Document:

<PAGE>

                                                                    Exhibit 10.1

                             AMENDED AND RESTATED
                      LIMITED LIABILITY COMPANY AGREEMENT

                                      OF

                           CARR OFFICE PARK, L.L.C.,
                     a Delaware Limited Liability Company

                         Dated as of: August 15, 2000
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                               TABLE OF CONTENTS

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                                                                                               Page
                                                                                               ----
<S>                                                                                            <C>
ARTICLE I  ORGANIZATION.......................................................................    2

     SECTION 1.1.  Amendment and Restatement; Maintenance of the Company......................    2
     SECTION 1.2.  Name and Office............................................................    3
     SECTION 1.3.  Purpose....................................................................    3
     SECTION 1.4.  Term.......................................................................    3
     SECTION 1.5.  Defined Terms..............................................................    3

ARTICLE II  CAPITAL...........................................................................   17

     SECTION 2.1.  Initial Capital Contributions; Distribution to the Carr Members............   17
     SECTION 2.2.  Operating Capital; Additional Capital Contributions........................   17
     SECTION 2.3.  Default Loans..............................................................   18
     SECTION 2.4.  No Third Party Beneficiaries...............................................   20

ARTICLE III  COMPANY INTERESTS................................................................   20

     SECTION 3.1.  Percentage Interests.......................................................   20
     SECTION 3.2.  Capital Accounts...........................................................   20
     SECTION 3.3.  Return of Capital..........................................................   21
     SECTION 3.4.  Carr Members; NYSTRS Members...............................................   21

ARTICLE IV  DISTRIBUTIONS.....................................................................   22

     SECTION 4.1.  Net Cash Flow..............................................................   22
     SECTION 4.2.  Net Proceeds of a Capital Transaction......................................   22

ARTICLE V  ALLOCATION OF PROFITS AND LOSSES...................................................   23

     SECTION 5.1.  Profits and Losses - General...............................................   23
     SECTION 5.2.  Special Allocations........................................................   23
     SECTION 5.3.  Other Allocation Rules.....................................................   25
     SECTION 5.4.  Tax Allocations:  Code Section 704(c)......................................   26
     SECTION 5.5.  Change in Allocations......................................................   26

ARTICLE VI  MANAGEMENT........................................................................   26

     SECTION 6.1.  Management.................................................................   26
     SECTION 6.2.  Management Committee.......................................................   28
     SECTION 6.3.  Major Decisions............................................................   28
     SECTION 6.4.  Day-to-Day Management; Termination of Property Management Agreements
                   and/or Development Agreements..............................................   30
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<TABLE>
<S>                                                                                            <C>
     SECTION 6.5.  Development Decisions......................................................   31
     SECTION 6.6.  Business Plan..............................................................   33
     SECTION 6.7.  Duties and Conflicts.......................................................   33
     SECTION 6.8.  Company's Counsel..........................................................   34
     SECTION 6.9.  Exculpation................................................................   34
     SECTION 6.10. Intentionally Deleted......................................................   35
     SECTION 6.11. Indebtedness; UBTI.........................................................   35
     SECTION 6.12. Removal of the Managing Member.............................................   35
     SECTION 6.13. Substitution of Managing Member............................................   36
     SECTION 6.14. Rights of Members upon Removal of Managing Member..........................   37
     SECTION 6.15. Dispute Resolution.........................................................   37
     SECTION 6.16. Indebtedness...............................................................   38

ARTICLE VII  BOOKS AND RECORDS; RESERVES......................................................   38

     SECTION 7.1.  Bank Accounts..............................................................   38
     SECTION 7.2.  Books of Account...........................................................   39
     SECTION 7.3.  Operating Statements.......................................................   39
     SECTION 7.4.  The Accountant.............................................................   41
     SECTION 7.5.  Appraisals.................................................................   41
     SECTION 7.6.  The Budget.................................................................   41
     SECTION 7.7.  Leasing and Property Guidelines............................................   42

ARTICLE VIII  TRANSFER OF COMPANY INTERESTS; SALE OF PROPERTY.................................   42

     SECTION 8.1.  Transfers; Certain Defined Terms...........................................   42
     SECTION 8.2.  Succession by Operation of Law.............................................   43
     SECTION 8.3.  Transfers by NYSTRS........................................................   44
     SECTION 8.4.  Transfers by the Carr Members..............................................   45
     SECTION 8.5.  New Members................................................................   47
     SECTION 8.6.  Sale of Properties; Right of First Offer...................................   48
     SECTION 8.7.  Buy/Sell for Marketed Properties...........................................   49
     SECTION 8.8.  Buy/Sell for Member's Interests............................................   51
     SECTION 8.9.  First Right to Invest......................................................   53

ARTICLE IX  TERMINATION.......................................................................   53

     SECTION 9.1.  Dissolution................................................................   53
     SECTION 9.2.  Termination................................................................   54
     SECTION 9.3.  Liquidating Member.........................................................   55
     SECTION 9.4.  No Redemption..............................................................   55
     SECTION 9.5.  No Distribution in Kind....................................................   56
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<TABLE>
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ARTICLE X  MISCELLANEOUS......................................................................   56

     SECTION 10.1.  Further Assurances........................................................   56
     SECTION 10.2.  Indemnities; Liability; Exculpation.......................................   56
     SECTION 10.3.  Notices...................................................................   56
     SECTION 10.4.  Governing Law.............................................................   58
     SECTION 10.5.  Captions..................................................................   58
     SECTION 10.6.  Pronouns..................................................................   58
     SECTION 10.7.  Successors and Assigns....................................................   58
     SECTION 10.8.  Extension Not a Waiver....................................................   59
     SECTION 10.9.  Construction..............................................................   59
     SECTION 10.10. Severability..............................................................   59
     SECTION 10.11. Consents..................................................................   59
     SECTION 10.12. Entire Agreement..........................................................   59
     SECTION 10.13. Consent to Jurisdiction...................................................   59
     SECTION 10.14. Counterparts..............................................................   60
     SECTION 10.15. Tax Election..............................................................   60
</TABLE>
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           AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

                                      OF

                             CARR OFFICE PARK, LLC

     THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this
"Agreement"), made as of the 15th day of August, 2000, by and among CARRAMERICA
REALTY CORPORATION, a Maryland corporation ("CarrAmerica"), CARRAMERICA REALTY,
L.P., a Delaware limited partnership ("Carr L.P."), CARR PARKWAY NORTH I
CORPORATION, a Delaware corporation ("Parkway Corp."), each having an office c/o
CarrAmerica Realty Corporation, 1850 K Street, NW, Suite 500, Washington, DC
20006 (CarrAmerica, Carr L.P. and Parkway Corp. are sometimes hereinafter
collectively referred to as the "Carr Members"), and NEW YORK STATE TEACHERS'
RETIREMENT SYSTEM, a public pension system created and existing pursuant to
Article 11 of the Education Law of the State of New York and having powers and
privileges of a corporation pursuant to Section 502 thereof, having an office
c/o J.P. Morgan Investment Management Inc., 522 Fifth Avenue, New York, New York
10036 ("NYSTRS").

     WHEREAS, CarrAmerica has formed Carr Office Park, LLC (the "Company"), a
Delaware limited liability company, pursuant to a Limited Liability Company
Agreement (the "Original Agreement"), dated as of July 25, 2000, in which
CarrAmerica is the sole member;

     WHEREAS, NYSTRS, the Carr Members, Development, Inc. and Development LP
have entered into that certain Contribution and Purchase/Sale Agreement, dated
as of this date (the "Contribution Agreement");

     WHEREAS, pursuant to the Contribution Agreement (i) CarrAmerica shall
contribute to the Company all of its right, title and interest in and to the
Properties which it owns as set forth in Exhibits A-1, A-2 and A-3, (ii) Carr
L.P. and Parkway Corp. shall contribute all of their right, title and interest
in and to the Properties they own as set forth in Exhibits A-1, A-2 and A-3 in
return for membership interests in the Company, (iii) CarrAmerica Development,
Inc., a Delaware corporation ("Development Inc.") and Carr Development &
Construction, L.P., a Delaware limited partnership ("Development LP") shall
convey certain assets to the Company and (iv) NYSTRS shall contribute cash to
the Company in return for a membership interest in the Company, and the Original
Agreement shall be amended to reflect such contributions, purchases and
admission of new members.

     WHEREAS, the Carr Members and NYSTRS desire to enter into this Agreement to
(i) amend and restate the Original Agreement in its entirety and (ii) set forth
their understandings and agreements with regard to the operation of the Company.
<PAGE>

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, NYSTRS and the Carr Members do hereby mutually covenant and
agree as follows:

                                   ARTICLE I

                                 ORGANIZATION
                                 ------------

     SECTION 1.1.  Amendment and Restatement; Maintenance of the Company.
                   -----------------------------------------------------

          (a)  The Members hereby amend and restate the Original Agreement in
its entirety pursuant to the terms set forth in this Agreement.  The rights and
liabilities of all Members shall be as provided under the Delaware Act, the
Certificate and this Agreement.  To the extent permitted by applicable law, the
provisions of this Agreement shall override the provisions of the Delaware Act
in the event of any inconsistency or contradiction between them.  CarrAmerica
has filed a Certificate with the Secretary of State of Delaware, dated July 25,
2000, in order to form the Company.  The fact that the Certificate is on file in
the office of the Secretary of State shall constitute notice that the Company is
a limited liability company, pursuant to Section 18-207 of the Delaware Act.

          (b)  In order to maintain the Company as a limited liability company
under the laws of the State of Delaware, the Company shall, from time to time,
take appropriate action, including the preparation and filing of such amendments
to the Certificate and such other assumed name certificates, documents,
instruments and publications as may be required by or desirable under law,
including, without limitation, action to reflect:

               (i)   any change in the Company name;

               (ii)  any correction of false or erroneous statements in the
Certificate or the desire of the Members to make a change in any statement
therein in order that it shall accurately represent the agreement among the
Members; or

               (iii) any change in the time for dissolution of the Company as
stated in the Certificate and in this Agreement, provided such time is later
than the time for dissolution of the Company as stated in the Certificate and
this Agreement.

          (c)  Each necessary Member shall further execute, and the Company
shall file and record (or cause to be filed and recorded) and shall publish, if
required by law, such other and further certificates, statements or other
instruments as may be necessary or desirable under the laws of the State of
Delaware or the state in which the Property (as defined in Section 1.5) is
located in connection with the formation of the Company and the commencement and
carrying on of its business.

                                      -6-
<PAGE>

     SECTION 1.2.  Name and Office.  The name of the Company shall be Carr
                   ---------------
Office Park, LLC.  All business of the Company shall be conducted under such
name and title to all property, real, personal, or mixed, owned by or leased to
the Company shall be held in such name.  The principal place of business and
office of the Company shall be located at c/o CarrAmerica Realty Corporation,
1850 K Street, NW, Suite 500, Washington, DC 20006 or at such other place or
places as the Members may from time to time designate.  The Company may have
such additional offices and places of business as may be established at such
other locations as may be determined from time to time by the Members.  The
registered agent of the Company within the State of Delaware is Corporation
Trust Company and the registered office of the Company within the State of
Delaware is 1209 Orange Street, Wilmington, Delaware 19801.

     SECTION 1.3.  Purpose.
                   -------

          (a)  The purpose and business of the Company shall be to acquire and
own, directly or indirectly, the real estate and improvements set forth on
Exhibits A-1, A-2 and A-3 attached hereto and made a part hereof and in
-------------------------
connection therewith to undertake the development, improvement, leasing,
management, mortgaging and sale or other disposition of such Properties, and any
additional properties that may be acquired by the Company from time to time
(individually a "Property" and collectively the "Properties") and to engage in
any and all acts necessary, advisable or incidental to the carrying out of the
obligations attendant to the foregoing as contemplated in this Agreement.

          (b)  The Company shall not engage in any other business or activity
without the prior written consent of all the Members.

          (c)  The Company, from time to time may form subsidiaries to hold fee
title to one or more of the Properties.

     SECTION 1.4.  Term.  The term of the Company commenced on the filing of the
                   ----
Certificate with the Secretary of State of the State of Delaware and shall
continue until December 31, 2050, unless sooner terminated pursuant to the
provisions hereof.

     SECTION 1.5.  Defined Terms.  The following terms shall have the following
                   -------------
meanings when used herein:

     "Accountant" - As defined in Section 7.4.
      ----------

     "Additional Capital Contribution" - Means any Capital Contribution pursuant
      -------------------------------
to Section 2.2 whether made by or on behalf of such Member.

