effective policies of property insurance and rental loss insurance
for the Improvements;

                  (g)    During the Contract Period, Transferors shall use
commercially reasonable efforts (but at no material cost to Transferors except
as may otherwise be expressly provided in this Agreement) to obtain all third
party and governmental approvals and consents necessary to consummate the
transactions contemplated hereby;

                  (h)    During the Contract Period, Transferors shall maintain
their books accounts and records in a manner consistent with past practice;

                  (i)    During the Contract Period, Transferors shall observe
and comply with the material terms and conditions of all Contracts, Leases,
Property licenses, and Property approvals;

                  (j)    During the Contract Period, Transferors shall not
knowingly and intentionally take any action which would cause the
representations and warranties contained in Section 4.1 (other than as permitted
in this Agreement) to cease to be true and correct in all material respects as
of the Closing Date as though then made;

                  (k)    During the Contract Period, Transferors shall comply in
all material respects with all existing easements, covenants, conditions,
restrictions and other encumbrances affecting any Property;

                  (l)    During the Contract Period, Transferors shall
reasonably cooperate with Buyer, but at no cost to Transferors, (i) to assist
Buyer in obtaining environmental insurance coverage for the Properties
(provided, that in no event shall Buyer have the right to perform any
environmental testing in connection with obtaining such insurance) and (ii) to
enable Buyer to exercise and close on the Applewood Option (as defined in the
Disclosure Materials List & Statement) and, at Buyer's written request, with
respect to any other similar options or rights described on Exhibit V attached
hereto, as soon as possible after the closing, provided such option(s) shall not
be exercised or caused to be exercised by Buyer prior to the closing and
Transferors shall not be required to exercise such option(s) prior to the
closing);

                  (m)    During the Contract Period, but subject to the
provisions of Sections 2.4 and 2.5, Transferors shall permit Buyer, and Buyer's
lenders and its representatives, to have


                                       19
<PAGE>   23

reasonable access (upon reasonable notice, during normal business hours and, if
required by Transferors, accompanied by a representative of Transferors) to the
books, records and Properties, and, with Transferors' prior approval not to be
unreasonably withheld, tenants, parties to REAs, parties to options and rights
of first refusal, and parties to management agreements and Contracts, in order
to assist Buyer in its management transition with respect to the Properties and
to provide information to its lenders that is reasonably requested by them;

                  (n)    As a courtesy to Buyer, during the Contract Period,
Transferors shall use reasonable efforts to provide Buyer with copies of any
written notices received by Transferors during the Contract Period, which
notices relate to matters described in Section 4.1(b)(i), (ii), (iii), (iv),
(vi), (vii) or (viii); provided, that notwithstanding anything to the contrary
contained in this Agreement, Transferors shall have no liability whatsoever to
Buyer as a result of its failure to comply with the provisions of this Section
4.2(n);

                  (o)    During the Contract Period, Transferors shall provide
reasonable access to the Disclosure Materials (upon reasonable notice and during
normal business hours) and the right to copy such materials (at no cost to
Transferors) in order to assist Buyer in its management transition with respect
to the Properties and to provide information to its lenders that is reasonably
requested by them;

                  (p)    During the Contract Period, Transferors shall meet and
confer with Buyer on a regular basis to discuss leasing activity at the
Properties and the status of work described in Section 6.9 and shall provide
Buyer at such meetings or otherwise reasonably detailed information regarding
the costs incurred with respect to, and the costs anticipated to complete, such
work;

                  (q)    During the Contract Period, Transferors shall notify
Buyer of any litigation filed against Transferors during the Contract Period
within a reasonable period of time after Transferors are made aware of such
litigation and Exhibit W shall be revised to include such litigation; and

                  (r)    During the Contract Period, to the extent Transferors
have a right of first offer or right of first refusal to purchase any real
property related to any of the Properties and Transferors receive written notice
that the period for exercising such right has commenced, Transferors shall
promptly notify Buyer and Buyer shall have the right, by written notice to
Transferors, to request that at closing Transferors assign such right to Buyer
(if assignable) or use reasonable efforts to cause the applicable property to be
direct deeded to Buyer; provided, that in no event shall Transferors have any
liability or incur any cost with respect to such property or be required to take
title to such property, and Buyer shall deliver to Title Company at the times
required in connection with such right to purchase, and remain responsible for,
any funds to be paid in connection with the acquisition of such property.

         SECTION 4.3     Buyer's Warranties and Representations. Buyer hereby
represents and warrants to Transferors that the following are true as of the
date of this Agreement:

                  (a)    Buyer is a duly formed and validly existing limited
liability company under the law of the state of its formation and is (or on the
Closing Date will be) in good


                                       20
<PAGE>   24

standing under the laws of the states where each Property is located and Buyer
has the full right, authority and power to enter into this Agreement, to
consummate the transactions contemplated herein and to perform its obligations
hereunder and under those documents and instruments to be executed by it at the
closing, and each of the individuals executing this Agreement on behalf of Buyer
is authorized to do so, and this Agreement constitutes a valid and legally
binding obligation of Buyer enforceable against Buyer in accordance with its
terms.

                  (b)    Buyer's execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the performance of
Buyer's obligations under the instruments required to be delivered by Buyer at
the closing, do not and will not result in any material violation of, or
material default under, any term or provision of any agreement, instrument,
mortgage, loan agreement or similar document to which Buyer is a party or by
which Buyer is bound.

                  (c)    There is no litigation, investigation or proceeding
pending or, to the best of Buyer's knowledge, contemplated or threatened against
Buyer which would impair or adversely affect Buyer's ability to perform its
obligations under this Agreement or any other instrument or document related
hereto.

         SECTION 4.4     Survival/Limitations.

                  (a)    Subject to subsection (b) below, the parties agree that
Transferors' warranties and representations contained in Sections 4.1 (a) and
(b) of this Agreement shall survive Buyer's purchase of the Properties and the
Closing Date for a period ending 180 calendar days following the Closing Date
(the "Limitation Period"). Such termination as of the close of the Limitation
Period shall apply to known as well as unknown breaches of such warranties or
representations. Subject to subsection (b) below, Buyer's waiver and release set
forth in Section 2.4 shall apply fully to liabilities under such representations
and warranties. Buyer specifically acknowledges that such termination of
liability represents a material element of the consideration to Transferors.

                  (b)    Any claim of Buyer based upon a breach of any
representation or warranty or covenant or a claim under any indemnity contained
in this Agreement or any representation, warranty, covenant or indemnity
contained in any other document or instrument delivered by Transferors to Buyer
at closing (collectively a "Breach") shall be expressed, if at all, in writing
setting forth in reasonable detail the basis and character of the claim (a
"Claim Notice"), and, in the case of a Breach of Transferors' representations
and warranties contained in this Agreement or a Breach of a covenant contained
in Section 4.2 hereof only, shall be delivered to Transferors prior to the
expiration of the Limitation Period. Notwithstanding the foregoing, Buyer's
right to make and recover any claim pursuant to a Claim Notice shall be subject
to the following: (i) any matters identified by Buyer during the Confirmation
Period which would represent both a breach of representation and result in a
Material Adverse Matters Amount shall be treated solely as the latter and shall
not be the subject of any claim for breach of representation under this Article
IV, (ii) with respect to a Breach of Transferors' representations and warranties
contained in this Agreement, or a Breach of a covenant contained in Section 4.2
hereof or a Breach under an indemnity contained in the Assignments of
Intangibles or the Assignments of Leases (as such terms are defined in Section
6.1(a) below), Buyer shall not make any claim on account of such


                                       21
<PAGE>   25

Breach unless and until (A) the aggregate measure of such claims with respect to
a Property exceeds $200,000, and (B) the aggregate measure of such claims with
respect to all of the Properties exceeds $750,000 (the "Threshold"), in which
event Buyer's claim shall be limited to an amount equal to (x) the amount by
which such aggregate exceeds the Threshold, plus (y) an amount equal to
two-thirds of the Threshold, (iii) Transferors' aggregate liability for claims
arising out of all Breaches (i.e., those described in clause (ii) above as well
as all other Breaches) shall not, in the aggregate, exceed an amount equal to
three percent (3%) of the aggregate Price for all of the Properties acquired by
Buyer exclusive of the amounts of any insurance proceeds actually received by
Transferors which are to be applied to Claims pursuant to Section 2.4(e), and
(iv) Buyer shall have the right to deliver to Transferors Claim Notices with
respect to any Breach discovered by Buyer prior to the Closing Date solely if
such notice is delivered prior to the Closing Date. Notwithstanding the
foregoing, with respect to a Claim Notice asserting a breach of the
representation contained in Section 4.1(b)(vii), the following shall be
substituted for the provisions of clause (ii) of this Section 4.4(b): (ii) Buyer
shall not make any claim on account of a breach of the representation and
warranty contained in Section 4.1(b)(vii) with respect to any Property unless
and until the aggregate measure of such claims with respect to all Properties
exceeds $50,000, and only to the extent that such aggregate exceeds $50,000. For
purposes of this Section 4.4(b) (and without limiting the introductory paragraph
of Section 4.1), a Breach shall be deemed to be discovered by Buyer prior to the
Closing Date only to the extent that any of David Martin, Daniel Platt, Joseph
Byrne, Scott Verges, John Waters, Jim Gaube or Guy Jacquier has actual,
subjective knowledge of the facts or circumstances giving rise to such breach of
representation or warranty or Section 4.2 covenants. Following receipt of such a
pre-closing Claim Notice with respect to which Buyer has the right to make and
recover a claim as aforesaid, Transferors may elect, by written notice to Buyer
given not later than the first to occur of the date that is ten (10) business
days following the date of the Claim Notice or the Closing Date, to terminate
this Agreement as to the Property to which such pre-closing Claim Notice relates
and such Property shall be treated as a Deleted Property and Buyer shall not be
entitled to any damages in connection therewith. If Transferors fail to elect to
treat any Property which is the subject of a pre-closing Claim Notice as a
Deleted Property, the closing as to such Property shall be conducted on the
Closing Date. As to pre-closing Claim Notices with respect to which Transferors
do not elect to treat the affected Property as a Deleted Property and as to all
Claim Notices received by Transferors following the Closing Date as to which
Buyer has the right to make and recover a claim as aforesaid, Buyer shall have
the right after (but not before) the Closing Date to proceed against Transferors
for actual monetary damages based upon such Claim Notice -- subject to the cure
rights set forth in subparagraph (c) below and the limitations set forth above
and in the remaining sentences of this subparagraph. Notwithstanding anything to
the contrary provided in this Agreement, in no event shall Transferors be liable
to Buyer for any consequential or punitive damages based upon any breach of this
Agreement, including breaches of representation or warranty. Subject to
applicable principles of fraudulent conveyance, in no event shall Buyer seek
satisfaction for any obligation from any shareholders, officers, directors,
employees, agents, legal representatives, successors or assigns of such trustees
or beneficiaries, nor shall any such person or entity have any personal
liability for any such obligations of any Transferors.