     "Adjusted Capital Account" - With respect to any Member, the balance, if
      ------------------------
any, in such Member's Capital Account as of the end of the relevant Fiscal Year,
after giving effect to the following adjustments:

                                      -7-
<PAGE>

          (a)  Credit to such Capital Account any amounts which such Member is
obligated to restore pursuant to the terms of this Agreement or is deemed to be
obligated to restore pursuant to Treasury Regulations Section 1.704-
1(b)(2)(ii)(c) or pursuant to the penultimate sentences of Treasury Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

          (b)  Debit to such Capital Account the items described in paragraphs
(4), (5) and (6) of Treasury Regulations Section 1.704-1(b)(2)(ii)(d).

The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations to
the extent relevant thereto and shall be interpreted consistently therewith.

     "Affiliate" - Means with respect to any corporation, partnership or other
      ---------
business entity, any other such entity which is and at all times remains
controlled by, under common control with or which controls the first such
entity; it being understood that a first entity "controls" a second entity under
the following circumstances:  (a) if the second entity is a corporation then
control is established if the first entity owns at least 51% of the issued and
outstanding voting stock of the second entity, (b) if the second entity is a
limited partnership then control is established if the first entity owns at
least a 51% interest in the general partner of the second entity, and (c) if the
second entity is a limited liability company, then control is established if the
first entity owns at least a 51% interest in the managing member of the second
entity. For purposes of this Agreement, Development, Inc., Development LP and
Manager, and any corporation, partnership or other business entity which
controls, is controlled by or under common control with any of the foregoing,
shall be deemed affiliates of the Carr Members, notwithstanding that such
entities are not "controlled" by the Carr Members pursuant to the above
definition.

     "Agreement" - As defined in the Preamble.
      ---------

     "Appraisers" - As defined in Section 7.5.
      ----------

     "Budget" - As defined in Section 7.6.
      ------

     "Business Day" - Any day other than Saturday, Sunday or any other day on
      ------------
which banks or savings and loan associations in Washington, D.C. are not open
for business.

     "Business Plan" - As defined in Section 6.6.
      -------------

     "Buy-Sell Property" - As defined in Section 8.7.
      -----------------

     "Call Notice" - As defined in Section 8.8.
      -----------

     "Call Purchase Price" - As defined in Section 8.8.
      -------------------

                                      -8-
<PAGE>

     "Call Response Notice" - As defined in Section 8.8.
      --------------------

     "Capital Account" - The Capital Account maintained for each Member pursuant
      ---------------
to Section 3.2.

     "Capital Contribution" - With respect to any Member, the amount of money
      --------------------
and the initial Gross Asset Value of any property contributed, or deemed
contributed, by such Member or in connection with a Default Loan on behalf of
such Member, to the Company (net of any liabilities secured by such property or
to which such property is otherwise subject), including any Initial Capital
Contribution and Additional Capital Contribution.

     "Capital Expenditures" - For any period, the amount expended for items
      --------------------
capitalized under generally accepted accounting principles, consistently
applied, except for such items as are otherwise classified under this Agreement.

     "Capital Transaction" - Means any of the following:  (a) a sale, exchange,
      -------------------
transfer, assignment or other disposition of all or a portion of any Company
Asset other than tangible personal property that is not sold or transferred in
connection with the sale or transfer of real property or a leasehold interest in
real property; (b) any condemnation or deeding in lieu of condemnation of all or
a portion of any Company Asset; (c) any financing or refinancing of any Company
Asset; (d) any fire or other casualty to the Properties or any other Company
Asset; and (e) any other transaction the proceeds of which, in accordance with
generally accepted accounting principles, are considered to be capital in
nature.

     "Carr Acceptance" - As defined in Section 8.3.
      ---------------

     "CarrAmerica" - Shall mean CarrAmerica Realty Corporation,  a Maryland
      -----------
corporation.

     "Carr Committee Member" - As defined in Section 6.2.
      ---------------------

     "Carr L.P." - Shall mean CarrAmerica Realty, L.P., a Delaware limited
      ---------
partnership.

     "Carr Affiliated Members" - As defined in Section 3.4.
      -----------------------

     "Carr Members" - Shall mean, initially, CarrAmerica, Carr L.P. and Parkway
      ------------
Corp., and their successors and assigns.

     "Carr Offer" - As defined in Section 8.4.
      ----------

     "Carr Sale Material Terms" - As defined in Section 8.4.
      ------------------------

                                      -9-
<PAGE>

     "Certificate" - The Certificate of Formation for the Company filed on July
      -----------
25, 2000 with the Secretary of State of Delaware, pursuant to Section 18-201 of
the Delaware Act, as the same may be amended and restated.

     "Change in Control" - As defined in Section 8.1.
      -----------------

     "Check The Box Regulations" -  Means regulations (in temporary or in final
      -------------------------
form) or other equivalent authority issued by the Internal Revenue Service and
all state and local jurisdictions in which the income, assets or operations of
the Company are, or may be, subject to income or similar tax, permitting the
Company to determine whether it will be treated as a partnership for U.S.
federal, state and, if applicable, local income tax purposes.

     "Code" - The Internal Revenue Code of 1986, as amended, or any
      ----
corresponding provision or provisions of prior or succeeding law.

     "Company" - Carr Office Park, LLC, a limited liability  company formed
      -------
under the laws of the State of Delaware, and any successor limited liability
company.

     "Company Assets" - Each of the Properties owned by the Company from time to
      --------------
time, and all other tangible or intangible property or personal property at any
time owned by or held for the benefit of the Company related to each of the
Properties.

     "Company's Counsel" - As defined in Section 6.8.
      -----------------

     "Company Interest" - As to any Member, all of the interest of that Member
      ----------------
in the Company including, without limitation, such Member's (i) right to a
distributive share of the profits and losses and cash flow of the Company, (ii)
right to a distributive share of Company Assets and (iii) right to participate
in the management of the business and affairs of the Company.

     "Company Minimum Gain" - Has the meaning set forth in Treasury Regulations
      --------------------
Section 1.704-2(d).

     "Contribution Agreement" - Means that certain Contribution Agreement, dated
      ----------------------
as of this Date, by and among NYSTRS, the Carr Members, Development Inc. and
Development LP.

     "Debt Service" - For any period, the aggregate interest, principal and
      ------------
other payments due under the Loans.

     "Default Loan" - As defined in Section 2.3.
      ------------

     "Default Loan Rate" - Six percent (6%) per annum above the prime or base
      -----------------
lending rate announced, from time to time, by Citibank, N.A. in New York City
or, in the event that Citibank,

                                     -10-
<PAGE>

N.A. shall no longer announce its prime or base lending rate as aforesaid, six
percent (6%) per annum above the prime or base lending rate announced, from time
to time, by Chase Bank, N.A. or, in the event that neither Citibank, N.A. nor
Chase Bank, N.A. shall announce its prime or base lending rate as aforesaid, six
percent (6%) per annum above the prime or base lending rate announced, from time
to time, by a bank in New York City designated by the Member making the
applicable Default Loan.

     "Defaulting Member" - As defined in Section 2.3.
      -----------------

     "Delaware Act" - Delaware Limited Liability Company Act, Title 6 of the
      ------------
Delaware Code, Section 18-101 et seq., as amended from time to time.

     "Depreciation" - For each Fiscal Year or other period, an amount equal to
      ------------
the depreciation, amortization, or other cost recovery deduction allowable for
federal income tax purposes with respect to an asset for such Fiscal Year or
other period, except that if the Gross Asset Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such Fiscal
Year or other period, Depreciation shall be determined by reference to the
asset's Gross Asset Value using a method specified or permitted by Treasury
Regulations Section 1.704-3.

     "Developed Properties" - As the date of this Agreement, means the
      --------------------
Properties specified on Exhibit A-1, subject to changes described in Section
                        -----------
6.5.

     "Development Agreements" - Shall mean the Development Services Agreements
      ----------------------
between the Company or its Affiliate and Development Inc. or Development LP, as
the case may be, listed on Exhibit F.

     "Development Budget" - As defined in Section 6.5.
      ------------------

     "Development Plans and Specifications" - As defined in Section 6.5.
      ------------------------------------

     "Development Schedule" - As defined in Section 6.5.
      --------------------

     "Development Inc." - Shall mean CarrAmerica Development, Inc., a Delaware
      ----------------
corporation.

     "Development LP" - Shall mean Carr Development & Construction, L.P., a
      --------------
Delaware limited partnership.

     "Due Date" - In the case of Additional Capital Contributions pursuant to
      --------
Section 2.2, the tenth (10th) Business Day following the Shortfall Notice.

                                     -11-
<PAGE>

     "Effective Date" - The date of the execution and delivery of this Agreement
      --------------
by all parties.

     "ERISA" - As defined in Section 8.1.
      -----

     "Existing Properties" - Means the Properties located in the States of
      -------------------
Colorado, Illinois and Texas more particularly described in Exhibits A-1, A-2
                                                            -----------------
and A-3 attached hereto and made a part hereof.
-------

     "Fiscal Year" - Except as otherwise required by law, the calendar year,
      -----------
except that the first Fiscal Year of the Company shall have commenced on the
date of commencement of the Company and end on the next succeeding December 31,
and the last Fiscal Year of the Company shall end on the date on which the
Company shall terminate and commence on the January 1 immediately preceding such
date of termination.

     "Gross Asset Value" - With respect to any Company Asset, the Company
      -----------------
Asset's adjusted basis for federal income tax purposes, except as follows:

          (a) The initial Gross Asset Values of the Existing Properties are set
forth in Exhibits A-1, A-2 and A-3;
         -------------------------

          (b) The Gross Asset Values of all Company Assets shall be adjusted to
equal their respective gross fair market values, as determined by the Members,
as of the following times:  (i) the acquisition of an interest or an additional
interest in the Company by any new or existing Member in exchange for more than
a de minimis Capital Contribution; (ii) the distribution by the Company to a
  ----------
Member of more than a de minimis amount of property or money as consideration
                      ----------
for an interest in the Company; and (iii) the liquidation of the Company within
the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g); provided,
                                                                  --------
however, that adjustments pursuant to clauses (i) and (ii) above shall be made
-------
only if the Members determine that such adjustments are necessary or appropriate
to reflect the relative economic interests of the Members;

          (c) The Gross Asset Value of any Company Asset distributed to a Member
shall be the gross fair market value of such asset on the date of distribution;

          (d) The Gross Asset Values of Company Assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m), clause (f) of the
definition of Profits and Losses and Section 5.2(g); provided, however, that
                                                     --------  -------
Gross Asset Values shall not be adjusted pursuant to this paragraph (d) to the
extent the Members determine that an adjustment pursuant to paragraph (b) hereof
is

                                      -12-
<PAGE>

necessary or appropriate in connection with a transaction that would otherwise
result in an adjustment pursuant to this paragraph (d); and

          (e) If the Gross Asset Value of a Company Asset has been determined or
adjusted pursuant to paragraphs (a), (b), or (d), such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect to
such Company Asset for purposes of computing Profits and Losses.

     "Gross Investment" - Means with respect to each Member, such Member's
      ----------------
Initial Capital Contribution plus any Additional Capital Contribution of such
Member, less amounts previously distributed to such Member under subsection
2.1(c) or 4.2(b).

     "Gross Receipts" - Means all receipts and revenues of any kind calculated
      --------------
on a cash  basis of the Company, including, without duplication (i) all Rents
received by the Company, (ii) all payments received by the Company from the
operators of any licensed facilities or concessions, including, without
limitation, amounts received as income and revenue of a non-rental nature, (iii)
all other forms of rent, revenue, income, proceeds, royalties, profits and other
benefits paid to the Company from using, leasing, licensing, processing,
operating from or in, or otherwise enjoying all or any portion of the
Properties, (iv) all payments under business interruption insurance policies or
proceeds payable under any policy of insurance covering loss of Rents, (v) any
utility or other deposits returned to the Company or other refunds paid to the
Company, (vi) any interest earned on security deposits held by the Company to
the extent retained by the Company and interest earned on operating and other
accounts of the Company, (vii) all amounts received by the Company from tenants
at the Properties in connection with the surrender of such tenant's lease and
(viii) all refunds, rebates and other recoveries of items previously charged as
Operating Expenses, but excluding, (a) Capital Contributions to the Company, (b)
                    --- ---------
Net Proceeds of a Capital Transaction with respect to the Company, (c) sums held
by the Company as security deposits under leases for space at the Property
unless and until applied to the satisfaction of tenants' obligations under such
leases (to the extent permitted under applicable leases and law) and (d) non-
cash charges accruing to the Company in the nature of depreciation and
amortization of the Property.