                  (c) The Transferors who have committed a Breach for which a
Claim Notice has been received shall have a period of 30 days within which to
cure such breach, or, if such breach cannot reasonably be cured within 30 days,
an additional reasonable time period of up to


                                       22
<PAGE>   26

an additional 60 days, so long as such cure has been commenced within such 30
days and is at all times diligently pursued. If the Breach is not cured after
actual written notice and within such cure period, Buyer's sole remedy shall be
an action at law for damages against the breaching Transferor or Transferors,
which must be commenced with respect to a Breach of a representation or warranty
contained in this Agreement or a Breach of a covenant contained in Section 4.2
hereof, if at all, within the Limitation Period; provided, however, that if
within the Limitation Period Buyer gives a Claim Notice and the Transferors
commence to cure and thereafter terminate such cure effort or fail in such cure
effort, Buyer shall have an additional 30 days from the date of written notice
from the Transferors of such termination or the expiration of such cure period
within which to commence an action at law for damages as a consequence of the
failure to cure. The existence or pendency of such cure rights shall not delay
the Closing Date as to a Property not designated as a Deleted Property. The
provisions of this Section 4.4 shall survive the closing or any termination of
this Agreement.


                                    ARTICLE 5
                                DEPOSIT; DEFAULT

         SECTION 5.1     Buyer's Default & Deposit.

                  (a)    Substantially concurrently with the execution and
delivery of this Agreement, Buyer shall deliver to Title Company, for deposit
into the escrow described in Section 6.1 below, cash in an amount equal to Nine
Million Dollars ($9,000,000), which amount shall be increased on April 30, 1999
by an additional Three Million Two Hundred Fifty Thousand Dollars ($3,250,000)
(collectively, the "Deposit"). In the event that this transaction is consummated
as contemplated by this Agreement, then the entire amount of the Deposit,
together with any interest accrued thereon, whether in cash or in the form of a
Letter of Credit (as herein defined) shall be returned to Buyer and in no event
shall the Deposit be credited against the Price. The entire amount of the
Deposit (or the portion of the Deposit allocable to Properties with respect to
which Transferors refuse to perform their material closing obligations),
together with any interest accrued thereon, shall be returned immediately to
Buyer in the event that the transaction fails to close due to termination of
this Agreement pursuant to Section 5.2. IN THE EVENT THE TRANSACTION
CONTEMPLATED BY THIS AGREEMENT SHOULD FAIL TO CLOSE AS A RESULT OF BUYER'S
DEFAULT HEREUNDER, THE ENTIRE AMOUNT OF THE DEPOSIT, PLUS ACCRUED INTEREST, (AND
TO THE EXTENT THE DEPOSIT IS IN THE FORM OF A LETTER OF CREDIT, TITLE COMPANY
SHALL IMMEDIATELY MAKE DEMAND FOR THE PRINCIPAL AMOUNT OF THE LETTER OF CREDIT)
SHALL BE PAID BY THE TITLE COMPANY TO TRANSFERORS AS LIQUIDATED DAMAGES (THE
"LIQUIDATED AMOUNT"). BUYER AND TRANSFERORS HEREBY ACKNOWLEDGE AND AGREE THAT
TRANSFERORS' DAMAGES IN THE EVENT OF SUCH A BREACH OF THIS AGREEMENT BY BUYER
WOULD BE DIFFICULT OR IMPOSSIBLE TO DETERMINE, THAT THE AMOUNT OF THE DEPOSIT
PLUS ACCRUED INTEREST IS THE PARTIES' BEST AND MOST ACCURATE ESTIMATE OF THE
DAMAGES TRANSFERORS WOULD SUFFER IN THE EVENT THE TRANSACTION PROVIDED FOR IN
THIS AGREEMENT FAILS TO CLOSE, AND THAT SUCH ESTIMATE IS REASONABLE UNDER THE
CIRCUMSTANCES EXISTING ON THE DATE OF THIS AGREEMENT. BUYER AND TRANSFERORS


                                       23
<PAGE>   27

AGREE THAT TRANSFERORS' RIGHT TO RETAIN THE DEPOSIT PLUS ACCRUED INTEREST SHALL
BE THE SOLE REMEDY OF TRANSFERORS IN THE EVENT OF A BREACH OF THIS AGREEMENT BY
BUYER.

ACCEPTED AND AGREED TO:


________________________            _____________________________

BUYER'S INITIALS                    TRANSFEROR'S INITIALS

This Section 5.1 is intended only to liquidate and limit Transferors' rights to
damages arising due to Buyer's failure to purchase the Properties and shall not
limit the indemnification or other obligations of (i) Buyer's constituent
partners pursuant to the Confidentiality Agreement dated January 25, 1999
executed by Burnham Pacific Properties, Inc. for the benefit of Transferors (the
"BP Confidentiality Agreement") and the Confidentiality Agreement dated January
25, 1999 executed by the State of California Public Employees' Retirement System
("Calpers") for the benefit of Transferors (the "Calpers Confidentiality
Agreement;" which, together with the BP Confidentiality Agreement, are
collectively referred to as the "Confidentiality Agreements") or (ii) Buyer
pursuant to (A) any other documents delivered pursuant to this Agreement or (B)
Sections 2.4(b), 2.4(e), 7.2, 7.9 and 7.13 of this Agreement. In the event that
any Property becomes a Deleted Property pursuant to the provisions of this
Agreement, then Buyer shall have the right to cause Title Company to withdraw
from the escrow and pay to Buyer (or to reduce any letter of credit, as
applicable, by) an amount equal to the product of (x) the Deposit (and interest
accruing thereon) and (y) the quotient expressed as a percentage, of the
Allocated Price with respect to such Deleted Property and the total Price.

                  (b)    In the event that Transferors are entitled to the
Deposit pursuant to Section 5.1 hereof, an amount equal to the lesser of (i) the
Liquidated Amount or (ii) the sum of (A) the maximum amount that can be paid to
Transferors without causing Transferors (or any of their constituent partners)
to fail to meet the requirements of Sections 856(c)(2) and 856(c)(3) of the
Code, determined as if the payment of such amount did not constitute income
described in Section 856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of the Code
("Qualifying Income"), as determined by Transferors' accountants, plus (B) in
the event Transferors receive either (x) a letter from Transferors' counsel
prior to the Closing Date indicating that Transferors (or their constituent
partners, as applicable) has received a ruling from the Internal Revenue Service
(the "IRS") described in clauses (ii) or (iii) of the following paragraph, or
(y) an opinion from Transferors' (or their constituent partners', as applicable)
counsel as described in clause (iv) of the following paragraph, an amount equal
to the Liquidated Amount less the amount payable under clause (A) above, and any
balance of the Liquidated Amount (the "Balance") shall be retained by Title
Company in escrow in accordance with the terms of an escrow (subject to the
terms of the following paragraph) being otherwise agreed upon by Transferors and
the escrow agent.

                  (c)    The escrow agreement described in Section 5.1(b) shall
provide that the amount in escrow or any portion thereof shall not be released
to Transferors except to the extent the escrow agent receives any one or
combination of the following: (i) a letter from Transferors' accountants
indicating the maximum amount that can be paid by the escrow agent to
Transferors without causing Transferors (or any of their constituent partners,
as applicable) to fail to meet the


                                       24
<PAGE>   28

requirements of Sections 856(c)(2) and 856(c)(3) of the Code, determined as if
the payment of such amount did not constitute Qualifying Income, in which case
the escrow agent shall release the amount indicated in such letter to
Transferors, (ii) a letter from Transferors' (or any of their constituent
partner's, as applicable) counsel indicating that Transferors (or any of its
constituent partners, as applicable) received a ruling from the IRS holding that
the receipt by Transferors (or any of their constituent partners, as applicable)
of the Liquidated Amount would either constitute Qualifying Income or would be
excluded from gross income within the meaning of Sections 856(c)(2) and
856(c)(3) of the Code, in which case the escrow agent shall release the Balance
to Transferors, (iii) a letter from Transferors' (or any of their constituent
partners' as applicable) counsel indicating that Transferors (or any of their
constituent partners, as applicable) received a ruling from the IRS holding that
the receipt by a Transferor (or its constituent partner, as applicable) of the
Balance following the receipt of and pursuant to such ruling would not be deemed
constructively received prior thereto or (iv) an opinion of a Transferor's (or
its constituent partner's, as applicable) legal counsel to the effect that the
receipt by a Transferor (or its constituent partner, as applicable) of the
Liquidated Amount would either constitute Qualifying Income or would be excluded
from gross income within the meaning of Sections 856(c)(2) and 856(c)(3) of the
Code, in which case the escrow agent shall release the Balance to Transferors.
Buyer and Title Company agree to act reasonably and cooperate with Transferor in
order (x) to maximize the portion of the Liquidated Amount that may be
distributed to Transferors hereunder without causing a Transferor (or its
constituent partner, as applicable) to fail to meet the requirements of Sections
856(c)(2) and 856(c)(3) of the Code or (y) to improve a Transferor's (or any of
their constituent partner's, as applicable) chances of securing a favorable
ruling described in this Section 5.1(c), provided that, except as otherwise
provided in this Agreement, Buyer and Title Company shall not be required to
incur any out-of-pocket costs in connection therewith. The escrow agreement
shall also provide that any portion of the Liquidated Amount then held in escrow
after the expiration of five (5) years from the date of the establishment of
such escrow shall be released by the escrow agent to Buyer. Buyer shall not be a
party (other than a contingent beneficiary as described above) to such escrow
arrangements and shall not bear any cost of or have liability resulting from
such escrow arrangements.

         SECTION 5.2     Transferors' Default. If (a) the conditions precedent
set forth in Section 3.1(b) shall have been satisfied or waived (provided that
for purposes of this Section Buyer shall not be required to tender formally the
Price but only demonstrate the commitment of immediately available funds to pay
such Price) and (b) Transferors shall refuse to perform their material closing
obligations under this Agreement (e.g., by refusing to convey a Property to
Buyer at Closing), then Buyer's sole and exclusive remedy shall be either (i) to
receive back the Deposit in the event Transferors refused to perform their
material closing obligations with respect to all of the Properties (or the
portion of the Deposit allocable to Properties with respect to which Transferors
refuse to perform their material closing obligations) plus all accrued interest
thereon or (ii) to pursue an action for specific performance on a Property by
Property basis as to those Properties with respect to which Transferors refuse
to perform their material closing obligations ; provided, that notwithstanding
anything to the contrary contained herein, Buyer's right to pursue an action for
specific performance is expressly conditioned on Buyer not being in default or
having defaulted in any material respect under any other material agreement in
which Buyer or any of its constituent members and any of the Transferors is a
party and which was entered into on or after March 1, 1999. Subject to the
foregoing, Buyer acknowledges that Buyer's remedies for Transferor's failure to
perform all of its material obligations under this


                                       25
<PAGE>   29

Agreement with respect to the sale or exchange of a particular Property but less
than all of the Properties shall be exclusively governed by the provisions of
Section 3.2 above. Nothing contained in this Section 5.2 is intended to limit
Buyer's rights under Sections 7.2, 7.9 and 7.13 of this Agreement.

         SECTION 5.3     Solicitation; Negotiations.

                  (a)    Unless and until this Agreement shall have been
terminated in accordance with its terms, the Transferors agree and covenant that
(i) neither Transferors nor any of their respective subsidiaries or affiliates
nor AMB Property Corporation, a Maryland corporation, which is AMBLP's general
partner (the "Company"), shall, and each of them shall direct and use their best
efforts to cause their respective officers, directors, employees, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it or any of its subsidiaries) not to, directly or
indirectly, initiate, solicit or encourage any inquiries or the making or
implementation of any proposal or offer with respect to a merger, acquisition,
or similar transaction involving the direct or indirect purchase of the
Properties (any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal") or engage in any negotiations with, or provide any
confidential information or data to, or have any discussions with, any person
relating to, an Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal.

                  (b)    Notwithstanding anything set forth in this Agreement to
the contrary, the Board of Directors of the Company may furnish information to
or enter into discussions or negotiations with any person that makes an
unsolicited bona fide proposal to purchase all or a portion of the Properties
having aggregate Allocated Price of at least eighty-five percent (85%) of the
aggregate Price of all of the Properties, whether by merger, purchase of
partnership interests or assets or otherwise (a "Proposal"), if the Board of
Directors of the Company determines in good faith that the Proposal, if
consummated as proposed, would result in a transaction more favorable to the
Company's stockholders from a financial point of view than the transactions
contemplated by this Agreement (any such Proposal being referred to herein as a
"Superior Proposal"). If the Board of Directors of the Company is prepared to
accept the Superior Proposal, then Transferors shall have the right to terminate
this Agreement by giving Buyer 48 hours notice that the Board of Directors is
prepared to accept the Superior Proposal, instructing the Title Company to
return the Deposit to Buyer and in addition paying Buyer a termination fee in
the amount of the then current Deposit (as increased or decreased from time to
time pursuant to this Agreement) (excluding the amount of any remaining Deposit
allocable to any Properties which were previously designated as Deleted
Properties) (the "Termination Fee"). The return of the Deposit (and all interest
accrued thereon) and the additional payment of the Termination Fee shall be
Buyer's sole and exclusive remedy in the event of a termination pursuant to this
Section 5.3

                  (c)    In addition to the provisions set forth in Sections
5.3(a) and 5.3(b) hereof, nothing in this Agreement shall be deemed to prevent
in any manner the taking of any action by the Company with respect to any
merger, consolidation or sale of all or substantially all of the assets of the
Company or any of the Transferors, in the event that the Board of Directors of
the Company shall determine, based on advice of outside legal counsel, that the
failure to take such action would be inconsistent with such Board of Directors'
fiduciary duties to the Company's


                                       26
<PAGE>   30

stockholders under applicable law. In the event that such action would be
inconsistent with the transactions contemplated hereby, then Transferors shall
have the right to terminate this Agreement by giving Buyer 48 hours notice that
such Board of Directors is prepared to take such action, instructing the Title
Company to return the Deposit to Buyer and in addition paying Buyer the
Termination Fee. The return of the Deposit and the additional payment of the
Termination Fee shall be Buyer's sole and exclusive remedy in the event of a
termination pursuant to this Section 5.3.

                  (d)    In the event that Transferors are obligated to pay
Buyer the Termination Fee, Transferors shall pay to Buyer an amount equal to the
lesser of (i) the Termination Fee or (ii) the sum of (A) the maximum amount that
can be paid to Buyer without causing Buyer (or any of its members) to fail to
meet the requirements of Sections 856(c)(2) and 856(c)(3) of the Code,
determined as if the payment of such amount did not constitute income described
in Section 856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of the Code ("Qualifying
Income"), as determined by Buyer's accountants, plus (B) in the event Buyer
receives either (x) a letter from Buyer's counsel prior to the Closing Date
indicating that Buyer (or its members, as applicable) has received a ruling from
the Internal Revenue Service (the "IRS") described in clauses (ii) or (iii) of
the following paragraph, or (y) an opinion from Buyer's (or its member's, as
applicable) counsel as described in clause (iv) of the following paragraph, an
amount equal to the Termination Fee less the amount payable under clause (A)
above, and any balance of the Termination Fee (the "Balance") shall be deposited
by Transferors in escrow in accordance with the next succeeding sentence with
the Title Company or other escrow agent selected by Buyer and reasonably
acceptable to Transferors. Transferors shall deposit into such escrow an amount
in immediately available federal funds equal to the Balance, with the terms of
such escrow (subject to the terms of the following paragraph) being otherwise
agreed upon by Buyer and the escrow agent. All payments by Transferors pursuant
to this paragraph shall be made by wire transfer or bank check within thirty
(30) days after demand by Buyer. Payment to Buyer of the amounts set forth in
this Section 5.3(d) and, if applicable, deposit into escrow of the Balance,
shall satisfy Transferors' obligations in full under the terms and conditions of
this Section 5.3.

                  (e)    The escrow agreement described in Section 5.3(d) shall
provide that the amount in escrow or any portion thereof shall not be released
to Buyer except to the extent the escrow agent receives any one or combination
of the following: (i) a letter from Buyer's accountants indicating the maximum
amount that can be paid by the escrow agent to Buyer without causing Buyer (or
its member, as applicable) to fail to meet the requirements of Sections
856(c)(2) and 856(c)(3) of the Code, determined as if the payment of such amount
did not constitute Qualifying Income, in which case the escrow agent shall
release the amount indicated in such letter to Buyer, (ii) a letter from Buyer's
(or its member's, as applicable) counsel indicating that Buyer (or its member,
as applicable) received a ruling from the IRS holding that the receipt by Buyer
(or its member, as applicable) of the Termination Fee would either constitute
Qualifying Income or would be excluded from gross income within the meaning of
Sections 856(c)(2) and 856(c)(3) of the Code, in which case the escrow agent
shall release the Balance to Buyer, (iii) a letter from Buyer's (or its
member's, as applicable) counsel indicating that Buyer (or its member, as
applicable) received a ruling from the IRS holding that the receipt by Buyer (or
its member, as applicable) of the Balance following the receipt of and pursuant
to such ruling would not be deemed constructively received prior thereto or (iv)
an opinion of Buyer's (or


                                       27
<PAGE>   31

its member's, as applicable) legal counsel to the effect that the receipt by
Buyer (or its member, as applicable) of the Termination Fee would either
constitute Qualifying Income or would be excluded from gross income within the
meaning of Sections 856(c)(2) and 856(c)(3) of the Code, in which case the
escrow agent shall release the Balance to Buyer. Transferors agree to act
reasonably and cooperate with Buyer in order (x) to maximize the portion of the
Termination Fee that may be distributed to Buyer hereunder without causing Buyer
(or its member, as applicable) to fail to meet the requirements of Sections
856(c)(2) and 856(c)(3) of the Code or (y) to improve Buyer's (or its member's,
as applicable) chances of securing a favorable ruling described in this Section
5.3(e), provided that Transferors shall not be required to incur any
out-of-pocket costs in connection therewith. The escrow agreement shall also
provide that any portion of the Termination Fee then held in escrow after the
expiration of five (5) years from the date of the establishment of such escrow
shall be released by the escrow agent to Transferors. Transferors shall not be a
party (other than a contingent beneficiary as described above) to such escrow
arrangements and shall not bear any cost of or have liability resulting from
such escrow arrangements.

         SECTION 5.4     Letter of Credit. In lieu of depositing the Deposit in
cash pursuant to this Agreement, or after depositing the Deposit in cash, in
substitution for all or any portion of the cash Deposit, Buyer may deliver to
Title Company an unconditional and irrevocable letter of credit in favor of
Title Company, in form reasonably satisfactory to Transferors and Title Company,
drawn upon a state or national bank reasonably approved by Transferors and Title
Company, which letter of credit shall (i) expire no earlier than fifteen (15)
days after the scheduled Closing Date (as such date may be changed with respect
to all of the Properties or a particular Property pursuant to this Agreement),
(ii) be capable of being drawn on by Title Company upon demand (subject to
customary draw procedures and requirements) and (iii) otherwise be in form and
substance reasonably satisfactory to Transferors and Title Company (the "Letter
of Credit"). The Letter of Credit shall secure the faithful performance and
observance by Buyer of the terms, provisions, and conditions of this Agreement
in the same manner and to the same extent as the Deposit. The Letter of Credit
shall be held and disbursed by Title Company in the same manner as the Deposit,
except that:

                  (a)    if the term of the Letter of Credit will expire prior
to the then scheduled Closing Date (as such date may be changed with respect to
all of the Properties or a particular Property pursuant to this Agreement), and
such Letter of Credit is not extended or a new Letter of Credit for an extended
period of time is not substituted within five (5) business days prior to the
expiration date of the Letter of Credit, then Title Company shall make demand
for the principal amount of the Letter of Credit prior to the expiration date of
the Letter of Credit and hold such funds in the same manner as the Deposit
pursuant to this Agreement;

                  (b)    if Title Company continues to hold the Letter of Credit
at closing and the closing occurs as contemplated by this Agreement, subject to
(c) below such Letter of Credit shall be returned to Buyer at closing; and

                  (c)    in any instance in which a portion of the Deposit is to
be returned to Buyer pursuant to this Agreement or in which a closing occurs and
subsequent closings are contemplated due to the deferral of the closing with
respect to one or more of the Properties and in order to do so the amount of the
Letter of Credit would have to be reduced, the Title Company shall continue to
hold the Letter of Credit in the manner set forth in and subject to the
provisions


                                       28
<PAGE>   32

of this Section 5.4 until Buyer has provided a substitute Letter of Credit in
the amount of the Deposit as so reduced.