     "Impositions" - Means all taxes (including sales and use taxes),
      -----------
assessments (including all assessments for public improvements or benefits,
whether or not commenced or completed prior to the date hereof), water, sewer or
other rents, rates and charges, excises, levies, license fees, permit fees,
inspection fees and other authorization fees and other charges, in each case
whether general or special, ordinary or extraordinary, of every character
(including all interest and penalties thereon), which at any time may be
assessed, levied, confirmed or imposed by any governmental or quasi-governmental
authority having jurisdiction over the Property on or in respect of or be a lien
upon (i) the Properties or any estate or interest therein, (ii) any occupancy,
use or possession of, or activity conducted on, the Properties, or (iii) the
Rents from the Properties or the use or occupancy thereof.

     "Indemnified Losses" - As defined in Section 10.2.
      ------------------

                                      -13-
<PAGE>

     "Initial Capital Contribution" - Means with respect to NYSTRS and the Carr
      ----------------------------
Members the Capital Contributions made by each of them pursuant to Section 2.1.

     "Initiating Member" - As defined in Section 8.6.
      -----------------

     "Initiating Party" - As defined in Section 8.8.
      ----------------

     "Initiating Party Call Purchase Price" - As defined in Section 8.8.
      ------------------------------------

     "Leases" - Means leases between the Company and tenants for occupancy of
      ------
space in the Properties.

     "Leasing and Property Guidelines" - As defined in Section 7.7.
      -------------------------------

     "Lending Eligible Member" - As defined in Section 2.3.
      -----------------------

     "Lending Member"  - As defined in Section 2.3.
      --------------

     "Liquidating Member" - As defined in Section 9.3.
      ------------------

     "Loan" - Means that certain first mortgage loan in the original principal
      ----
amount of $29,250,000 made by CBA Conduit, Inc. (State Street Bank and Trust
Company, as trustee) to Parkway Corp.

     "Lockout Date" - Means February 15, 2003.
      ------------

     "Major Decision" - As defined in Section 6.3.
      --------------

     "Major Dispute" - As defined in Section 6.15.
      -------------

     "Major Leases" - Means Leases with tenants covering (i) a full floor of a
      ------------
building or (ii) in excess of 25,000 net rentable square feet.

     "Management Committee" - As defined in Section 6.2.
      --------------------

     "Manager" - As defined in Section 6.4.
      -------

     "Manager Material Default" - As defined in Section 6.12.
      ------------------------

     "Managing Member" - Means the Member then authorized to carry out the
      ---------------
management of the business and affairs of the Company pursuant to Article 6
hereof.  The initial Managing

                                      -14-
<PAGE>

Member shall be CarrAmerica. CarrAmerica may further designate Carr L.P., or
with NYSTRS' approval, any other Carr Affiliated Member, as a successor Managing
Member

     "Marketed Property" - As defined in Section 8.6.
      -----------------

     "Maximum Rate" - Means the highest lawful rate of interest allowable under
      ------------
applicable law.

     "Member" - Means, at any time, any person or entity admitted and remaining
      ------
as a member of the Company pursuant to the terms of this Agreement.  As of the
date of this Agreement, the Members of the Company are the Carr Members and
NYSTRS.

     "Member Material Default" - As defined in Section 2.3.
      -----------------------

     "Member Nonrecourse Debt" - Has the meaning set forth in Treasury
      -----------------------
Regulations Section 1.704-2(b)(4).

     "Member Nonrecourse Debt Minimum Gain" - Means an amount, with respect to
      ------------------------------------
each Member Nonrecourse Debt, equal to the Company Minimum Gain that would
result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Treasury Regulations Section 1.704-2(i)(2) and
(3).

     "Member Nonrecourse Deductions" - Has the meaning set forth in Treasury
      -----------------------------
Regulations Section 1.704-2(i)(2).  For any Fiscal Year, the amount of Member
Nonrecourse Deductions with respect to a Member Nonrecourse Debt equals the
excess, if any, of the net increase, if any, in the amount of the Member
Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt over
the aggregate amount of any distributions during such Year to the Member that
bears the economic risk of loss for such Member Nonrecourse Debt to the extent
such distributions are from proceeds of such Member Nonrecourse Debt and are
allocable to an increase in Member Nonrecourse Debt Minimum Gain, determined
according to the provisions of Treasury Regulations Section 1.704-2(i)(2).

     "Named Officers" - As defined in Section 8.1.
      --------------

     "Net Cash Flow" - Means, for any period, (a) Gross Receipts plus any
      -------------
amount, with the approval of the Management Committee, taken out of any general
reserve account established by the Company pursuant to the approved Budget, in
excess of (b) Operating Expenses plus any amount, with the approval of the
Management Committee, added during such period to any such general reserve
account pursuant to the approved Budget.

     "Net Proceeds of a Capital Transaction" - Means the net cash proceeds from
      -------------------------------------
a Capital Transaction less any portion thereof used to (i) establish reserves in
connection with such Capital Transaction, (ii) repay any debts or other
obligations of the Company in connection with such Capital Transaction or (iii)
restore the Property following a casualty or condemnation. "Net
                                                            ---

                                      -15-
<PAGE>

Proceeds of a Capital Transaction" shall include all principal, interest and
---------------------------------
other payments as and when received with respect to any note or other obligation
received by the Company in connection with a Capital Transaction.

     "New Project" - As defined in Section 6.5.
      -----------

     "Non-Defaulting Member" - As defined in Section 2.3.
      ---------------------

     "Non-Initiating Party" - As defined in Section 8.8.
      --------------------

     "Non-Initiating Party Call Purchase Price" - As defined in Section 8.8.
      ----------------------------------------

     "Nonrecourse Deductions" - Has the meaning set forth in Treasury
      ----------------------
Regulations Section 1.704-2(b)(1).  The amount of Nonrecourse Deductions for a
Fiscal Year equals the excess, if any, of the net increase, if any, in the
amount of Company Minimum Gain during that Fiscal Year, over the aggregate
amount of any distributions during that Fiscal Year of proceeds of a Nonrecourse
Liability that are allocable to an increase in Company Minimum Gain, determined
according to the provisions of Treasury Regulations Section 1.704-2(c).

     "Nonrecourse Liability" - Has the meaning set forth in Treasury Regulations
      ---------------------
Section 1.704-2(b)(3).

     "Notices" - As defined in Section 10.3.
      -------

     "NYSTRS" - Means New York State Teachers' Retirement System, a public
      ------
pension system created and existing pursuant to Article 11 of the Education Law
of the State of New York and having powers and privileges of a corporation
pursuant to Section 502 thereof.

     "NYSTRS Acceptance" - As defined in Section 8.4.
      -----------------

     "NYSTRS Affiliated Members" - As defined in Section 3.4.
      -------------------------

     "NYSTRS Committee Member" - As defined in Section 6.2.
      -----------------------

     "NYSTRS Offer" - As defined in Section 8.3.
      ------------

     "NYSTRS Sale Material Terms" - As defined in Section 8.3
      --------------------------

     "Operating Expenses"  - Means, for any period, all expenses incurred by the
      ------------------
Company during such period, calculated on a cash basis, including, without
duplication (subject to the exclusions described below): (i) organizational
expenses, including fees for accountants, attorneys and other consultants, (ii)
administrative expenses related to the operation of the Company, which shall
include fees and expenses of accountants, attorneys and other

                                      -16-
<PAGE>

professionals incurred in connection with the Company's annual audit, financial
reporting for the Company, legal opinions, tax return preparation, and expenses
related to the software installed by Management Reporting, Inc., (iii) all fees,
costs and expenses related to the acquisition, holding, financing, refinancing
and sale or other disposition of the Properties, and the evaluation of proposed
development of the Properties (regardless of whether any proposed development
proceeds), provided fees paid to Affiliates shall be subject to clause (E)
below, (iv) any expenses related to the making of temporary investments by the
Company for cash management purposes and any interest expenses related thereto,
(v) any extraordinary administrative or operating fees or expenses, related to
litigation, indemnification or otherwise, (vi) current operating expenses and
taxes incurred by the Company including but not limited to (without duplication)
utility charges, costs of materials, normal repair and maintenance costs,
Impositions and other business taxes applicable to the Property (except as
excluded below), license fees, costs of complying with any encumbrance upon the
Property, premiums for insurance, the costs of any appraisals performed by the
Company and any other reasonable costs which are paid for by the Company, (vii)
the management fee and any reimbursable expenses paid or reimbursed to Manager
by the Company pursuant to the Property Management Agreements, (viii) capital
expenditures determined to be necessary or desirable by the Members or as
mandated by law or necessitated by an emergency for improvements to space at any
Property leased to tenants, inducements granted to such tenants and leasing
expenses (including leasing commissions), (ix) fees paid pursuant to the
Development Agreements, (x) payments of fees, interest and scheduled
amortization of principal on any financing affecting the Properties or the
Company Assets, and (xi) fees of third party construction management consultants
retained by NYSTRS or required by a construction lender to monitor construction
and development activity of the Company (it being understood, if NYSTRS shall
desire to retain any such consultant in addition to the consultant required by a
construction lender, such additional consultant shall be at the expense of
NYSTRS and not the Company), but excluding without duplication: (A) expenditures
                                 ---------
paid or to be paid from insurance proceeds or condemnation awards available for
restoration of a Property; (B) payments with respect to Federal, State or local
income, franchise or similar taxes of any Member and all kinds of taxes payable
in lieu thereof (other than gross receipts or franchise taxes or similar taxes
imposed in respect of the operation of the Property regardless of the form of
ownership thereof and not determined by reference to net income or gains
realized by any Member); (C) any non-cash charges from depreciation or
amortization of property; (D) any expenses or costs incurred in connection with
a Capital Transaction that would not have been incurred but for such Capital
Transaction or (E) any fees paid to Affiliates of the Carr Members which have
not been approved by NYSTRS or in connection with an approved Budget, other than
fees paid pursuant to the Property Management Agreements and the Development
Agreements. Distributions to the Members pursuant to Sections 4.1, 4.2 and 9.2
shall not be considered to be Operating Expenses.

     "Parkway Corp." - Shall mean Carr Parkway North I Corporation, a Delaware
      -------------
corporation.

                                      -17-
<PAGE>

     "Percentage Interest" - As to any Member, the Percentage Interest of such
      -------------------
Member specified in Section 3.1, as adjusted pursuant to this Agreement.

     "Person" - Means any individual, corporation, partnership, limited
      ------
liability company, association, trust or other entity or organization.

     "Profits" and "Losses" - For each Fiscal Year or other period, an amount
      -------       ------
equal to the Company's taxable income or loss for such Fiscal Year or period,
determined in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss, or deduction required to be stated separately pursuant to
Code Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:

          (a) Any income of the Company that is exempt from federal income tax
and not otherwise taken into account in computing Profits or Losses pursuant to
this definitional Section shall be added to such taxable income or loss;

          (b) Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Treasury Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into
account in computing Profits or Losses pursuant to this definitional Section,
shall be subtracted from such taxable income or loss;

          (c) In the event the Gross Asset Value of any Company Asset is
adjusted pursuant to paragraph (b) or (c) under the definition of "Gross Asset
Value," the amount of such adjustment shall be taken into account as gain or
loss from the disposition of such Company Asset for purposes of computing
Profits or Losses;

          (d) Gain or loss resulting from any disposition of Company property
with respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property disposed
of, notwithstanding that the adjusted tax basis of such property differs from
its Gross Asset Value;

          (e) In lieu of the depreciation, amortization and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account Depreciation for such Fiscal Year or other period,
computed in accordance with the definition thereof;

          (f) To the extent an adjustment to the adjusted tax basis of any
Company Asset pursuant to Code Section 734(b) or Code Section 743(b) is required
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(4) to be taken into
account in determining Capital Accounts as a result of a distribution other than
in complete liquidation of a Member's Company Interest, the amount of such
adjustment shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases the basis of the asset)
from the disposition of the asset and shall be taken into account for purposes
of computing Profits or Losses; and

                                      -18-
<PAGE>

          (g) Notwithstanding any other provision of this definitional Section,
any items which are specially allocated under this Agreement shall not be taken
into account in computing Profits or Losses.

     "Property" or "Properties" - Means, as the context requires, Developed
      --------      ----------
Properties, Properties Under Development or Undeveloped Properties or additional
properties that may be acquired by the Company from time to time.

     "Property B/S Purchaser" - As defined in Section 8.7.
      ----------------------

     "Property Call Notice" - As defined in Section 8.7.
      --------------------

     "Property Call Purchase Price" - As defined in Section 8.7.
      ----------------------------

     "Property Call Response Notice" - As defined in Section 8.7.
      -----------------------------

     "Property Initiating Party" - As defined in Section 8.7.
      -------------------------

     "Properties Under Development" - As of the date of this Agreement, means
      ----------------------------
the Properties specified on Exhibit A-2, subject to changes described in Section
                            -----------
6.5.