                                    ARTICLE 6
                                     CLOSING

         SECTION 6.1     Escrow Arrangements. One or more escrows (to the extent
more than one escrow is necessary to accommodate Transferors' 1031 Exchange(s))
for the purchase and sale contemplated by this Agreement shall be opened by
Buyer and Transferors with Title Company. At least one business day prior to the
Closing Date, Transferors and Buyer shall each deliver escrow instructions to
Title Company consistent with this Article VI, and designating Title Company as
the "Reporting Person" for the transaction pursuant to Section 6045(e) of the
Code. By signing below, Title Company agrees to act as the "Reporting Person"
for the transaction pursuant to Section 6045(e) of the Code and to complete and
file with the IRS Forms 1099-S (and furnish Buyer and Transferors with copies
thereof) on or before the due date therefor. In addition, the parties shall
deposit in escrow, at least one business day prior to the Closing Date (unless
otherwise provided below in this Section 6.1) the funds and documents described
below:

                  (a)    Transferors shall deposit (or cause to be deposited):

                         (i)       a duly executed and acknowledged deed
pertaining to the Real Property portion of each of the Properties, each in the
form attached to this Agreement as Exhibit I-A (collectively, the "Deeds");

                         (ii)      a duly executed bill of sale pertaining to
the Personal Property portion of each of the Properties, each in the form
attached to this Agreement as Exhibit I-B (collectively, the "Bills of Sale");

                         (iii)     a duly executed counterpart assignment and
assumption pertaining to the Intangible Property portion of each of the
Properties, each in the form attached to this Agreement as Exhibit I-C
(collectively, the "Assignments of Intangibles");

                         (iv)      a duly executed counterpart assignment and
assumption pertaining to the Leases, each in the form attached to this Agreement
as Exhibit I-D (collectively, the "Assignments of Leases");

                         (v) a certificate from each Transferors certifying the
information required by any of the states in which any of the Properties are
located to establish that the transaction contemplated by this Agreement is
exempt from the tax withholding requirements of such states (the "State
Certificates");

                         (vi)      a certificate from each Transferors
certifying the information required by 1445 of the Code to establish, for the
purposes of avoiding Buyer's tax withholding obligations, that Transferors is
not a "foreign person" as defined in 1445(f)(3) of the Code (the "FIRPTA
Certificate");


                                       29
<PAGE>   33

                          (vii)    a letter executed by each respective
Transferors and, if applicable, its respective management agent and the Buyer,
in form and substance satisfactory to Buyer, addressed to all tenants of each
respective Property, notifying all such tenants of the transfer of ownership of
the Property and directing payment of all rents accruing after the Closing Date
to be made to Buyer or such other party as Buyer directs (the "Tenant Notices");

                         (viii)    to the extent not previously delivered to
Buyer and in Buyer's possession or under its control, originals of any of the
Contracts, Leases, licenses, approvals, plans, specifications, warranties, other
Intangible Property and other books and records relating to the ownership and
operation of the Property (or if the original is not in the Transferors'
possession or control, copies thereof to the extent in Transferors' possession
or control);

                         (ix)      an updated Rent Roll for each Property in the
same format as was used for the Rent Rolls attached hereto as Exhibit E or in
such other format as is reasonably acceptable to Buyer dated no later than five
(5) days prior to closing, which updated Rent Roll will be used solely for the
purpose of (i) identifying all Leases at such Property as of the applicable
Closing Date and (ii) allowing the Title Company to issue Buyer's title
insurance policies subject to no exception for parties in possession other than
the Leases identified in the Rent Roll;

                         (x)       subject to the provisions of Section 2.6,
such affidavits as may be reasonably and customarily required by the Title
Company to issue the Title Policies in the form required hereby (including,
without limitation, without exception for parties-in-possession (other than
tenants under the Leases) or mechanics' or materialmen's liens which are to be
satisfied by Transferors pursuant to Section 2.6);

                         (xi)      the Remediation and Access Agreement (as
herein defined); and

                         (xii)     evidence reasonably satisfactory to the Title
Company as to the legal existence and authority of the Transferors and the
authority and incumbency of the persons signing documents on behalf of the
Transferors.

In addition, Transferors shall deliver to Buyer on the Closing Date, outside of
escrow, to the extent in Transferor's possession or control, the originals of
all Leases, Contracts and tenant files and all keys to the Properties.

                  (b)    Buyer shall deposit:

                         (i)       on or prior to the close of business on the
business day immediately prior to the Closing Date, immediately available funds
sufficient to pay the balance of the Price, plus sufficient additional cash to
pay Buyer's share of all escrow costs and closing expenses;

                         (ii)      a duly executed counterpart for each of the
Assignments of Intangibles, Assignments of Leases and Remediation and Access
Agreement (and Tenant Notices where required);


                                       30
<PAGE>   34

                         (iii)     a certificate duly executed by Buyer in favor
of Transferors confirming the waivers and acknowledgments set forth in Sections
2.5 and 4.4 above; and

                         (iv)      evidence reasonably satisfactory to Title
Company as to the legal existence and authority of the Buyer and the authority
and incumbency of the persons signing documents on behalf of the Buyer.

         SECTION 6.2     Title. Title Company shall close escrow on the Closing
Date by:

                  (a)    recording the Deeds;

                  (b)    issuing the owner's title policies to Buyer pursuant to
Section 3.1(a)(i) above;

                  (c)    delivering to Buyer originals of the Bills of Sale, the
FIRPTA Certificate, the State Certificates, executed counterparts of each of the
Assignments of Intangibles, Assignments of Leases and Remediation and Access
Agreement and all of the other documents in escrow under Section 6.1(a);

                  (d)    delivering to Transferors (or the exchange
facilitator(s), as applicable) (i) a counterpart for each of the Assignments of
Intangibles, the Assignments of Leases and the Remediation and Access Agreement
executed by Buyer, (ii) the certificate described in Section 6.1(b)(iii) above,
(iii) funds in the amount of the Sale Purchase Price, as adjusted for credits,
adjustments, prorations and closing costs in accordance with Section 2.3 and
this Article VI and as allocated pursuant to the direction of the Transferors
(upon which allocation Buyer and Title Company shall have the right to
conclusively rely) and (iv) funds in the amount of the Exchange Price, as
adjusted for credits, adjustments, prorations and closing costs in accordance
with Section 2.3 and this Article VI and as allocated pursuant to the direction
of the Transferors (upon which allocation Buyer and Title Company shall have the
right to conclusively rely); and

                  (e)    if directed by the parties, delivering the Tenant
Notices to the tenants by certified mail, return receipt requested.

         SECTION 6.3     Prorations.

                  (a)    Taxes. Real estate taxes, personal property taxes and
any general or special assessments with respect to the Properties which are not
the direct payment obligation of tenants pursuant to the Leases (as opposed to a
reimbursement obligation) shall be prorated as of the Closing Date -- to the end
that Transferors shall be responsible for all taxes and assessments that are
allocable to any period prior to the Closing Date and Buyer shall be responsible
for all taxes and assessments that are allocable to any period from and after
the Closing Date. Notwithstanding anything to the contrary contained herein, in
regards to Real Property located in the States of Illinois and Colorado, (A)
general real estate taxes which are not the direct or indirect (as a
reimbursement obligation) payment obligations of tenants pursuant to the Leases
and which are payable for the tax year prior to the tax year in which the
closing occurs and all prior years shall be paid by Transferors (including any
installments thereof payable after the Closing Date) and (B) general real estate
taxes which are not the direct or indirect (as a reimbursement obligation)
payment obligations of tenants pursuant to the Leases and which are


                                       31
<PAGE>   35

payable for the tax year in which the closing occurs shall be prorated by
Transferors and Buyer as of the Closing Date. If the actual amount of taxes,
assessments or other amounts to be prorated for the year in which the closing
occurs (and, with respect to Real Property located in Illinois and Colorado, for
the tax year prior to the tax year in which the closing occurs) is not known as
of the Closing Date, the proration shall be based on the parties' reasonable
estimates of such taxes, assessments and other amounts. To the extent any real
or personal property taxes subject to apportionment in accordance with the
foregoing are, as of the Closing Date, the subject of any appeal filed by or on
behalf of Transferors, then notwithstanding anything to the contrary contained
in this subparagraph, (i) no apportionment of the taxes being appealed shall
occur at the closing, but instead such apportionment shall be deferred until the
outcome of the appeal is final and the amount of taxes owing becomes fixed at
which time Transferors shall be responsible for all such taxes that are
allocable to any period prior to the Closing Date and Buyer shall be responsible
for all such taxes that are allocable to any period from and after the Closing
Date, and (ii) Transferors shall provide Buyer with adequate security, either in
the form of a bond or by escrowing the amounts being appealed, to assure Buyer
that Transferors' portion of such tax liability, including any penalty, will be
available. To the extent any taxes which are the subject of an appeal have been
paid by Transferors under protest and the appeal results in Buyer receiving a
credit toward future tax liability or a refund, then Buyer shall, within thirty
(30) days following receipt of such refund or notice of such credit, pay to
Transferors the full amount of such refund or credit allocable to the period
prior to the Closing Date, excluding, however, any portion of such refund or
credit that is required to be passed through to the tenants pursuant to any
Leases or to other parties by existing contract.

                  (b)    Prepaid Expenses. Buyer shall be charged for those
prepaid expenses paid by Transferors directly or indirectly allocable to any
period from and after the Closing Date, including, without limitation, annual
permit and confirmation fees, fees for licenses and all security or other
deposits paid by Transferors to third parties which Buyer elects to assume and
to which Buyer then shall be entitled to the benefits and refund following the
Closing Date.

                  (c)    Property Income and Expense. The following prorations
and adjustments shall occur as of the closing. Prior to the Closing Date,
Transferors shall provide all information to Buyer required to calculate such
prorations and adjustments and representatives of Buyer and Transferors shall
together make such calculations:

                         (i)       General. Subject to the specific provisions
of clauses (ii), (iii) and (iv) below, income and expense shall be prorated on
the basis of a 30-day month and on a cash basis (except for items of income and
expense that are payable less frequently than monthly, which shall be prorated
on an accrual basis). All such items attributable to the period prior to the
Closing Date shall be credited to Transferors; all such items attributable to
the period on and following the Closing Date shall be credited to Buyer. Buyer
shall be credited in escrow with (a) any portion of rental agreement or lease
deposits which are refundable to the tenants and have not been applied to
outstanding tenant obligations in accordance with the terms of the applicable
Lease and (b) rent prepaid beyond the Closing Date. Transferors shall transfer
Transferors entire interest in any letters of credit or certificates of deposit
held by Transferors as the deposits described in clause (a) above and shall
diligently cooperate with Buyer in obtaining any reissuance or confirmation of
the effect of the transfer of such instruments. Buyer shall not be entitled to
any interest on rental agreement or lease deposits or prepaid rent accrued on or
before


                                       32
<PAGE>   36

the Closing Date, except to the extent any such amount of interest is refundable
or payable to any tenant under a Lease or applicable law. Transferors shall be
credited in escrow with any refundable deposits or bonds held by any utility,
governmental agency or service contractor, to the extent such deposits or bonds
are assigned to Buyer on the Closing Date.

                         (ii)      Leasing Costs. Subject to the provisions of
Section 6.9 below, Buyer shall be credited in escrow with any leasing
commissions, tenant improvements or other allowances to be paid by Buyer on or
after the Closing Date with respect to the current term of any Lease or Lease
modification executed, or any extension term or expansion of premises exercised,
in each case, on or before March 1, 1999, and Transferors shall pay on or before
the Closing Date all such items payable prior to the Closing Date.
Notwithstanding the provisions of the immediately following sentence, with
respect to any new Leases or Lease modifications executed after March 1, 1999
with respect to any of the space identified on Exhibit S attached hereto which
are permitted under the terms of this Agreement ("Vacant Space"), Transferors
shall be credited in escrow with the amount of any leasing commissions, tenant
improvements or other allowances paid by Transferors after March 1, 1999. Buyer
shall receive a credit at closing against the Price in the amount of $7.00 per
square foot of Vacant Space, whether or not such space is leased prior to
closing. With respect to any space which is not Vacant Space, subject to Section
6.9 Transferors shall be credited in escrow with an amount equal to (A) the
amount of any leasing commissions, tenant improvement and other allowances paid
by Transferors after March 1, 1999 to the extent such items relate to new Leases
or Lease modifications executed or extensions of terms or expansions of premises
that are exercised after March 1, 1999 and permitted under the terms of this
Agreement, multiplied by (B) a fraction in which the numerator is the number of
months or partial months of the stabilized term (i.e., the term following the
tenant's entry into occupancy and commencement of unabated rental obligations)
of any such Lease following the Closing Date and the denominator is the number
of months or partial months in the stabilized term of such Lease. Buyer shall
assume all obligations for any leasing commissions, tenant improvement or other
allowances payable following the Closing Date with respect to Leases or Lease
modifications executed or extensions of terms or expansions of premises that are
exercised following March 1, 1999 and which are permitted under the terms of
this Agreement; provided, that as to any such leasing commissions not disclosed
to Buyer in the Disclosure Materials List & Statement or the Disclosure
Materials or approved or deemed approved by Buyer pursuant to this Agreement or
which are not expressly assumed by Buyer under any other provision of this
Agreement, Buyer shall only be obligated to pay the market rate commission for
the applicable Lease (and Transferors shall remain responsible for any above
market component of such commission). Any expenditures or commitments to
expenditures relating to Leases or modifications or extensions of terms or
expansions of premises executed following March 1, 1999 in excess of the amounts
budgeted and approved as part of Buyer's approval of the Lease (where such
approval is required) shall be subject to Buyer's specific approval, which shall
not be unreasonably withheld and shall be deemed given if Buyer should fail to
approve or disapprove such excess expenditure within 5 business days following
Transferors' written request and delivery of material information reasonably
necessary to allow Buyer to make an informed decision.

                         (iii)     Rents. Rents payable by tenants under the
Leases, shall be prorated as and when collected (whether such collection occurs
prior to, on, or after the Closing Date). Buyer shall receive a credit for the
amounts actually received before the Closing Date and


                                       33
<PAGE>   37

which pertain to any period after the Closing Date. Buyer shall not receive a
credit at the closing for any rents for the month in which the closing occurs
which are in arrears and have not then been received. As to any tenants who are
delinquent in the payment of rent on the Closing Date, Buyer shall use
reasonable efforts (but shall not be required to commence legal action or
terminate or evict a tenant) to collect or cause to be collected such delinquent
rents following the Closing Date. Any and all rents so collected by Buyer
following the closing (less a deduction for all reasonable collection costs and
expenses incurred by Buyer) shall be successively applied (after deduction for
Buyer's reasonable collection costs) to the payment of (x) rent due and payable
in the month in which the closing occurs, (y) rent due and payable in the months
succeeding the month in which the closing occurs (through and including the
month in which payment is made) and (z) rent due and payable in the months
preceding the month in which the closing occurs. If all or part of any rents or
other charges received by Buyer following the closing are allocable to
Transferors pursuant to the foregoing sentence, then such sums shall be promptly
paid to Transferors. Transferors reserve the right to pursue any damages remedy
Transferors may have against any tenant with respect to such delinquent rents,
but shall have no right to exercise any other remedy under the Lease (including,
without limitation, termination or eviction).

                         (iv)      Additional Rents. Any percentage rent,
escalation charges for real estate taxes, parking charges, operating and
maintenance expenses, escalation rents or charges, electricity charges, cost of
living increases or any other charges of a similar nature other than fixed or
base rent under the Leases (collectively, the "Additional Rents") shall be
prorated as of the Closing Date between Buyer and Transferors on or before the
date which is ninety (90) days following the end of the calendar year in which
the closing occurs based on the actual number of days of the year and month
which shall have elapsed as of the Closing Date. Prior to the end of the
calendar year in which the closing occurs, Transferors shall provide Buyer with
information regarding Additional Rents which were received by Transferors prior
to closing and the amount of reimbursable expenses paid by Transferors prior to
closing. On or before the date which is sixty (60) days following the end of the
calendar year in which the closing occurs, Buyer shall deliver to Transferors a
reconciliation of all expenses reimbursable by tenants under the Leases, and the
amount of Additional Rents received by Transferors and Buyer relating thereto
(the "Reconciliation"). Upon reasonable notice and during normal business hours,
each party shall make available to the other all information reasonably required
to confirm the Reconciliation. In the event of any overpayment of Additional
Rents by the tenants to Transferors, Transferors shall promptly, but in no event
later than fifteen (15) days after receipt of the Reconciliation, pay to Buyer
the amount of such overpayment and Buyer, as the landlord under the particular
Leases, shall pay or credit to each applicable tenant the amount of such
overpayment. In the event of an underpayment of Additional Rents by the tenants
to Transferors, Buyer shall pay to Transferors the amount of such underpayment
within fifteen (15) days following Buyer's receipt of any such amounts from the
tenants.

                  (d)    Adjustments to Prorations. Subject to Section 6.3(a)
and 6.3(c)(iv) above, after the closing, the parties shall from time to time, as
soon as is practicable after accurate information becomes available and in any
event within 180 days following the Closing Date, recalculate and reapportion
any of the items subject to proration or apportionment (i) which were not
prorated and apportioned at the closing because of the unavailability of the
information necessary to compute such proration, or (ii) which were prorated or
apportioned at the closing


                                       34
<PAGE>   38


based upon estimated or incomplete information, or (iii) for which any errors or
omissions in computing prorations at the closing are discovered subsequent
thereto, and thereafter the proper party shall be reimbursed based on the
results of such recalculation and reapportionment. Unless otherwise specified
herein, all such reimbursements shall be made on or before thirty (30) days
after receipt of notice of the amount due. Any such reimbursements not timely
paid shall bear interest at a per annum rate equal to ten percent (10%) from the
due date until all such unpaid sums together with all interest accrued thereon
is paid if payment is not made within ten (10) days after receipt of a bill
therefor.

                  (e)    Prior Year's Reconciliation. If the closing occurs
before Transferors have performed the annual reconciliation of Additional Rent
for the calendar year immediately preceding the calendar year in which the
closing occurs, then Transferors shall, as soon as practicable after closing,
perform such reconciliation at its sole cost and expense. Upon completion of
such annual reconciliation, Transferors shall immediately deliver to Buyer a
detailed description of any Additional Rent which are payable by or reimbursable
to any present tenant (the "Prior Year Reconciliation"). The Prior Year
Reconciliation shall be accompanied by all applicable back-up documentation,
together with Transferors' check for such Additional Rent which is reimbursable
to a tenant. Based upon Transferors' calculations, Buyer shall send customary
statements for reimbursement of Additional Rent to tenants under the Leases
based on the Prior Year Reconciliation, and shall remit to Transferors within
thirty (30) days of receipt, all sums so collected. If Transferors' calculations
show that Additional Rent has been overpaid by any present tenant and
Transferors have submitted its check to Buyer for such amounts, Buyer shall
refund such Additional Rent to such tenant.

                  (f)    Survival. The provisions of this Section 6.3 shall
survive the closing.

         SECTION 6.4     Other Closing Costs.

                  (a)    The premium payable in connection with the issuance of
the Title Policies, governmental documentary transfer or transaction taxes or
fees due on the transfer of the Properties, recording costs, and, except as
otherwise provided below, other closing costs shall be paid by Transferors and
Buyer according to custom in the county in which the applicable Property is
located as set forth on Exhibit D attached hereto.

                  (b)    Transferors shall pay 50% of any escrow or other costs
charged by or reimbursable to the Title Company; provided, however that
additional costs to create multiple escrows to accommodate 1031 Exchanges shall
be borne by the party requesting such multiple escrows.

                  (c)    Buyer shall pay 50% of any escrow or other costs
charged by or reimbursable to the Title Company; provided, however that
additional costs to create multiple escrows to accommodate 1031 Exchanges shall
be borne by the party requesting such multiple escrows.

         SECTION 6.5     Further Documentation. At or following the close of
escrow, Buyer and Transferors shall execute any certificate, memoranda,
assignment or other instruments required by this Agreement, law or local custom
or otherwise reasonably requested by the other party to


                                       35
<PAGE>   39

effect the transactions contemplated by this Agreement and shall take such other
actions (but at no material cost or expense) as are reasonably requested by the
other party to effect the transactions contemplated by this Agreement.

         SECTION 6.6     Cooperation in Exchange. The parties acknowledge and
agree that Exchangors have elected (with respect to the Exchange Properties) and
Buyer may elect (with respect to the Properties) to assign their interest in
this Agreement to an exchange facilitator by means of one or more escrows for
the purpose of completing an exchange of such Properties or interests in such
Properties in a transaction which will qualify for treatment as a tax deferred
exchange pursuant to the provisions of Section 1031 of the Internal Revenue Code
of 1986 and applicable state revenue and taxation code sections (a "1031
Exchange"). Each party agrees to reasonably cooperate with any party so electing
in implementing any such assignment and 1031 Exchange, provided that such
cooperation shall not entail any material additional expense to the non-electing
party, cause such party to take title to any other property or cause such party
exposure to any liability or loss of rights or benefits contemplated by this
Agreement, and the electing party shall indemnify, defend and hold the
non-electing party harmless from any liability, damage, loss, cost or other
expense including, without limitation, reasonable attorneys' fees and costs,
resulting or arising from the implementation of any such assignment and 1031
Exchange. No such assignment by any party shall relieve such party from any of
its obligations hereunder, nor shall such party's ability to consummate a tax
deferred exchange be a condition to the performance of such party's obligations
under this Agreement.

         SECTION 6.7     Environmental Matters.

                  (a)    Buyer and Transferors acknowledge and agree that
Transferors shall transfer and assign to Buyer at the closing (to the extent
assignable), as part of the Intangible Property, Transferors' rights and
interests in and to any indemnifications or covenants from third parties (other
than any rights of Transferors under any of Transferors' environmental insurance
policies, which rights are expressly not assigned to Buyer under this Agreement
except as expressly otherwise set forth below) relating to the environmental
condition of the Properties (reserving solely Transferors' rights to the benefit
of such indemnifications and covenants protecting Transferors with respect to
Transferors' ownership of the Properties), including, without limitation, those
indemnity agreements shown on Exhibit O. Following the closing, Buyer and
Transferors shall cooperate in the pursuit of any and all claims arising under
such instruments, which cooperation shall include, as required, Transferors'
expression and pursuit of claims for the benefit of Buyer -- provided that such
pursuit is at Buyer's sole cost and expense and does not expose Transferors to
additional liability. Notwithstanding the foregoing, with respect to the
Property described on Exhibit U-1 attached hereto, to the extent assignable and
subject to obtaining the consent of the applicable insurer, at closing
Transferors shall assign all of their right, title and interest in the
environmental insurance policy described on Exhibit U-2 and Transferors shall be
named as an additional insured under such policy; provided, that the assignment
of such policy shall not constitute a condition of closing under this Agreement.

                  (b)    With respect to the Property described on Exhibit U-3,
Transferors shall use reasonable efforts to obtain on or before closing (but
without any liability whatsoever if they are unable to do so except as set forth
below), a no further action letter (which letter shall be permitted to contain
customary qualifications and exclusions, such as a right of the lead


                                       36
<PAGE>   40

regulatory agency to reopen its investigation based on additional information,
and may be a risk based no further action letter) from the lead regulatory
agency in connection with the known contamination located on such Property as
more particularly described on Exhibit U-3 (an "NFA letter"). If Transferors are
not able to deliver to Buyer an NFA Letter with respect to any such Property on
or before the closing, then Transferors shall execute and deliver to Buyer at
closing with respect to such Property as to which no NFA Letter has been
obtained, a remediation and access agreement in the form attached as Exhibit U-4
(the "Remediation and Access Agreement").