     "Property Management Agreements" - As defined in Section 6.4.
      ------------------------------

     "Purchaser" - As defined in Section 8.8.
      ---------

     "Rents" - Means, collectively, all fixed, base, minimum, guaranteed,
      -----
additional, retroactive, percentage, participation or escalation rents,
operating cost pass-throughs, utility charges, common area maintenance or
management charges, administrative charges, parking, maintenance, tax and
insurance contributions payable under any lease for space at the Property,
deficiency rents and liquidated damages following default by any tenant at the
Property, premiums payable by any tenant at the Property upon the exercise of a
cancellation privilege originally provided in any lease for space at the
Property, and any rights and claims of any kind which the Company may have
against any tenant at the Property.

     "Regulations" or "Treasury Regulations" - The Income Tax Regulations
      -----------      --------------------
promulgated under the Code as such regulations may be amended from time to time
(including Temporary Regulations).

     "Responding Member" - As defined in Section 8.6.
      -----------------

     "Response Notice" - As defined in Section 8.6.
      ---------------

                                      -19-
<PAGE>

     "Sale Notice" - As defined in Section 8.6.
      -----------

     "Sale Terms" - As defined in Section 8.6.
      ----------

     "Seller" - As defined in Section 8.8.
      ------

     "Shortfall" - As defined in Section 2.2.
      ---------

     "Shortfall Amount" - As defined in Section 2.2.
      ----------------

     "Shortfall Notice" - As defined in Section 2.2.
      ----------------

     "Stipulated Price" - As defined in Section 8.6.
      ----------------

     "Subportfolio" - Means the Company's interest in any one of Riata Corporate
      ------------
Center in Austin, Texas, Riata Crossing in Austin, Texas; Parkway North in
Chicago, Illinois; Royal Ridge in Irving, Texas; or Panorama in Englewood,
Colorado.

     "Tax Matters Member" - As defined in Section 7.3
      ------------------

     "Tax Returns" - As defined in Section 7.3.
      -----------

     "Transfer" - As defined in Section 8.1.
      --------

     "UBTI" - Means "unrelated business taxable income" within the meaning of
      ----
Sections 511-514 of the Code.

     "Undeveloped Properties" - As of the date of this Agreement, means the
      ----------------------
Properties specified on Exhibit A-3, subject to changes described in Section
                        -----------
6.5.

     "Unpermitted Transfer" - As defined in Section 8.1.
      --------------------

     "Unrecovered Capital Contribution" - Means, with respect to any Member,
      --------------------------------
such Member's Capital Contribution less amounts previously distributed to such
Member under subsection 2.1(c) or 4.2(b).

                                      -20-
<PAGE>

                                  ARTICLE II

                                    CAPITAL
                                    -------

     SECTION 2.1.  Initial Capital Contributions; Distribution to the Carr
                   -------------------------------------------------------
Members.
-------

          (a) Upon the execution of this Agreement the Company shall purchase
certain of the Properties from Development Inc. and Development LP as designated
in Exhibits A-1, A-2 and A-3 for the purchase prices set forth in Exhibits A-1,
   -------------------------                                      -------------
A-2 and A-3.
-----------

          (b) Upon the execution of this Agreement, the Carr Members shall make
their Initial Capital Contributions to the Company by conveying the Properties
set forth in Exhibits A-1, A-2 and A-3 to the Company at the values set forth
             -------------------------
next to each of the Properties in Exhibits A-1, A-2 and A-3 and the Carr Members
                                  -------------------------
shall be deemed to have made Initial Capital Contributions in the amounts set
forth next to their names in Exhibit B.
                             ---------

          (c) Upon execution of this Agreement, NYSTRS shall make its Initial
Capital Contribution to the Company of cash in the amount set forth next to its
name on Exhibit B hereto. The Members hereby agree that a portion of the Initial
        ---------
Capital Contribution of NYSTRS shall be applied by the Company toward the
purchase of the Properties described in Section 2.1(a) and also as a
distribution to the Carr Members. Such distribution shall also be utilized to
pay and discharge certain liabilities which were incurred in connection with the
financing of the Properties as described more particularly in Exhibit C annexed
                                                              ---------
hereto.

          (d) Immediately subsequent to the Initial Capital Contributions of the
Members set forth above, the Company shall pay the purchase prices for the
Properties described in, and in the amounts set forth in, Section 2.1(a) and
shall make distributions to the Carr Members equal to the amounts set forth in
Exhibit B.
---------

     SECTION 2.2.  Operating Capital; Additional Capital Contributions.  In the
                   ---------------------------------------------------
event at any time or from time to time additional funds are necessary to (i)
operate the Developed Properties, and Gross Receipts together with the proceeds
of any reserve account established by the Company may be insufficient to pay all
Operating Expenses when due, or if sufficient funds are otherwise unavailable to
fund amounts required for the Developed Properties (ii) fund amounts required to
pay non-discretionary items or to develop Properties pursuant to the
requirements of Section 6.5 or otherwise in accordance with approved Business
Plans or (iii) fund any amounts required to remedy an emergency situation (i.e.,
payment of real property taxes or insurance premiums or to complete emergency
repairs) in connection with any of the Existing Properties (in each case, a
"Shortfall"), then the Managing Member shall notify each Member of such
Shortfall (a "Shortfall Notice") identifying the amount of such Shortfall (the
"Shortfall Amount").  Within ten (10) Business Days after receipt of the
Shortfall Notice, each Member shall make a cash Capital Contribution to the
Company (each, an "Additional Capital Contribution") in an amount equal to the
Shortfall Amount specified in the Shortfall Notice

                                      -21-
<PAGE>

multiplied by such Member's Percentage Interest in the Company such that such
amount of the Shortfall specified by the Managing Member shall not exist
subsequent to the Due Date. Additional Capital Contributions shall be credited
to the Capital Account of the Members making such Additional Capital
Contributions. The Managing Member shall consult with the other Members within a
reasonable period of time prior to delivering any Shortfall Notice and any Major
Decision requiring the expenditure of funds shall be subject to the requirements
of Section 6.3. The Managing Member shall give evidence to NYSTRS of any
Additional Capital Contributions made by the Carr Members.

     SECTION 2.3.  Default Loans.  (a)  If any Member shall fail to advance any
                   -------------
Additional Capital Contribution pursuant to Section 2.2 hereof on or before the
Due Date thereof then the Managing Member shall give immediate notice to any
Member failing to advance the Additional Capital Contribution (a "Defaulting
Member").  Should any Defaulting Member fail to advance the Additional Capital
Contribution within ten (10) days after such notice, then each non-defaulting
Member (a "Non-Defaulting Member") that does not have an outstanding Default
Loan made to it hereunder (a "Lending Eligible Member") shall have the right,
but not the obligation, to make a loan (a "Default Loan") to such Defaulting
Member in an amount equal to the Defaulting Member's Percentage Interest of such
Additional Capital Contribution within thirty (30) days after the Due Date.  If
a Default Loan(s) shall be made in accordance with this Section 2.3, the Company
shall also notify the Defaulting Member of the amount and date of the Default
Loan(s).   Each Default Loan shall be deemed to be made to the Defaulting
Member, with the proceeds of each Default Loan by the Lending Eligible Member
making same being delivered to the Company in immediately available funds on
such Defaulting Member's behalf.  A Default Loan shall be deemed to have been
advanced on the Due Date.  Default Loans shall earn interest on the outstanding
principal amount thereof at a rate equal to the lesser of (i) the Default Loan
Rate or (ii) the Maximum Rate, from the Due Date until the same is repaid in
full.

          (b) Default Loans shall be non-recourse, secured as provided in
paragraph (c) of this Section 2.3 and shall have a term of ninety (90) days and
be repayable by and collectible from the Defaulting Member only as set forth in
this Section 2.3(b).  A Member making a Default Loan (a "Lending Member") may,
in the exercise of such Member's sole and absolute discretion, extend (for a
period(s) to be determined by such Member) the term of a Default Loan.  If a
Member makes a Default Loan, the Defaulting Member shall not receive any
distributions of Net Cash Flow or Net Proceeds of a Capital Transaction or any
proceeds from the transfer of all or any part of its interest in the Company
while the Default Loan remains unpaid.  Instead, the Defaulting Member's share
of Net Cash Flow and Net Proceeds of a Capital Transaction or such other
proceeds shall (until all Default Loans and interest thereon shall have been
repaid in full) first be paid to the Lending Member.  Such payments shall be
applied first to the payment of interest on such Default Loans and then to the
repayment of the principal amounts thereof, but shall be considered, for all
other purposes of this Agreement, to have been distributed to the Defaulting
Member.  Distributions of Net Cash Flow to such Defaulting Member shall be
reinstated prospectively upon the full repayment of a Default Loan and interest
thereon to the Lending Member (if a Default Loan has been made).  In addition,
at any time during the term of

                                      -22-
<PAGE>

such Default Loan, the Defaulting Member shall have the right to repay, in full,
the Default Loan (including interest).

          (c) If a Member makes a Default Loan, the Defaulting Member shall be
deemed to have pledged to the Lending Member, and granted to such Lending Member
a continuing first priority security interest in, all of the Company Interest of
the Defaulting Member and all distributions of Net Cash Flow or Net Proceeds of
a Capital Transaction due to a Defaulting Member (it being understood that if
any one of the Carr Members is a Defaulting Member that such first priority
security interest shall be secured by all of the Company Interests of the Carr
Members and such distributions payable to all of the Carr Members) to secure the
payment of the principal of, and interest on, such Default Loan in accordance
with the provisions hereof, and for such purpose this Agreement shall constitute
a security agreement. The Defaulting Member shall promptly execute, acknowledge
and deliver such financing statements, continuation statements or other
documents and take such other actions as the Lending Member shall request in
order to perfect or continue the perfection of such security interest; and, if
the Defaulting Member shall fail to do so within seven (7) days after demand
therefor, the Lending Member is hereby appointed the attorney-in-fact of, and is
hereby authorized on behalf of, the Defaulting Member, to execute, acknowledge
and deliver all such documents and take all such other actions as may be
required to perfect such security interest.  Such appointment and authorization
are coupled with an interest and shall be irrevocable.  Any Lending Member
holding a security interest in such Company Interest of a Defaulting Member or
in distributions of Net Cash Flow or Net Proceeds of a Capital Transaction due
to a Defaulting Member as a result of the making of a Default Loan to such
Defaulting Member shall, prior to exercising any right or remedy (whether at
law, in equity or pursuant to the terms hereof) available to such Lending Member
in connection with such security interest, provide to the Defaulting Member
written notice, in reasonable detail, of the right or remedy to be exercised and
the intended timing of such exercise.

          (d)       If the Defaulting Member shall fail to make an Additional
Capital Contribution and such failure constitutes a "Member Material Default",
then the Defaulting Member and its representatives on the Management Committee
shall have no further voting right or right to participate in the management of
the Company until the default due to the failure to make the Additional Capital
Contribution is cured, it being understood that if any of the Carr Members is a
Defaulting Member, then the Carr Committee Member shall have no further voting
rights until such default is cured.  "Member Material Default" shall mean a
default by the Defaulting Member (for this purpose and pursuant to Section 3.4
the Carr Members shall be deemed to act as a single entity) after expiration of
the ten (10) day notice provision set forth in Section 2.3(a) to contribute
Additional Capital Contributions in the aggregate during the existence of the
Company an amount greater than One Million Dollars ($1,000,000).  During the
continuance of a Member Material Default, the Company shall be managed without
regard to the voting rights of any Member in Member Material Default, and
decisions otherwise subject to the consent and/or approval and/or participation
of such Member in Member Material Default (or its representative on the
Management Committee) shall be made without the necessity of obtaining

                                      -23-
<PAGE>

the consent and/or approval and/or participation of such Member in Member
Material Default (or its representative on the Management Committee).

     SECTION 2.4.  No Third Party Beneficiaries.  The right of the Managing
                   ----------------------------
Member to require an Additional Capital Contribution or the right of a Member to
make a Default Loan pursuant to Section 2.3 shall not confer upon any creditor
or other third party having dealings with the Company any right, claim or other
benefit, including the right to require any such Additional Capital Contribution
or Default Loan.

                                  ARTICLE III

                               COMPANY INTERESTS
                               -----------------

     SECTION 3.1.  Percentage Interests.  The Percentage Interest of NYSTRS in
                   --------------------
the Company shall be sixty-five percent (65%) and the initial Percentage
Interests of the Carr Members in the Company shall be as follows:

               (i)      CarrAmerica    13.03%
               (ii)     Carr L.P.      19.95%
               (iii)    Parkway Corp.   2.02%

     SECTION 3.2.  Capital Accounts.  The Company shall establish and maintain a
                   ----------------
separate Capital Account for each Member in accordance with the following
provisions:

          (a) To each Member's Capital Account there shall be credited such
Member's Capital Contributions (including, with respect to any Defaulting
Member, Additional Capital Contributions made to the Company on such Defaulting
Member's behalf pursuant to the terms of Section 2.3 hereof), such Member's
allocable share of Profits, and any items in the nature of income or gain that
are specially allocated to such Member under this Agreement, and the amount of
any Company liabilities that are assumed by such Member (other than liabilities
that are secured by any Company property distributed to such Member).