         SECTION 6.8     Environmental Insurance Deductibles. The parties hereto
acknowledge that Buyer intends to obtain environmental insurance ("Environmental
Insurance") for the Properties listed on Exhibit Q attached hereto (the "Insured
Properties"). If a loss occurs under the Environmental Insurance and to the
extent such loss is a result of environmental contamination or a release of
Hazardous Materials determined to have been present or to have occurred at an
Insured Property on or before the Closing Date (a "Loss"), then Transferors
shall reimburse to Buyer eighty percent (80%) of any amounts actually incurred
by Buyer with respect to such Loss (as substantiated by written invoices or
other evidence reasonably satisfactory to Transferors) as a result of the
application of the deductible under the Environmental Insurance for such Insured
Property, but in no event shall Transferors' liability exceed eighty thousand
dollars ($80,000) in the aggregate with respect to all Losses at any one Insured
Property. Buyer agrees not to take any affirmative actions which would or could
reasonably be expected to result in a Loss, such as performing a Phase II
environmental assessment, unless required to do so in writing by a lender,
rating agency, new material equity investor, a governmental authority or tenant
(but with respect to any of the foregoing persons, only after Buyer has used
commercially reasonable efforts to find a suitable alternative to taking any
such affirmative actions, such as naming such party as an additional insured
under Buyer's environmental insurance policy or providing such party with an
environmental indemnity) or based on a reasonable belief that a release of
Hazardous Materials (other than with respect to a matter disclosed in the
environmental reports included in the Disclosure Materials) has occurred
(provided, that the mere existence of a dry cleaner at the Property is not in
and of itself sufficient to constitute such a "reasonable belief"), and in any
event will not do so without providing Transferors at least ten (10) days prior
written notice to review the scope of such action; provided, that the foregoing
prohibition on Buyer taking affirmative actions shall not apply with respect to
a Property from and after the two (2) year anniversary of the Closing Date for
such Property. The obligation of Transferors to reimburse Buyer under this
Section 6.8 shall apply only to Losses for a particular Property as to which
Transferors receive written notice from Buyer on or before the two (2) year
anniversary of the Closing Date for such Property.

         SECTION 6.9     Completion Events.

                  (a)    With respect to the Property described on Exhibit R
attached hereto (the "SWP Property"), Transferors shall use commercially
reasonable efforts to obtain title to such Property on or before the closing so
as to allow Transferors to convey such Property to Buyer in a condition as will
enable Buyer to obtain an Owner's Title Policy for such Property (including
endorsements and exceptions) substantially similar to the form of Owner's title
policy obtained by Buyer with respect to the Property acquired by Buyer in this
transaction which is most proximate to the SWP Property. Buyer has informed
Transferors that Buyer intends to ground


                                       37
<PAGE>   41

lease the SWP Property and Transferors agree that Buyer can take the lead role
in any negotiations with a potential ground lessee, subject to the reasonable
approval of Transferors as to the terms of any such ground lease; provided, that
if Buyer acquires the SWP Property, then Buyer shall assume all obligations for
any site improvements to be performed by or at the expense of the ground lessor
and Transferors shall receive a credit for any sums expended by Transferors
prior to the closing and at the request of Buyer or pursuant to a ground lease
approved by Buyer with respect to any such site work. If Transferors are unable
to obtain title to the SWP Property on or before the closing, then the SWP
Property shall be treated as a Deferred Property, Transferors shall thereafter
use reasonable efforts (without any obligation to expend any funds) to obtain
title to the SWP Property and the closing for such Property shall be deferred
for a period of up to one (1) year to allow transferors to obtain such title, in
which event (i) the Price payable on the Closing Date applicable to all other
Properties shall be reduced by the Allocated Price of such Property, and (ii) an
amount equal to five percent (5%) of the Allocated Price for such Property shall
be retained by Title Company as a continuing Deposit subject to disposition in
accordance with Section 5.1 above as to such Property (provided that if
Transferors have not obtained a binding commitment from the title holder to
convey such Property to Transferors (or Buyer as Transferors' designee), Buyer
shall not be obligated to post a continuing Deposit until such binding agreement
is obtained and delivered to Buyer). If the closing for such Property occurs,
then at such closing Buyer shall receive a credit against the Allocated Price
for such Property in the amount of $250,000.

                  (b)    General Provisions. All work performed by Transferors
under this Section 6.9 shall be performed in a good and workmanlike manner
substantially in accordance with all applicable laws. Nothing in this Section
6.9 is intended to limit or expand Buyer's approval rights contained in Section
4.2(c) or (d).

         SECTION 6.10    Transferors' Covenant of Cooperation. Transferors
hereby agree to reasonably cooperate with Buyer or Buyer's auditors, at no
expense, liability or substantial accounting time to Transferors, prior to and
after the closing (but subject to the provisions of Section 2.4) (i) by
providing financial data pertaining to the Properties to the extent required by
the Securities and Exchange Commission ("SEC") or reasonably required to prepare
filings that Buyer intends to file with the SEC, including (to the extent so
required) the documentation requested on Exhibit T-1 (but without duplication of
any of the documents listed in the Disclosure Material List & Statement or
contained in the Disclosure Materials so long as continued access is provided to
such documents as were not delivered to Buyer) as it relates to the one (1) year
period immediately preceding the closing, and (ii) in delivering to Buyer's
auditors a certificate in the form of Exhibit T-2. Transferors shall provide
such documentation and deliver such certificate in each instance within ten (10)
business days after receipt of Buyer's reasonable request to do so. Without
limiting Transferors' representations and warranties contained in this Agreement
or Transferors' covenants contained in Section 4.2 or in any document executed
and delivered to Buyer by Transferors at closing, Buyer shall indemnify and hold
Transferors harmless from and against any and all claims, liabilities, losses,
damages, causes of action, costs and expenses (including, without limitation,
reasonable attorneys' fees and costs) to the extent relating to or arising out
of Transferors' performance of its obligations under this Section 6.10,
including, without limitation, any claims arising out of the reliance by third
parties, including Buyer's auditors, on information provided by Transferors
under this Section 6.10. The provisions of this Section 6.10 shall survive the
closing


                                       38
<PAGE>   42

         SECTION 6.11    UCC Financing Statements. If Buyer provides evidence
during the Confirmation Period of any UCC Financing Statements naming a
Transferor or any of its affiliates as debtor and encumbering a Property
(whether in connection with mortgages, deeds of trust or personal property
financings which are not assumed by Buyer), then Transferors shall use
reasonable efforts to cause the release of such UCC Financing Statements as soon
as practicable after the closing.


                                    ARTICLE 7
                                  MISCELLANEOUS

         SECTION 7.1     Damage or Destruction.

                  (a)    Buyer shall be bound to purchase each of the Properties
as required by the terms of this Agreement without regard to the occurrence or
effect of any damage to or destruction of any of the Properties or condemnation
of any Property by right of eminent domain, provided that the occurrence of any
damage or destruction involves repair costs of less than the greater of
$1,000,000 or ten percent (10%) of the Property's Allocated Price, and any
condemnation does not materially affect the use or value of the affected
Property. If Buyer is so bound to purchase a Property notwithstanding the
occurrence of damage, destruction or condemnation, or if Buyer fails to elect to
treat the applicable Property as a Deleted Property pursuant to Section 7.1(b)
below then upon the closing: (i) in the event of damage covered by insurance or
an immaterial condemnation, Buyer shall receive a credit against the Allocated
Price for such Property in the amount (net of collection costs and costs of
repair reasonably incurred by Transferors and not then reimbursed) of any
insurance proceeds or condemnation award collected and retained by Transferors
as a result of any such damage or destruction or condemnation plus (in the case
of damage) the amount of the deductible portion of Transferors' insurance
policy, and Transferors shall assign to Buyer all rights to such net insurance
proceeds or condemnation awards as shall not have been collected prior to the
close of escrow; and (ii) in the event of damage not covered by insurance, Buyer
shall receive a credit (not to exceed the greater of $1,000,000 or ten percent
(10%) of the Property's Allocated Price for each affected Property) in the
amount of the estimated cost to repair the damage.

                  (b)    If, prior to the Closing Date, any Property suffers
damage or destruction that involves repair costs in excess of the greater of
$1,000,000 or ten percent (10%) of the Property's Allocated Price or
condemnation which affects the use or value of the Property in other than a
minor and immaterial manner, then Buyer may elect to treat such Property as a
Deleted Property by giving written notice of such election to Transferors
promptly following Buyer's knowledge of the event and extent of damage,
destruction or condemnation. In the event of the deletion of any Property
pursuant to this Section 7.1(b), the parties shall be bound to consummate the
purchase and sale of the balance of the Properties in accordance with this
Agreement and the Price shall be reduced by an amount equal to the Allocated
Price of the Deleted Property.

         SECTION 7.2     Fees & Commissions.

                  (a)    Each party to this Agreement warrants to the other
that, except as otherwise provided in subparagraph (b) below, no person or
entity can properly claim a right to a


                                       39
<PAGE>   43

real estate or investment banker's commission, finder's fee, acquisition fee or
other brokerage-type compensation (collectively, "Real Estate Compensation")
based upon the acts of that party with respect to the transaction contemplated
by this Agreement. Each party hereby agrees to indemnify and defend the other
against and to hold the other harmless from any and all loss, cost, liability or
expense (including but not limited to attorneys' fees and returned commissions)
resulting from any claim for Real Estate Compensation by any person or entity
based upon such acts.

                  (b)    The parties hereby acknowledge that Morgan Stanley Dean
Witter has acted as Transferors' investment bankers in connection with this
transaction. Transferors shall be responsible for paying any commission or fees
due to such parties in connection with this transaction.

         SECTION 7.3     Successors and Assigns. Buyer may not assign any of
Buyer's rights or duties hereunder without the prior written consent of
Transferors, which may be withheld in Transferors' sole discretion; provided,
however, that Buyer shall have the right to assign all or a portion of its
rights hereunder to an entity which is at least 75% owned, directly or
indirectly, by Buyer, without the prior consent of Transferors, except that any
such assignment to such an affiliate of Buyer shall not relieve Buyer of any of
its obligations under this Agreement.

         SECTION 7.4     Notices. Any notice, consent or approval (or request
for consent or approval) required or permitted to be given under this Agreement
shall be in writing and shall be given or requested by (i) hand delivery, (ii)
Federal Express or another reliable overnight courier service, (iii) facsimile
telecopy, or (iv) United States mail, registered or certified mail, postage
prepaid, return receipt required, and addressed as follows:

To Transferors:

         c/o AMB Property, L.P.
         505 Montgomery Street, Fifth Floor
         San Francisco, CA 94111
         Attn:  W. Blake Baird
         Fax No.:  (415) 394-9001

         and

         AMB Property, L.P.
         505 Montgomery Street, Fifth Floor
         San Francisco, CA 94111
         Attn:  General Counsel
         Fax No.:  (415) 394-9001

         with a copy to:
         Morrison & Foerster LLP
         755 Page Mill Road
         Palo Alto, California  94304-1018


                                       40
<PAGE>   44

         Attn:  Philip J. Levine
         Fax No.:  (650) 494-0792

To Buyer:

         Burnham Pacific Properties, Inc.
         100 Bush Street, Suite 2400
         San Francisco, CA  94104
         Attn:  General Counsel
         Fax No.: (650) 352-1711

         with a copy to:

         David Krotine, Esq.
         McDonough, Holland & Allen
         5555 Capitol Mall, 9th Flr.
         Sacramento, CA 94814
         Fax No.:  (916) 444-5918

         with a copy to:

         Goodwin, Procter & Hoar LLP
         Exchange Place
         Boston, MA 02109-2881
         Attn:  Christopher B. Barker, P.C.
         Fax No.:  617-227-8591

Any such notice, consent or approval (or request for consent or approval) shall
be deemed given or requested (i) if given by hand delivery, upon such hand
delivery, (ii) one (1) business day after being deposited with Federal Express
or another reliable overnight courier service, (iii) if sent by facsimile, the
day the facsimile is successfully transmitted, or (iv) if sent by registered or
certified mail, three (3) business days after being deposited in the United
States mail. Any address or name specified above may be changed by notice given
to the addressee by the other party in accordance with this Section 7.4. The
inability to deliver because of a changed address of which no notice was given,
or rejection or other refusal to accept any notice, shall be deemed to be the
receipt of the notice as of the date of such inability to deliver or rejection
or refusal to accept. Any notice to be given by any party hereto may be given by
the counsel for such party.

         SECTION 7.5 ARBITRATION OF DISPUTES. CONTROVERSIES OR CLAIMS TO BE
SUBMITTED TO ARBITRATION PURSUANT TO SECTIONS 2.5, 2.6 OR 6.9 ABOVE SHALL BE
RESOLVED BY ARBITRATION CONDUCTED IN ACCORDANCE WITH THE CALIFORNIA CODE OF
CIVIL PROCEDURE SECTION 1280 ET SEQ. AND UNDER THE REAL ESTATE INDUSTRY RULES OF
THE AMERICAN ARBITRATION ASSOCIATION ("AAA RULES"), EXCEPT THAT WITH RESPECT TO
ANY INSTANCE IN WHICH THE ARBITRATION RELATES SOLELY TO A DISPUTE OVER THE
AMOUNT OF A PRICE ADJUSTMENT, ANY SUCH ARBITRATION SHALL BE SO CALLED
"BASEBALL-STYLE" SUCH THAT EACH PARTY SHALL STATE A SINGLE AMOUNT AS ITS


                                       41
<PAGE>   45

POSITION ON THE ISSUE BEING ARBITRATED AND A SINGLE ARBITRATOR SHALL BE REQUIRED
TO SELECT ONE OF THE AMOUNTS STATED BY THE PARTIES, AND SHALL HAVE NO RIGHT TO
DECIDE A DIFFERENT AMOUNT OR OTHERWISE TAKE A DIFFERENT POSITION. THE
ARBITRATOR(S) SHALL GIVE EFFECT TO SUBSTANTIVE AND PROCEDURAL LAW OF THE STATE
OF CALIFORNIA INCLUDING, WITHOUT LIMITATION, THE STATUTES OF LIMITATION IN
DETERMINING ANY CLAIM (BUT EXCLUDING PRINCIPLES RELATING TO CONFLICTS OF LAWS).
ANY CONTROVERSY CONCERNING WHETHER AN ISSUE IS ARBITRABLE SHALL BE DETERMINED BY
THE ARBITRATOR(S). ALL DECISIONS BY THE ARBITRATOR(S) SHALL BE IN WRITING AND
COPIES OF THE DECISIONS SHALL BE DELIVERED TO EACH PARTY.

ARBITRATION SHALL TAKE PLACE IN SAN FRANCISCO, CALIFORNIA AT A LOCATION MUTUALLY
ACCEPTABLE TO THE PARTIES OR AS DESIGNATED BY THE ARBITRATOR(S) IF THE PARTIES
CANNOT AGREE ON A LOCATION. THE DECISION BY THE ARBITRATOR(S) SHALL BE ISSUED NO
LATER THAN SIXTY (60) DAYS AFTER THE DATE ON WHICH THE INITIATING PARTY GIVES
WRITTEN NOTICE TO THE OTHER PARTY OF ITS INTENTION TO ARBITRATE, WHICH NOTICE
SHALL COMPLY WITH THE REQUIREMENTS OF THE AAA RULES AND THREE COPIES OF SUCH
NOTICE SHALL BE FILED AT THE REGIONAL OFFICE OF AAA IN SAN FRANCISCO, CALIFORNIA
AS PROVIDED IN THE AAA RULES.

JUDGMENT UPON THE ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING
JURISDICTION. THE INSTITUTION AND MAINTENANCE OF AN ACTION FOR JUDICIAL RELIEF
OR PURSUIT OF A PROVISIONAL OR ANCILLARY REMEDY SHALL NOT CONSTITUTE A WAIVER OF
THE RIGHT OF ANY PARTY, INCLUDING THE PLAINTIFF, TO SUBMIT THE CONTROVERSY OR
CLAIM TO ARBITRATION IF ANY OTHER PARTY CONTESTS SUCH ACTION FOR JUDICIAL
RELIEF.

NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE
ARISING OUT OF THE MATTERS INCLUDED IN THE `ARBITRATION OF DISPUTES' PROVISION
DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING
UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY
TRIAL. BY INITIALING IN THE SPACE BELOW, YOU ARE GIVING UP YOUR JUDICIAL RIGHTS
TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE
`ARBITRATION OF DISPUTES' PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION
AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE
AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS
ARBITRATION PROVISION IS VOLUNTARY.

WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING
OUT OF THE MATTERS INCLUDED IN THE `ARBITRATION OF DISPUTES' PROVISION TO
NEUTRAL ARBITRATION.


                                       42
<PAGE>   46

_______________________             _____________________________

BUYER'S INITIALS                    TRANSFEROR'S INITIALS



         SECTION 7.6     Entire Agreement. Excepting solely the Confidentiality
Agreements, this Agreement and the attached exhibits, which are by this
reference incorporated herein, and all documents in the nature of such exhibits,
when executed, contain the entire understanding of the parties and supersede any
and all other written or oral understanding.

         SECTION 7.7     Time. Time is of the essence of every provision
contained in this Agreement.

         SECTION 7.8     Incorporation by Reference. All of the exhibits
attached to this Agreement or referred to herein and all documents in the nature
of such exhibits, when executed, are by this reference incorporated in and made
a part of this Agreement.

         SECTION 7.9     Attorneys' Fees. In the event any dispute between Buyer
and any of Transferors should result in litigation or arbitration, including,
without limitation, arbitration pursuant to Section 7.5 above, the prevailing
party shall be reimbursed for all reasonable costs incurred in connection with
such litigation or arbitration, including, without limitation, reasonable
attorneys' fees and costs.

         SECTION 7.10    Construction. The parties acknowledge that each party
and its counsel have reviewed and revised this Agreement and that the normal
rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of this
Agreement or any amendments or exhibits hereto.

         SECTION 7.11    Governing Law. This Agreement shall be construed and
interpreted in accordance with and shall be governed and enforced in all
respects according to the laws of the State of California (without giving effect
to conflicts of laws principles).

         SECTION 7.12    Operating Records. Each party agrees to make available
to the other party from time to time, but not more frequently than quarterly,
upon reasonable notice, for a period of two years following the Closing Date,
such party's operating records for the Properties, to the extent such party has
operating records, in order to permit the requesting party to prepare such
historical financial statements for the Properties as such party requires to
satisfy legal or contractual obligations. The party making its operating records
available shall have no obligation to prepare any operating statements or incur
any expense in connection with the provisions of this section.

         SECTION 7.13    Confidentiality. Buyer and Transferors each acknowledge
and agree that this Agreement and the terms and conditions set forth are to be
kept confidential unless and until the closing occurs on the Closing Date in
accordance with and subject to the terms of this Section 7.13 and the
Confidentiality Agreements. Without limiting the obligations of Buyer's
constituent partners under the Confidentiality Agreements, each party shall be
entitled to discuss and disclose the transaction with employees, agents,
consultants, lenders, clients and


                                       43
<PAGE>   47

representatives of such party -- each of whom shall be directed by the
disclosing party to maintain such information in confidence. Notwithstanding
anything to the contrary contained in this Section 7.13, following the full
execution of this Agreement and Buyer's delivery of the Deposit to Title
Company, the parties shall issue a joint press release with respect to this
transaction, which press release shall be in the form attached hereto as Exhibit
J. The Transferors agree that nothing in this Section shall prevent Buyer from
disclosing any information otherwise deemed confidential under this Section (i)
in connection with Buyer's enforcement of its rights hereunder or (ii) pursuant
to any legal requirement applicable to Buyer, including, without limitation, any
securities laws, any reporting requirement or any accounting or auditing
standard.

         SECTION 7.14    Counterparts. This Agreement may be executed in one or
more counterparts. All counterparts so executed shall constitute one contract,
binding on all parties, even though all parties are not signatory to the same
counterpart.

         SECTION 7.15    Transferors' Representative. Buyer shall be entitled to
rely upon any notice, approval or decision expressed by any of the Knowledge
Persons acting alone on behalf of all of the Transferors.

         SECTION 7.16    No Liability. Notwithstanding anything to the contrary
contained herein, in no event shall Calpers, which is a constituent member of
Buyer, or any of its trustees, directors or employees, have any personal
liability under this Agreement.

         SECTION 7.17    Escrow Provisions.

                  (a)    By its signature below, Title Company acknowledges
receipt of the Deposit (whether in the form of cash or a Letter of Credit).
Title Company agrees to hold the Deposit (whether in the form of cash or a
Letter of Credit) in escrow pursuant to the provisions of this Agreement for
application in accordance with the provisions of this Agreement, including the
following terms:

                         (1)  Title Company shall have no duties or
responsibilities other than those expressly set forth in this Agreement. Title
Company shall have no duty to enforce any obligation of any person to make any
payment or delivery or to enforce any obligation of any person to perform any
other act. Title Company shall be under no liability to the other parties hereto
or to anyone else by reason of any failure on the part of any party hereto or
any maker, guarantor, endorser or other signatory of any document or any other
person to perform such person's obligations under any such document. Except for
this Agreement, amendments to this Agreement executed by Transferors and Buyer
and except for joint written instructions given to Title Company by Transferors
and Buyer relating to the Deposit, Title Company shall not be obligated to
recognize any agreement between any or all of the persons referred to herein,
notwithstanding that references thereto may be made herein and whether or not it
has knowledge thereof.