          (b) To each Member's Capital Account there shall be debited the amount
of cash and the Gross Asset Value of any Company property distributed to such
Member pursuant to any provision of this Agreement (net of liabilities secured
by such distributed property that such Member is considered to assume or take
subject to under Code Section 752), such Member's allocable share of Losses, and
any items in the nature of expenses or losses that are specially allocated to
such Member under this Agreement, and the amount of any liabilities of such
Member that are assumed by the Company (other than liabilities that are secured
by any property contributed by such Member to the Company).

                                      -24-
<PAGE>

          (c) In the event any interest in the Company is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it relates to the transferred
interest.  In the case of a sale or exchange of an interest in the Company at a
time when an election under Code Section 754 is in effect, the Capital Account
of the transferee Member shall not be adjusted to reflect the adjustments to the
adjusted tax bases of Company property required under Code Sections 754 and 743,
except as otherwise permitted by Treasury Regulations Section 1.704-
1(b)(2)(iv)(m).

          (d) In determining the amount of any liability for purposes of
paragraphs (a) and (b) above, there shall be taken into account Code Section
752(c) and the Treasury Regulations promulgated thereunder, and any other
applicable provisions of the Code and Regulations.

          (e) The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Treasury Regulations Section 1.704-1(b) and 1.704-2, and shall be
interpreted and applied in a manner consistent with such Regulations.

     SECTION 3.3.  Return of Capital.  No Member shall be liable for the return
                   -----------------
of the Capital Contributions (or any portion thereof) of any other Member, it
being expressly understood that any such return shall be made solely from the
Company Assets.  No Member shall be required to pay to the Company or to any
other Member any deficit in its Capital Account upon dissolution of the Company
or otherwise, and no Member shall be entitled to withdraw any part of its
Capital Contributions or Capital Account, to receive interest on its Capital
Contributions or Capital Account or to receive any distributions from the
Company, except as expressly provided for in this Agreement or under the
Delaware Act as then in effect.

     SECTION 3.4.  Carr Members; NYSTRS Members.  Unless explicitly provided
                   ----------------------------
herein to the contrary, the term "Member" shall refer to NYSTRS and any
Affiliates thereof should a Transfer occur pursuant to Section 8.3(a), and their
successors and assigns (the "NYSTRS Affiliated Members"), on the one hand, and
the Carr Members and any Affiliates thereof should a Transfer occur pursuant to
Section 8.4(a), and their successors and assigns (the "Carr Affiliated
Members"), on the other hand.  Any reference in this Agreement to the "Carr
Members," or to the Carr Members collectively as a Member, shall be deemed to
refer to the Carr Affiliated Members in the aggregate as set forth in this
Section 3.4.  Unless explicitly provided herein to the contrary, the Carr
Affiliated Members shall be treated for all purposes of this Agreement as if the
Carr Affiliated Members' Company Interests were held as a single, aggregate
Company Interest by a single entity.  The aggregate obligations of the Carr
Affiliated Members under this Agreement may be satisfied or performed by any one
or more of the Carr Affiliated Members.  Allocations for tax and accounting
purposes, and any distributions and contributions hereunder, to, among or by the
individual Carr Affiliated Members (subject to applicable provisions of the Code
or the Delaware Act) shall be made as directed by CarrAmerica or, in the absence
of any direction by CarrAmerica, on a pro rata basis in accordance with the
Percentage

                                      -25-
<PAGE>

Interests of the respective Carr Affiliated Members. Unless explicitly provided
herein to the contrary, a default or other event under this Agreement with
respect to any one of the Carr Affiliated Members shall be deemed to have
occurred with respect to all of the Carr Affiliated Members and the entire
aggregate Company Interest of the Carr Affiliated Members; provided, however,
                                                           --------  -------
that such crossing or aggregation of defaults or other events among the Carr
Affiliated Members shall not be interpreted so as to increase or expand the
scope or nature of the actions that must be taken under the terms of this
Agreement to cure or remedy any such default or other event. Notwithstanding
anything herein to the contrary, the NYSTRS Affiliated Members shall similarly
be considered collectively as a single Member for all intents and purposes of
this Agreement, under the same provisions set forth above applicable to the Carr
Affiliated Members, provided that the NYSTRS Affiliated Members shall act
through or at the direction of NYSTRS hereunder.

                                   ARTICLE IV

                                 DISTRIBUTIONS
                                 -------------

     SECTION 4.1.  Net Cash Flow.
                   -------------

          Subject to Sections 2.3 and 9.2 hereof, Net Cash Flow of the Company
for any Fiscal Year shall be distributed quarterly (if and to the extent
available) by the Company to the Members in accordance with their respective
Percentage Interests; provided, however, that with respect to distributions
otherwise payable to a Defaulting Member which received a Default Loan pursuant
to Section 2.3, the Company shall first apply such distributions to pay all
principal and accrued interest due under such Default Loan, to the Non-
Defaulting Member making such Default Loan.

     SECTION 4.2.  Net Proceeds of a Capital Transaction.
                   -------------------------------------

          Subject to Sections 2.3 and 9.2 hereof, Net Proceeds of a Capital
Transaction shall be distributed by the Company as soon as practicable after the
receipt thereof to the Members in the following manner and priority:

          (a) First, to the Members, in proportion to the amount of their
Unrecovered Capital Contributions, until each Member has received such Member's
Unrecovered Capital Contribution; and

          (b) Second, to the Members in accordance with their respective
Percentage Interests;

provided, however, that with respect to distributions otherwise payable to a
Defaulting Member which received a Default Loan pursuant to Section 2.3, the
Company shall first apply such

                                      -26-
<PAGE>

distributions to pay all principal and accrued interest due under such Default
Loan to the Non-Defaulting Member making such Default Loan.

                                   ARTICLE V

                        ALLOCATION OF PROFITS AND LOSSES
                        --------------------------------

     SECTION 5.1.  Profits and Losses - General.
                   ----------------------------

          (a)  After giving effect to the special allocations set forth in
Sections 5.2 and 5.6 hereof (and except as otherwise provided in subsection
9.2(c)(iv) upon a dissolution of the Company), Profits for any Fiscal Year shall
be allocated in accordance with the Members' respective Percentage Interests.

          (b)  After giving effect to the special allocations set forth in
Sections 5.2 and 5.6 hereof (and except as otherwise provided in subsection
9.2(c)(iv) upon dissolution of the Company), Losses for any Fiscal Year shall be
allocated in accordance with the Members' respective Percentage Interests.

     SECTION 5.2.  Special Allocations.
                   -------------------

          (a) Minimum Gain Chargeback.  Notwithstanding any other provision of
              -----------------------
this Article 5, if there is a net decrease in Company Minimum Gain during any
Company Fiscal Year, the Members shall be specially allocated items of Company
income and gain for such Fiscal Year (and, if necessary, subsequent Fiscal
Years) in an amount equal to such Member's share of the net decrease in Company
Minimum Gain, determined in accordance with Treasury Regulations Section 1.704-
2(g)(2).  Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Member
pursuant thereto.  The items so allocated shall be determined in accordance with
Treasury Regulations Section 1.704-2(f).  This Section 5.2(a) is intended to
comply with the minimum gain chargeback requirement in Section 1.704-2(f) of the
Treasury Regulations and shall be interpreted consistently therewith.

          (b) Member Nonrecourse Debt Minimum Gain Chargeback. Notwithstanding
              -----------------------------------------------
any other provision of this Article 5, except Section 5.2(a), if there is a net
decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member
Nonrecourse Debt during any Fiscal Year, each Member who has a share of the
Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse
Debt, determined in accordance with Treasury Regulations Section 1.704-2(i)(5),
shall be specially allocated items of Company income and gain for such Fiscal
Year (and, if necessary, subsequent Fiscal Years) in an amount equal to such
Member's share of the net decease in Member Nonrecourse Debt Minimum Gain
attributable to such Member Nonrecourse Debt, determined in accordance with
Treasury Regulations Section

                                      -27-
<PAGE>

1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Member
pursuant thereto. The items so allocated shall be determined in accordance with
Treasury Regulations Section 1.704-2(i)(4). This Section 5.2(b) is intended to
comply with the minimum gain chargeback requirement in such Section of the
Treasury Regulations and shall be interpreted consistently therewith.

          (c) Qualified Income Offset.  In the event any Member unexpectedly
              -----------------------
receives any adjustments, allocations, or distributions described in paragraphs
(4), (5) and (6) of Treasury Regulations Section 1.704-1(b)(2)(ii)(d), items of
Company income and gain shall be specially allocated to such Members in an
amount and manner sufficient to eliminate, to the extent required by such
Regulations, the Adjusted Capital Account deficit of such Members as quickly as
possible, provided that an allocation pursuant to this Section 5.3(c) shall be
made only if and to the extent that such Member would have an Adjusted Capital
Account deficit after all other allocations provided for in this Article 5 have
been tentatively made as if this Section 5.2(c) were not in the Agreement.

          (d) Nonrecourse Deductions.  Nonrecourse Deductions shall be allocated
              ----------------------
to the Members in accordance with their respective Percentage Interests.

          (e) Member Nonrecourse Deductions.  Any Member Nonrecourse Deductions
              -----------------------------
for any Fiscal Year or other period shall be specially allocated to the Member
who bears the economic risk of loss with respect to the Member Nonrecourse Debt
to which such Member Nonrecourse Deductions are attributable in accordance with
Treasury Regulations Section 1.704-2(i)(1).

          (f) Limitation on Allocation of Losses.  In no event shall Losses be
              ----------------------------------
allocated to a Member to the extent such allocation would result in such Member
having an Adjusted Capital Account deficit at the end of any Fiscal Year.  All
such Losses shall be allocated to the other Member, provided, however, that
appropriate adjustments shall be made to the allocation of future Profits in
order to offset such specially allocated Losses hereunder.

          (g) Section 754 Adjustments.  To the extent an adjustment to the
              -----------------------
adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code
Section 743(b) is required, pursuant to Treasury Regulations Section 1.704-
1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the
amount of such adjustment to the Capital Accounts shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis) and such gain or loss shall be allocated to the
Members in a manner consistent with the manner in which their Capital Accounts
are required to be adjusted pursuant to such Section of the Treasury
Regulations.  The Managing Member shall make such election upon the receipt of
notice from a Members having a majority of the Percentage Interests.

          (h) Special Allocations.  Notwithstanding any other provision of this
              -------------------
Agreement, allocations under this Section 5.2 shall be made only to the extent
that, and shall be

                                      -28-
<PAGE>

adjusted to the extent necessary to ensure that, the Company's allocations
satisfy the requirements of Code Section 514(c)(9)(E), the Treasury Regulations
promulgated thereunder and any administrative guidelines or pronouncements
thereunder, including so that all allocations have "substantial economic effect"
for purposes of Code Section 514(c)(9)(E)(i)(II). Further, to the extent an
allocation made pursuant to this Section 5.2 causes the ratio of Members'
Capital Account balance to differ from the ratio of their Percentage Interests,
an effecting "chargeback" allocation shall be made to restore the Members'
Capital Account balances to be in proportion to their Percentage Interests at
the earliest possible time permitted by the Treasury Regulations promulgated
under Code Sections 704 and 514(c)(9)(E).

          (i) Curative Allocations.  The allocations contained in Sections
              --------------------
5.2(a) through 5.3(g) (the "Regulatory Allocations") are intended to comply with
certain requirements of the Code and Treasury Regulations.  The Members intend
that, to the extent possible, all Regulatory Allocations shall be offset either
by other Regulatory Allocations or with special allocations of other items of
Company income, gain, loss or deduction pursuant to this Section 5.2(i).
Therefore, notwithstanding any other provisions of this Article 5 (other than
the Regulatory Allocations and Section 5.2(h)), the Members shall make such
offsetting special allocations of Company income, gain, loss or deduction in
whatever manner they reasonably determine to be appropriate so that, after such
offsetting allocations are made, each Member's Capital Account balance is, to
the extent possible, equal to the Capital Account balance such Member would have
had if the Regulatory Allocations were not part of this Agreement.

     SECTION 5.3.  Other Allocation Rules.
                   ----------------------

          (a) For purposes of determining the Profits, Losses, or any other
items allocable to any period, Profits, Losses, and any such other items shall
be determined on a daily, monthly, or other basis, as reasonably determined by
the Members using any permissible method under Code Section 706 and the Treasury
Regulations thereunder.