                         (2)  In its capacity as Title Company, Title Company
shall not be responsible for the genuineness or validity of any security,
instrument, document or item deposited with it and shall have no responsibility
other than to faithfully follow the instructions


                                       44
<PAGE>   48

contained in this Agreement, and subject to the terms hereof, it is fully
protected in acting in accordance with any written instrument given to it
hereunder by any of the parties hereto and believed by Title Company to have
been signed by the proper person. Title Company may assume that any person
purporting to give any notice hereunder has been duly authorized to do so. Title
Company is acting as a stakeholder only with respect to the Deposit. If there is
any dispute or uncertainty concerning any action to be taken hereunder, Title
Company shall have the right to take no action (other than to make demand for
the principal amount of any portion of the Deposit in the form of a Letter of
Credit as may be required under this Agreement which demand shall be made as so
required by this Agreement notwithstanding any contrary instructions by Buyer
unless approved in writing by Transferors) until it shall have received
instructions in writing approved by Transferors and Buyer or until directed by a
final order of judgment of a court of competent jurisdiction, whereupon Title
Company shall take such action in accordance with such instructions or such
order.

                         (3)  It is understood and agreed that the duties of
Title Company are purely ministerial in nature. Title Company shall not be
liable to the other parties hereto or to anyone else for any action taken or
omitted by it, or any action suffered by it to be taken or omitted, in good
faith and in the exercise of reasonable judgment, except for acts of willful
misconduct or gross negligence. Title Company may rely conclusively and shall be
protected in acting upon any order, notice, demand, certificate, opinion or
advice of counsel (including counsel chosen by Title Company), statement,
instrument, report or other paper or document (not only as to its due execution
and the validity and effectiveness of its provisions, but also as to the truth
and accuracy of any information therein contained) which is reasonably believed
by Title Company to be genuine and signed or presented by the proper person or
persons. Title Company shall not be bound by any notice or demand, or any
waiver, modification, termination or rescission of this Agreement or any of the
terms hereof, unless evidenced by a final judgment or decree of a court of
competent jurisdiction in the State of California or a Federal court in such
State, or a writing delivered to Title Company signed by the proper party or
parties and, if the duties or rights of Title Company are affected, unless it
shall give its prior written consent thereto.

                         (4)  Title Company shall have the right to assume in
the absence of written notice to the contrary from the proper person or persons
that a fact or an event by reason of which an action would or might be taken by
Title Company does not exist or has not occurred, without incurring liability to
the other parties hereto or to anyone else for any action taken or omitted, or
any action suffered by it to be taken or omitted, in good faith and in the
exercise of reasonable judgment, in reliance upon such assumption.

                         (5)  Except in connection with Title Company's willful
misconduct or gross negligence, Title Company shall be indemnified and held
harmless jointly and severally by the other parties hereto from and against any
and all liabilities, expenses and losses suffered by Title Company (as escrow
agent), including reasonable attorneys' fees and expenses, in connection with
any action, suit or other proceeding involving any claim, which arises out of or
relates to this Agreement, the services of Title Company hereunder or the monies
or instruments held by it hereunder. Promptly after the receipt by Title Company
of notice of any demand or claim or the commencement of any action, suit or
proceeding, Title Company shall, if a demand or a claim is made or an action is
commenced against any of the other parties hereto, notify such


                                       45
<PAGE>   49

other parties hereto in writing; but the failure by Title Company to give such
notice shall not relieve any party from any liability which such party may have
to Title Company hereunder.

         SECTION 7.18    State Specific Provisions.

                  (a)    In regards to Real Property located in California:

                         (i)       Buyer is hereby apprised of and shall
determine whether any Real Property is located within the coastal zone under the
California Coastal Act.

                         (ii)      Buyer is hereby apprised of and shall
determine whether any Real Property is located within a special studies zone
under the Alquist-Priolo Geologic Hazard Act.

                         (iii)     To the extent required by law, Transferors
and Buyer agree to provide a Real Estate Transfer Disclosure Statement.

                         (iv)      Transferors shall provide Buyer with a form
California 590-RE.

                  (b)    In regards to Real Property located in Colorado:
Special taxing districts may be subject to general obligation indebtedness that
is paid by revenues produced from annual tax levies on the taxable property
within such districts. Property owners in such districts may be placed at risk
for increased mill levies and excessive tax burdens to support the servicing of
such debt where circumstances arise resulting in the inability of such a
district to discharge such indebtedness without such an increase in mill levies.
Buyer should investigate the debt financing requirements of the authorized
general obligation indebtedness of such districts, existing mill levies of such
districts servicing such indebtedness, and the potential for an increase in such
mill levies.

                  (c)    In regards to Real Property located in Illinois: Buyer
and Transferors hereby agree to make all disclosures and do all things necessary
to comply with the Illinois Responsible Property Transfer Act ("Act"). Either a
disclosure document ("IRPTA Disclosure Document") in the form required under the
Act, or an affidavit to the effect that no such IRPTA Disclosure Document is
required under such Act shall be delivered by Transferors to Buyer at closing.
Buyer and Transferors hereby waive the requirement of the delivery of an IRPTA
Disclosure Document not less than thirty (30) days prior to the Closing Date,
both parties acknowledging and agreeing that they are aware of the purpose and
intent of the IRPTA Disclosure Document.

                  (d)    In regards to Real Property located in Minnesota: Buyer
is hereby apprised of and shall determine whether a well is located on any of
the Real Property located in Minnesota. Transferors certify that Transferors do
not know of any wells on the Real Property located in Minnesota. In the event
Buyer locates a well on the Real Property Buyer shall not be entitled to cancel
this Agreement nor shall Buyer be entitled to recover any costs, including,
without limitation, the cost to seal the well and attorneys' fees.

                  (e)    In regards to Real Property located in Texas


                                       46
<PAGE>   50

                         (i)       Buyer is hereby apprised of and shall
determine whether any of the Real Property is located seaward of the Gulf
Intercoastal Waterway to its southernmost point and then seaward of the
longitudinal line also known as 97/,12', 19" which runs southerly to the
international boundary from the intersection of the center line of the Gulf
Intercoastal Waterway and the Brownsville Ship Channel, and if any of the Real
Property is in close proximity to a beach fronting the Gulf of Mexico, Buyer is
hereby advised that the public has acquired a right of use or easement to or
over the area of any public beach by prescription, dedication, or presumption,
or has retained a right by virtue of continuous right in the public since time
immemorial, as recognized in law and custom.

                  The extreme seaward boundary of natural vegetation that
spreads continuously inland customarily marks the landward boundary of the
public easement. If there is no clearly marked natural vegetation line, the
landward boundary of the easement is as provided by Sections 61.016 and 61.017,
Natural Resources Code.

                  State law prohibits any obstruction, barrier, restraint, or
interference with the use of the public easement, including the placement of
structure seaward of the landward boundary of the easement. STRUCTURES ERECTED
SEAWARD OF THE VEGETATION LINE (OR OTHER APPLICABLE EASEMENT BOUNDARY) OR THAT
BECOME SEAWARD OF THE VEGETATION LINE AS A RESULT OF NATURAL PROCESSES ARE
SUBJECT TO A LAWSUIT BY THE STATE OF TEXAS TO REMOVE THE STRUCTURE.

Buyer is hereby notified that Buyer should seek the advice of an attorney or
other qualified person before executing this Agreement or instrument of
conveyance as to the relevance of these statutes and facts to the value of any
of the Real Property Buyer is hereby purchasing or contracting to purchase.

                         (ii)      Buyer is hereby apprised of and shall
determine whether any of the Real Property is located within a Water District.
If any of the Real Property is located within a Water District, Buyer is
notified as follows [to the extent required, missing information to be
completed, if applicable, by Transferors on or before the closing.]:

         "The real property, described below, that you are about to purchase is
         located in the _________District. The district has taxing authority
         separate from any other taxing authority and may, subject to voter
         approval, issue an unlimited amount of bonds and levy an unlimited rate
         of tax in payment of such bonds. As of this date, the rate of taxes
         levied by the district on real property located in the district is
         $________________on each $100 of assessed valuation. If the district
         has not yet levied taxes, the most recent projected rate of debt
         service tax, as of this date, is $__________on each $100 of assessed
         valuation. The total amount of bonds approved by the voters and which
         have been or may, at this date, be issued is $_________, and the
         aggregate initial principal amounts of all bonds issued for one or more
         of the specified facilities of the district and payable in whole or in
         part from property taxes is
         $_____________.

         The district has the authority to adopt and impose a standby fee on
         property in the district that has water, sanitary sewer, or drainage
         facilities and services available


                                       47
<PAGE>   51

         but not connected and which does not have a house, building, or other
         improvement located thereon and does not substantially utilize the
         utility capacity available to the property. The district may exercise
         the authority without holding an election on the matter. As of this
         date, the most recent amount of the standby fee is $____________. An
         unpaid standby fee is a personal obligation of the person that owned
         the property at the time of imposition and is secured by a lien on the
         property. Any person may request a certificate from the district
         stating the amount, if any, of unpaid standby fees on a tract of
         property in the district.

         The purpose of this district is to provide water, sewer, drainage, or
         flood control facilities and services within the district through the
         issuance of bonds payable in whole or in part from property taxes. The
         cost of these facilities is not included in the purchase price of your
         property, and these utility facilities are owned or to be owned by the
         district. The legal description of the property you are acquiring is as
         follows:


         _______________________________________________________________________

         _______________________________________________________________________

         BUYER IS ADVISED THAT THE INFORMATION SHOWN ON THIS FORM IS SUBJECT TO
         CHANGE BY THE DISTRICT AT ANY TIME. THE DISTRICT ROUTINELY ESTABLISHES
         TAX RATES DURING THE MONTHS OF SEPTEMBER THROUGH DECEMBER OF EACH YEAR,
         EFFECTIVE FOR THE YEAR IN WHICH THE TAX RATES ARE APPROVED BY THE
         DISTRICT. BUYER IS ADVISED TO CONTACT THE DISTRICT TO DETERMINE THE
         STATUS OF ANY CURRENT OR PROPOSED CHANGES TO THE INFORMATION SHOWN ON
         THIS FORM.

         The undersigned Buyer hereby acknowledges receipt of the foregoing
         notice at or prior to execution of a binding contract for the purchase
         of the real property described in such notice or at closing of purchase
         of the real property."


                                       48
<PAGE>   52

IN WITNESS WHEREOF, Transferors and Buyer have executed this Agreement as of the
day and year first written above.

Buyer:

BPP RETAIL, LLC,
a Delaware limited liability company

By:  Burnham Pacific Operating Partnership, L.P.
a Delaware limited partnership
Its Managing Member

      By:  Burnham Pacific Properties, Inc.
      Its general partner

           By:  ____________________________
           Name:  __________________________
           Title:  _________________________

           By:  ____________________________
           Name:  __________________________
           Title:  _________________________


Transferors:

AMB Property, L.P.
a Delaware limited partnership

By:  AMB Property Corporation
Its general partner

         By:________________________________
         Its:_______________________________


AMB Property II, L.P.
a Delaware limited partnership

By:  AMB Property Holding Corporation
Its general partner

         By:________________________________
         Its________________________________


                                       49
<PAGE>   53

The undersigned party is joining this Agreement solely for the purpose of
acknowledging and agreeing to the provisions of Article V and Section 7.17
hereof and any other provisions of this Agreement expressly applicable to Title
Company.

CHICAGO TITLE COMPANY



By:  ____________________________
Name:  __________________________
Title:  _________________________


                                       50