          (b) Except as otherwise provided in this Agreement, all items of
Company income, gain, loss, deduction, and any other allocations not otherwise
provided for shall be divided among the Members for tax purposes in the same
proportions as they share Profits or Losses, as the case may be, for the Fiscal
Year.

          (c) The Members are aware of the income tax consequences of the
allocations made by this Article 5 and hereby agree to be bound by the
provisions of this Article 5 in reporting their shares of Company income and
loss for income tax purposes.

          (d) Solely for purposes of determining a Member's proportionate share
of the "excess nonrecourse liabilities" of the Company within the meaning of
Treasury Regulations Section 1.752-3(a)(3), the interest of the Members in
Company Profits equals one hundred percent (100%), in proportion to their
Percentage Interests.

                                      -29-
<PAGE>

     SECTION 5.4.  Tax Allocations:  Code Section 704(c).
                   -------------------------------------

          (a) In accordance with Code Section 704(c) and the Treasury
Regulations thereunder, income, gain, loss, and deduction with respect to any
property contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the Company for federal income
tax purposes and its initial Gross Asset Value.

          (b) In the event the Gross Asset Value of any Company property is
adjusted pursuant to paragraph (b) of the definition of Gross Asset Value,
subsequent allocations of income, gain, loss, and deduction with respect to such
asset shall take account of any variation between the adjusted basis of such
asset for federal income tax purposes and its Gross Asset Value in the same
manner as under Code Section 704(c) and the Treasury Regulations thereunder.
The Members hereby agree that the Company shall use the "traditional method" as
described in Treasury Regulations Section 1.704 - 3(b) with respect to
allocations related to the Properties.

          (c) Any elections or other decisions relating to such allocations
shall be made by the Members, in any manner that reasonably reflects the purpose
and intention of this Agreement.  Allocations pursuant to this Section 5.4 are
solely for purposes of federal, state, and local taxes and shall not affect, or
in any way be taken into account in computing, any Member's Capital Account or
share of Profits, Losses, other items, or distributions pursuant to any
provision of this Agreement.

     SECTION 5.5.  Change in Allocations.  In the event the Members having a
                   ---------------------
majority of the Percentage Interests shall, on the advice of the Company
Counsel, determine that it is prudent to modify the allocations set forth herein
to comply with the Treasury Regulations and/or the Code, the Managing Member
shall be directed to make such modifications, provided that (i) such
modifications will not have a reasonable likelihood of causing a material
adverse effect upon any Member and (ii) such modifications shall be approved by
all Members.

                                   ARTICLE VI

                                   MANAGEMENT
                                   ----------

                                      -30-
<PAGE>

     SECTION 6.1.  Management.  The Managing Member shall carry out and
                   ----------
implement the day to day affairs of the Company in accordance with the approved
Business Plan, and shall undertake the development of Properties in conformance
with the procedures set forth in Section 6.5, within the scope of the authority
granted pursuant to this Agreement.  The Managing Member shall keep the Members
informed as to all matters of concern to the Company and the Members.  The
Managing Member agrees to devote to the Company's business such time as
reasonably shall be necessary in connection with its duties and responsibilities
hereunder.  The Managing Member shall be authorized to take any action which is
specifically authorized or contemplated by the approved Business Plan, or to
make an expenditure set forth in an approved Budget, or as otherwise expressly
authorized by this Agreement.  Subject to the terms of this Agreement and to the
Delaware Act, and provided the same shall not be prohibited under this
Agreement, the Managing Member shall have all the powers of the Company,
including, without limitation, the full power to:

          (a) cause the Company, directly or through its agents, at all times to
perform and comply with the provisions of any loan commitment, agreement,
mortgage, deed of trust, lease, construction contract or other contract,
instrument or agreement to which the Company is a party or which affects the
Property or the operation thereof;

          (b)  keep and maintain at least such insurance coverage as may be
required by the holder of any mortgage or deed of trust encumbering all or any
portion of the Property;

          (c)  deliver to the Members promptly upon the receipt or sending
thereof copies of all notices, reports and communications (i) between the
Company and any holder of a mortgage or deed of trust affecting all or any
portion of the Property which relate to any existing or pending default
thereunder or to any financial or operational information required by such
holder and (ii) regarding material violations affecting the Property;

          (d)  open and maintain bank accounts for funds of the Company;

          (e)  employ independent unaffiliated contractors for the ordinary
maintenance and repair of the Property;

          (f) retain or engage independent  unaffiliated real estate brokers
licensed to do business in the states in which the Property, or any part
thereof, is located;

          (g)  enter into leases of space which do not deviate materially from
the approved Leasing and Property Guidelines or otherwise are approved by the
Management Committee;

          (h) execute and deliver agreements and documents on behalf of the
Company which (i) are contemplated by an approved Business Plan, (ii) are
agreements or documents made

                                      -31-
<PAGE>

and executed in the ordinary course of business that do not grant any lien or
encumbrance on any Property, or (iii) otherwise are approved by the Management
Committee;

          (i) act on behalf of the Owner (and appoint any Owner's
representative) under the Property Management Agreements and the Development
Agreements, subject to the approval of the Management Committee where such acts
would constitute a Major Decision or are related to a default thereunder; and

          (j) cause the general partner of any subsidiary limited partnership or
the managing member of any subsidiary limited liability company, to take any
action on behalf of any such subsidiary.

     SECTION 6.2.  Management Committee.
                   --------------------

          NYSTRS, and the Carr Members acting as a single group, shall each
elect one (1) member (the "NYSTRS Committee Member" and the "Carr Committee
Member", respectively) of a management committee (the "Management Committee") ,
which shall consist of two (2) members total.  The NYSTRS Committee Member and
the Carr Committee Member shall each appoint up to three (3) alternate members
of the Management Committee.  Any one of  the alternate members appointed by the
NYSTRS Committee Member and by the Carr Committee Member shall be entitled to
act on behalf of the NYSTRS Committee Member and the Carr Committee Member,
respectively, in their absence.  The election of the NYSTRS Committee Member and
the Carr Committee Member shall take place no later than thirty (30) days after
the commencement of the Fiscal Year of the Company.  The Management Committee
shall meet regularly to review the operations of the Company, but not less often
than once per month.  The Management Committee shall also meet from time to time
at the request of the Managing Member, or NYSTRS in order to consider a "Major
Decision."

     SECTION 6.3.  Major Decisions.
                   ---------------

          Notwithstanding the provisions of Section 6.1, without the unanimous
vote of the Management Committee in each instance (a "Major Decision"), the
Company shall not:

          (a) sell, transfer, assign, convey, exchange or otherwise dispose of
the Properties or the Company Assets (other than personal property at the
Properties which may be disposed of or replaced due to wear and tear or
obsolescence or otherwise in the ordinary course of business and other than
Leases, which are governed by Section 6.3(e));

          (b)   purchase any additional properties;

          (c) borrow money on behalf of the Company, whether on a secured or
unsecured basis, refinance, recast, extend, compromise or otherwise materially
amend any such loan, and in connection therewith, issue evidences of
indebtedness and secure the same by

                                      -32-
<PAGE>

mortgages, deeds of trust, security agreements or other similar documents
encumbering assets of the Company (other than (i) trade receivables in the
ordinary course of business or (ii) equipment financing);

          (d)   approve the annual Business Plan for the operation, management,
improvement and development of the Properties, or the acquisition of new
Properties, including approval of the following components of the Business Plan:
(i) the Budget, (ii) the Leasing and Property Guidelines, (iii) the Development
Budgets, (iv) the Development Plans and Specifications and (v) the Development
Schedules; or material modifications of any of the above (subject to the
provisions of this Agreement, including without limitation "Material" changes
pursuant to Section 6.5(a), (b) or (c) or "Material" variances pursuant to
Section 7.6); nor shall the Company make expenditures not set forth in an
approved Budget or Development Budget or as otherwise expressly authorized by
this Agreement.

          (e)   approve Major Leases, or any Leases which materially deviate
from the parameters of the Leasing and Property Guidelines;

          (f)   institute or settle any major litigation or dispute (i.e., where
the amount in controversy exceeds $500,000 relating to any of the Properties);

          (g) approve the terms of the insurance program for the Company or any
modification thereof; provided, however that in all cases the Managing Member
shall use commercially reasonable efforts to comply with all insurance
requirements of the Loan and all future lenders and provided, further, that in
the event that the Management Committee cannot agree on an insurance program the
insurance program for the prior Fiscal Year shall be continued;

          (h) select or change the auditor for the Company;

          (i) approve any agreements between the Members and any Affiliates of
the Members or any modifications thereto, including the terms of the Property
Management Agreements and/or the Development Agreements or any modifications
thereto, or the termination thereof in the event of a default by the Manager or
the elective termination of the Manager under any of the Property Management
Agreements, or a default by the Developer or the elective termination of the
Developer under any of the Development Agreements, as the case may be, unless
any of the Property Management Agreements or the Development Agreements are
terminated following the removal of the Managing Member pursuant to Section
6.14;

          (j) approve the terms of any construction contracts, construction
management agreements, or subcontracts relating to the construction and/or
development of the Properties under Development or the Undeveloped Properties,
in each case where the dollar amount covered thereby is in excess of $1,000,000
with respect to base building construction or $750,000 with respect to tenant
improvement work; provided, however, that if the Management

                                      -33-
<PAGE>

Committee has not responded to a request for approval of a construction related
contract requiring approval within five (5) Business Days after a request for
approval by the Managing Member, then such construction related contract shall
be deemed to be approved by the Management Committee;

          (k)  approve any proposed material changes to the zoning of the
Properties other than has been expressly contemplated by approved Business Plan;
and

          (l)  enter into any financing agreement or commitment that would
impose any personal liability on any Member or beneficial owner of any Member
(exclusive of any transferee liability with respect to the receipt by any Member
of loan proceeds, if any, that might exist under applicable law).

     SECTION 6.4.  Day-to-Day Management; Termination of Property Management
                   ---------------------------------------------------------
Agreements and/or Development Agreements.
----------------------------------------

          (a)  The Company has entered into agreements with Carr Real Estate
Services, Inc. ("Manager") simultaneously herewith to manage, lease and
otherwise operate the Developed Properties on a day-to-day basis as manager for
the Company pursuant to the management and leasing agreements (collectively, the
"Property Management Agreements") between the Company and Manager substantially
in the form set forth as Exhibit D annexed hereto and made a part hereof.  Upon
                         ---------
a default by Manager under any Property Management Agreement, the Managing
Member agrees to notify all Members of such default by Manager and to use its
commercially reasonable efforts to cause Manager to cure any such default or to
otherwise cure the same on behalf of Manager within the applicable cure period.
If such default is of such a nature as to give the Company the right to
terminate any Property Management Agreement pursuant to the terms thereof, and
has not been cured within the applicable cure period, then upon the request and
direction of NYSTRS the Managing Member agrees to terminate any or all of the
Property Management Agreements as provided therein and NYSTRS shall have the
right on behalf of the Company to terminate all such Property Management
Agreements if the Managing Member has failed to give Manager a notice of
termination within five (5) Business Days following notice by NYSTRS and to take
all other action against Manager on behalf of the Company.  The Company shall
not cancel, extend or otherwise modify any of the Property Management Agreements
or enter into another Property Management Agreement without the prior written
consent of the Management Committee.  The Manager shall be subject to the
general supervision and control of the Managing Member and shall carry out all
policy decisions made by the Company pursuant to the Property Management
Agreement.  Upon the termination of the employment of Manager or any successor
manager, the Managing Member shall propose the employment of a new manager.  The
Manager shall not be authorized to lease any space at the Properties without the
prior written approval of the Company.  Subject to the provisions of this
Agreement, the Manager shall be authorized to execute Leases on behalf of the
Company, as the authorized signatory of the Company, when approved by the
Company in accordance with the provisions of this Agreement.

                                      -34-
<PAGE>

          (b)  The parties shall have the following rights upon termination of
any one or more of the Property Management Agreements or the Development
Agreements:

               (i)  Notwithstanding any other term of this Agreement, should an
Unpermitted Transfer on the part of the Carr Members occur, and should NYSTRS in
its sole and absolute discretion elect to cause the Company to terminate any one
or more of the Property Management Agreements or Development Agreements, and
NYSTRS is hereby authorized to do so, or if any or all of the Property
Management Agreements are terminated pursuant to Section 6.4(a), then during the
sixty (60) day period after such termination NYSTRS, at its option, may exercise
sale rights for all the Properties pursuant to Section 8.6, or buy-sell rights
for all the Properties pursuant to Section 8.7 or all of the Company Interests
of the Carr Members pursuant to Section 8.8, at any time prior to or subsequent
to the Lockout Date during such sixty (60) day period.  Should NYSTRS not
exercise such rights in a timely fashion, then the Carr Members, acting as a
group, may exercise during the subsequent sixty (60) day period after
termination of the initial sixty (60) day period, sale rights for all the
Properties pursuant to Section 8.6 or buy-sell rights for all the Properties
pursuant to Section 8.7 or all of the Company Interests of NYSTRS pursuant to
Section 8.8.  Should neither NYSTRS exercise such rights during the initial
sixty (60) day period, nor the Carr Members exercise such rights during the
subsequent sixty (60) day period, then neither NYSTRS or the Carr Members shall
have the right to exercise any sale rights pursuant to Section 8.6 or buy-sell
rights pursuant to Section 8.7 or Section 8.8 in connection with the particular
Unpermitted Transfer in question, other than as otherwise permitted by clause
(ii) below or Article VIII.  Further, if any of the Property Management
Agreements or Development Agreements are electively terminated pursuant to the
terms thereof, or due to an Owner's default not caused by the Carr Members, then
the Carr Members, acting as a group, may exercise the foregoing rights during
the subsequent sixty (60) day period after such termination.

               (ii) Should an Unpermitted Transfer by a Carr Member occur, and
should NYSTRS elect not to cause the Company to terminate any one or more of the
                    ---
Property Management Agreements or Development Agreements, then during the
ensuing year after the Unpermitted Transfer NYSTRS, at its option, may exercise
sale rights for all of the Properties pursuant to Section 8.6 or buy-sell rights
for all of the Properties pursuant to Section 8.7 or all of the Company
Interests of the Carr Members pursuant to Section 8.8, at any time prior to or
subsequent to the Lockout Period during such one (1) year period.  Should NYSTRS
not exercise such rights during such one (1) year period then NYSTRS shall not
have the right to exercise any sale rights pursuant to Section 8.6 or buy-sell
rights pursuant to Section 8.7 or Section 8.8 in connection with the particular
Unpermitted Transfer in question, other than as otherwise permitted by Article
VIII.

     SECTION 6.5.  Development Decisions.  The Managing Member shall monitor the
                   ---------------------
completion of all work at the Properties Under Development in conformance with a
development

                                      -35-
<PAGE>

budget ("Development Budget"), in accordance with a schedule ("Development
Schedule") and pursuant to plans and specifications ("Development Plans and
Specifications"), which have been approved by NYSTRS and which are attached
hereto as part of the Business Plan attached as Exhibit E. Any Undeveloped
Properties that the Company may decide to develop from time to time shall be
considered "New Projects" and shall henceforth be considered Properties Under
Development for all intents and purposes of this Agreement. Likewise, Properties
Under Development which are completed shall henceforth be considered Developed
Properties for all intents and purposes of this Agreement. The Company from time
to time, with the approval of the Management Committee, may decide to acquire
new properties, and upon acquisition such new properties shall be considered
Properties for all intents and purposes of this Agreement. Depending upon the
circumstances, such newly acquired properties may be Developed Properties,
Properties Under Development or Undeveloped Properties. The Management Committee
shall approve all future Development Budgets, Development Schedules and
Development Plans and Specifications relating to the Properties Under
Development or New Projects. All Properties Under Development shall be
constructed in accordance with existing construction contracts which have been
approved by NYSTRS. All new construction contracts for Properties under
Development or New Projects must be guaranteed maximum price contracts,
stipulated sum contracts or otherwise approved by the Management Committee. All
requisitions for payment or periodic reports required to be delivered by the
developer to the Company or its representative under the Development Agreements
shall, at the option of NYSTRS, be delivered also to NYSTRS and/or its
construction consultant, it being understood that such construction consultant
shall have no independent approval rights but shall review the requisitions for
the benefit of NYSTRS. Additional costs attributable to change orders, cost
overruns or other obligations of the Company shall be covered by borrowings of
the Company or through Additional Capital Contributions, as proposed by the
Managing Member and, if the applicable modification to any Development Budgets,
Development Schedules and Development Plans and Specifications, taken in the
aggregate as to all modifications, would constitute a "Material" modification,
approved by the Management Committee. The Managing Member shall use reasonable
efforts to avoid multiple requests for Additional Capital Contributions in any
one month. The Company shall commence development of the Undeveloped Properties
and New Projects pursuant to Development Budgets, Development Schedules and
Development Plans and Specifications proposed by the Managing Member and
approved by the Management Committee. The Management Committee must approve any
Material modifications to the Development Budgets, the Development Schedules or
the Development Plans and Specifications for the Undeveloped Properties, the
Properties Under Development and New Projects. The Managing Member shall monitor
all development of the Properties Under Development, the Undeveloped Properties
and New Projects pursuant to the Development Agreements and shall keep the
Management Committee informed of all development activities with regard thereto.
With regard to the Undeveloped Properties, the Managing Member annually at the
commencement of each Fiscal Year shall propose annual development plans for
development of the Undeveloped Properties proposed to be developed in the
ensuing Fiscal Year in concept form for the approval of the Management
Committee, setting forth, amongst other factors, the Undeveloped Properties to
be developed, the proposed yield parameters and expected capital and financing
requirements,

                                      -36-
<PAGE>

together with material information concerning the remaining Undeveloped
Properties in each Subportfolio that are not covered by the conceptual
development plans. After approval of the annual conceptual development plans by
the Management Committee, the Managing Member shall develop detailed Development
Budgets, Development Schedules and Development Plans and Specifications for the
approval of the Management Committee. The Development Budgets, Development Plans
and Specifications and Development Plans and Specifications approved by the
Management Committee shall become part of the annual Business Plan. All proposed
borrowings or required Additional Capital Contributions requested in the year in
question for future development shall be set forth in the components of such
approved Business Plan. The Managing Member shall proceed to develop the
Properties Under Development, the Undeveloped Properties and the New Projects in
conformance with the approved Business Plan. Notwithstanding the above, the
Managing Member may make modifications to the Development Budgets, Development
Schedules and Development Plans and Specifications for a single Property Under
Development or New Project which are not "Material" without the approval of the
Management Committee. For purposes of this Section 6.5:

          (a)  A "Material" change to a Development Budget shall mean an
increased cost of more than the greater of (i) ten percent (10%) or (ii)
$20,000, in any single line item; provided that not more than fifty percent
(50%) of the contingency line item is committed and the total overall cost for
the Property Under Development or New Project is not increased; and provided,
further, that savings attributable to any line item covering any "hard" costs
shall not be transferred to any line item covering any "soft" costs, or vice
versa, without the approval of the Management Committee.

          (b)  A "Material" change to a Development Schedule shall mean a delay
in construction of at least three (3) months (exclusive of unavoidable delay)
provided that the total cost for the Property Under Development or New Project
is not increased.

          (c)  A "Material" change in the Development Plans and Specifications
means any proposed change orders that would cause a Material change in the
Development Budget as set forth in Section 6.5(a).

     SECTION 6.6.  Business Plan.  The current business plan ("Business Plan")
                   -------------
is attached hereto as Exhibit E.  Future Business Plans for subsequent Fiscal
                      ---------
Years shall consist of the following components:

          (a)  The Budget for the individual Properties, each Subportfolio and
all of the Properties approved by the Management Committee pursuant to Section
7.6.

          (b)  The Leasing and Property Guidelines for each of the Subportfolios
approved by the Management Committee pursuant to Section 7.7.

                                      -37-
<PAGE>

          (c)  The Development Budgets, Development Schedules and Development
Plans and Specifications approved by the Management Committee pursuant to
Section 6.5.

     SECTION 6.7.  Duties and Conflicts.
                   --------------------

          (a)  The Members, in connection with their respective duties and
responsibilities hereunder, shall at all times act in good faith and, except as
expressly set forth herein, any decision or exercise of right of approval,
consent, disapproval or deferral of approval by a Member is to be made by such
Member pursuant to the terms of this Agreement in good faith, in the exercise of
commercial reasonableness for an owner and operator of suburban office buildings
commensurate in quality with the standard of quality of the Existing Properties,
it being recognized that each Member may act in its own economic self interest
and in accordance with such tax and business objectives as it deems appropriate
or desirable for such Member.  Except as otherwise agreed to in writing by the
Members, no Member or any partner, officer, shareholder or employee of any
Member shall receive any salary or other remuneration for its services rendered
pursuant to this Agreement.

          (b)  Each Member recognizes that the other Members have or may have
other business interests, activities and investments, some of which may be in
conflict or competition with the business of the Company and that such other
Member is entitled to carry on such other business interests, activities and
investments.  No Member shall be obligated to devote all or any particular part
of its time and effort to the Company and its affairs.

     SECTION 6.8.  Company's Counsel.  To the extent that the Management
                   -----------------
Committee deems necessary, the Company shall retain legal counsel to be the
Company's initial legal counsel (the "Company's Counsel").  The fees and
expenses of the Company's Counsel shall be a Company expense.  The Managing
Member shall further have the power to appoint or approve the retention, at the
Company's expense, of additional counsel to represent the Company in the
ordinary course of business.  Nothing herein shall restrict any such counsel
from acting as counsel to any Member or any Affiliate of such Member, provided
that such representation shall not be continued in any adversarial context or
would otherwise conflict with standards of professional conduct.  In the event
the Management Committee shall desire to terminate the employment of the Company
Counsel and to substitute other counsel therefore, such substitute counsel shall
be subject to the approval of the Management Committee.

     SECTION 6.9.  Exculpation. The Managing Member shall act as fiduciary
                   -----------
hereunder and in good faith, but neither the Managing Member nor any other
entity replacing CarrAmerica and acting as Managing Member hereunder shall be
liable to the Company or to any Member for any act performed or omitted to be
performed by it on behalf of the Company, provided such act or omission was
taken in good faith, was reasonably believed by the Managing Member to be in the
interests of the Company and within the scope of authority granted or reserved
to the Managing Member under this Agreement, and did not constitute fraud or
willful misconduct.  Notwithstanding any other term of this Agreement:

                                      -38-
<PAGE>

          (a)  It will not constitute a breach of fiduciary or other duty for
the Managing Member, or any Affiliate of the Managing Member, to engage in
activities of the type conducted by the Company, even if in direct competition
with the Company, including without limitation, the purchase, sale and leasing
of commercial office properties or the purchase, sale, leasing, management or
development of any real property.

          (b)  It will not constitute a breach of fiduciary or other duty for
the Managing Member to resolve any conflicts of interest related to any REIT
requirements.

          (c)  It will not constitute a breach of fiduciary or other duty for
the Managing Member, or any Affiliate of the Managing Member, to engage, as
attorneys, accountants and other advisors on behalf of the Company, persons who
may also be retained from time to time by the Managing Member or its Affiliates,
or any of their respective officers, directors or shareholders, and such persons
may be engaged by both the Company and the Managing Members or its Affiliates
with respect to any matter, provided, however, that unless approved by all of
the Members after full disclosure of any conflict of interest, such persons may
not be engaged with respect to any matter in which the interest of the Company
and the Managing Member may conflict or otherwise when such engagement would
conflict with standards of professional conduct. The Managing Member shall not
be responsible for any misconduct or negligence on the part of any such
attorney, accountant or other advisor.

          (d)  It will not constitute a breach of fiduciary or other duty for
the Managing Member, or an Affiliate of the Managing Member, to contract or
enter into any agreement or arrangement with the Company with respect to any
aspect of the operations of the Company if approved by the Management Committee
or NYSTRS after full disclosure to all of the Members.

     SECTION 6.10.  Intentionally Deleted.
                    ---------------------

     SECTION 6.11.  Indebtedness; UBTI.  The Managing Member shall use
                    ------------------
commercially reasonable efforts, after consultation with NYSTRS and the Carr
Members, to ensure that (i) the Company is not operated in such a manner as to
be classified as an "investment company" for purposes of the Investment Company
Act of 1940, as amended, (ii) the Company does not enter into any transaction
resulting in the realization by NYSTRS of UBTI as defined under Section 5.12 of
the Code, (iii) the Company does not fail to be classified as an "operating
company"as defined in Department of Labor regulations set forth at 29 CFR (S)
2510.3-101(c), or (iv) the Company is operated in such a manner as to cause
CarrAmerica not to qualify as a real estate investment trust or to incur excise
taxes under Sections 856,  857 or 4981 of the Code.  The Managing Member shall
cooperate with any adversely affected Member in connection with any proposed
transaction and shall take all commercially reasonable measures to satisfy a
Member's concerns and alleviate any adverse consequences to such Member
resulting therefrom.  The Managing Member shall submit to NYSTRS written notice
containing all material details of any proposed transaction that the Managing
Member reasonably believes, based upon directions

                                      -39-
<PAGE>

and/or guidelines provided by NYSTRS or other Members, could result in the
realization of UBTI by any Member, or any of a Member's direct or indirect
members or participants, or the realization of income that would be UBTI if a
Member, or any of a Member's direct or indirect members or participants, were
subject to the provisions of Sections 511 through 514 of the Code, and NYSTRS
shall consult with the Managing Member regarding the proposed transaction.

     SECTION 6.12.  Removal of the Managing Member.  At any time before or after
                    ------------------------------
the Lockout Date the Managing Member may be removed as Managing Member by a
majority vote of the Members voting in accordance with their Percentage
Interests, upon ten (10) days written notice, should any of the following events
occur, each of which shall be considered a "Manager Material Default":

          (a)  A case or proceeding shall have been commenced against the
Managing Member in a court having competent jurisdiction seeking a decree or
order in respect of the Managing Member (i) under Title 11 of the United States
Code, or any other applicable federal or state bankruptcy or other similar law,
(ii) appointing a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) of the Managing Member or a substantial part
of its properties, or (iii) ordering the winding-up or liquidation of the
affairs of the Managing Member, and such case or proceeding shall remain
undismissed or unstayed for sixty (60) consecutive days or such court shall
enter a decree or order granting the relief sought in such case or proceeding;

          (b)  The Managing Member shall (i) file a petition seeking relief
under Title 11 of the United States Code, or any other applicable federal or
state bankruptcy or other similar law, (ii) consent to the institution of
proceedings thereunder or to the filing of any such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) of the Managing Member
or of a substantial part of its properties, (iii) admit in writing its inability
to pay its debts generally as such debts become due, or (iv) take any action in
furtherance of any such action;

          (c)  The Managing Member shall have committed gross negligence or
willful misconduct in the conduct of its duties under this Agreement;

          (d)  The Managing Member shall have defaulted in its obligations
(other than in the conduct of its duties which is governed by subparagraph (c))
under this Agreement in any material manner, including, without limitation, if
the Managing Member shall have committed a Member Material Default, or if any of
the Carr Members shall have committed a Member Material Default; or

          (e)  An Unpermitted Transfer by any Carr Member shall have occurred.

     Notwithstanding any other term of this Agreement, in the event that any
defaults described in clauses (d) or (e) above shall have occurred, the Managing
Member shall not be

                                      -40-
<PAGE>

deemed to be in default until the Managing Member shall have received a written
notice of default from NYSTRS specifying the claimed default, and the Managing
Member shall not have cured the claimed default to the satisfaction of NYSTRS
within a period of thirty (30) days; provided, however, that if the cure cannot
reasonably be completed within such thirty (30) day period then the Managing
Member shall have an additional thirty (30) day period to effect the cure
provided that the Managing Member is diligently prosecuting the cure within such
additional thirty (30) day period.

     SECTION 6.13.  Substitution of Managing Member.  Should the Managing Member
                    -------------------------------
be removed pursuant to Section 6.12, then immediately upon such removal NYSTRS
shall become the new Managing Member and shall succeed to all of the rights and
obligations of the Managing Member hereunder; or, at the option of NYSTRS,
NYSTRS shall have the option of appointing a non-member manager who shall have
all the rights and powers of the Managing Member hereunder.

     SECTION 6.14.  Rights of Members upon Removal of Managing Member.  Should
                    -------------------------------------------------
the Managing Member be removed pursuant to Section 6.12, then at any time prior
to or after the Lockout Date the Members shall have the following rights:

          (a)  NYSTRS may exercise sale rights pursuant to Section 8.6 or buy-
sell rights pursuant to Section 8.7 or Section 8.8 for all of the Properties or
all of the Company Interests of the Carr Members at any time for a period of
twelve (12) months after it succeeds as Managing Member; provided, however, that
should NYSTRS as successor Managing Member elect to terminate any of the
Management Agreements or Development Agreements pursuant to the terms thereof,
then such time period shall be reduced to sixty (60) days; and provided further,
however, that should NYSTRS so elect to terminate any of the Management
Agreements or Development Agreements, but not exercise such sale or buy-sell
rights within such sixty (60) days, then the Carr Members, acting as a group,
within the ensuing sixty (60) days, may exercise such sale or buy-sell rights
for all of the Properties or all of the Company Interests of NYSTRS.

          (b)  If neither NYSTRS nor the Carr Members exercise their rights
under Section 6.14(a) then neither NYSTRS nor the Carr Members shall have any
further rights to exercise such sale or buy-sell rights in connection with the
removal of the Managing Member, except as such rights may otherwise be available
to NYSTRS or the Carr Members pursuant to Article VIII.

     SECTION 6.15.  Dispute Resolution.  The Members shall cause their
                    ------------------
representatives on the Management Committee to act reasonably and in good faith
to resolve any disputes related to Major Decisions.  If, notwithstanding
reasonable efforts, the Management Committee is unable to approve a proposed
annual Business Plan for any Fiscal Year, then the Company shall continue to be
operated by the Managing Member on the basis of the Business Plan for the prior
Fiscal Year.  The Managing Member shall nevertheless be authorized to pay
increases in real estate taxes and other similar non-discretionary items.  After
the Lockout Date, if, despite

                                      -41-
<PAGE>

reasonable efforts, the Management Committee cannot resolve disputes with
respect to the making of a Major Decision, then either NYSTRS or the Carr
Members, acting as a group, may exercise sale rights in connection with all or
any of the Properties as set forth in Section 8.6. In addition, in the event
that after the Lockout Period a Major Dispute (hereinafter defined) occurs, then
(i) if the Major Dispute concerns issues relating to all of the Properties, then
either NYSTRS or the Carr Members, acting as a group, may exercise buy-sell
rights in accordance with Section 8.7 or 8.8 covering all of the Properties or
all of the Company Interests of NYSTRS, on the one hand, or all of the Carr
Members, on the other hand (without having first exercised their right of first
offer pursuant to Section 8.6), or (ii) if the Major Dispute relates to a single
Property or Subportfolio then either NYSTRS or the Carr Members, acting as a
group, may exercise buy-sell rights in accordance with Section 8.7 in connection
with the single Property or Subportfolio in question (without having first
exercised their right of first offer pursuant to Section 8.6). For purposes of
this Section 6.15, a "Major Dispute" shall mean a dispute as between the NYSTRS
Committee Member and the Carr Committee Member relating to any of the following
subjects: (i) the sale or exchange of any of the Properties, (ii) the
mortgaging, pledging or other encumbering of any of the Properties, or (iii) the
terms of any new secured or unsecured borrowings by the Company in excess of
$10,000,000, or any modification of any existing borrowings of the Company when
the amount of the borrowing exceeds $10,000,000.

     SECTION 6.16.  Indebtedness.
                    ------------

          (a)  The Company or its Affiliates shall assume, and the Members
hereby consent to the assumption of, the Loan which is secured by Building 1 of
the Parkway North Subportfolio. Parkway has assigned to the Company as part of
its Initial Capital Contribution all right, title and interest in and to the
cash escrows associated with the Loan.

          (b)  The Company may obtain additional secured non-recourse financing
secured by all or a portion of the Developed Properties in an amount sufficient
to bring the debt level of the Developed Properties to a 50% leverage ratio,
subject to the approval of the Management Committee.

          (c)  The Company may obtain additional financing to complete
development of the Properties Under Development and develop the Undeveloped
Properties, in such amounts and secured by such Company Assets as may be
approved from time to time by the Management Committee.

          (d)  Any guaranties required in connection with any financing must be
approved by the Management Committee and any liability under such guaranties
shall be several as between NYSTRS and the Carr Members in proportion to their
Percentage Interests in the Company.

                                  ARTICLE VII

                                      -42-
<PAGE>

                          BOOKS AND RECORDS; RESERVES
                          ---------------------------

     SECTION 7.1.  Bank Accounts.  The Managing Member shall have authority to
                   -------------
open bank accounts and designate signatories with respect thereto on behalf of
the Company and may authorize Manager and other agents and independent
contractors of the Company to open such bank accounts as the Managing Member
shall deem necessary or desirable in the exercise of the Managing Member's
reasonable judgment for the management and operation of the Project and the
conduct of Company business.

     SECTION 7.2.  Books of Account.  The Company shall keep accurate and
                   ----------------
complete books of account and records showing the assets and liabilities,
operations, transactions and financial condition of the Company and the
Properties in accordance with generally accepted accounting principles,
consistently applied.  The books of account and records of the Company and the
Properties shall at all times be maintained at the principal office of the
Company or at the offices of Manager.  The Company shall permit all such books
of account and records to be inspected by the Members, their designees or
representative from time to time and upon reasonable prior notice at the office
of the Company or other person maintaining the same.

     SECTION 7.3.  Operating Statements.
                   --------------------

          (a)  As and when prepared or received by the Managing Member, Manager
and/or the Company, the Managing Member shall promptly provide each Member, when
available, with copies of the monthly reports received from the Manager,
periodic reports by the developer under the Development Agreement and all other
material reports, studies, operating statements and other documents relating to
the Properties, the Company or this Agreement.  The Company shall at least once
every calendar year have the Company's books and records audited at its expense
by the Accountant.

          (b)  No later than the later of (i) the twentieth (20th) day after the
end of each calendar month and (ii) five (5) days following receipt of the same
from the Manager (if the Manager shall be responsible for producing the same),
the Company shall, as a Company expense, furnish each Member with:

               (i)  a statement of operations showing GAAP net income and actual
incurred capital expenditures of the Properties in the aggregate and broken down
by Subportfolio according to pre-determined categories, in a format which will
allow for comparison to, and show variances from, the Budget;

               (ii) balance sheets on an accrual basis for the Company and for
each Subportfolio;

                                      -43-
<PAGE>

               (iii)  a full trial balance on an accrual basis (including
assets, liabilities and profit and loss statement) on the Manager's existing
format; and

               (iv)   a schedule showing changes in Members' equity.

          (c)  No later than the later of (i) the twentieth (20th) day after the
end of each calendar quarter and (ii) five (5) days following receipt of the
same from the Manager (if the Manager shall be responsible for producing the
same), the Company shall, as a Company expense, furnish each Member with a cash
flow statement setting forth Net Cash Flow from the Properties in the aggregate
and broken down by Subportfolio for, and the distribution thereof during, the
reporting period.

          (d)  No later than ninety (90) days after the end of each taxable year
of the Company, the Managing Member shall, as a Company expense, furnish each
Member with (i) all necessary tax reporting information required by the Members
for the preparation of their respective Federal, State and local income tax
returns, including each Member's pro rata share of income, gain, loss,
deductions and credits for such year and (ii) an audited year-end statement of
the Company in connection with the continuing operations of the Properties,
including a balance sheet and the related statements of income and changes in
financial conditions;

          (e)  Within ninety (90) days following the end of the taxable year of
the Company, the Managing Member shall, as a Company expense, furnish each
Member with copies of the Company's Federal and other income tax returns,
together with each Member's Schedule K-1 or analogous schedule, which returns
shall be signed by the Managing Member on behalf of the Company and co-signed by
the Accountant as preparer.

          (f)  The Managing Member shall use reasonable efforts to cause all
Federal, State and local income and other tax returns (the "Tax Returns") to be
timely filed by the Company.  The Managing Member shall provide NYSTRS with a
draft of the Tax Returns within a reasonable period of time prior to the Tax
Returns being due for filing with any Federal, State or local taxing authority.
NYSTRS shall have five (5) Business Days following the receipt of the draft Tax
Returns to object to any item(s) set forth in such draft Tax Returns which would
have a material adverse consequence to NYSTRS (a "Tax Return Objection").  The
failure of NYSTRS to notify the Managing Member of a Tax Return Objection within
such five (5) Business Day period shall be deemed an acceptance of such Tax
Return unless such Tax Return shall be subsequently modified.  If NYSTRS shall
deliver a Tax Return Objection within such five (5) Business Day period, the
Company shall not file any such Tax Return without NYSTRS's prior written
consent.

          (g)  The Managing Member shall be the "Tax Matters Member" of the
Company for federal income tax purposes (i.e., the "tax matters partner" as
described in Code Section 6231(a)(7)).  All costs and expenses incurred by the
Tax Matters Member in performing its duties as such (including legal and
accounting fees) shall be borne by the Company.  The Tax Matters Member shall
not extend the statute of limitations, select a judicial forum to challenge a

                                      -44-
<PAGE>

determination of the Internal Revenue Service or enter into any settlement with
any taxing authority (federal, state or local) without the consent of NYSTRS.
Each Member shall give prompt notice to each other Member of any and all notices
it receives from any taxing authority (federal, state or local) concerning the
Company, including, without limitation, any notice of audit, any notice of
action with respect to a revenue agent's report, any notice of a 30-day appeal
letter or any notice of a deficiency in tax concerning the Company's income tax
returns. The Tax Matters Member shall furnish each Member with status reports
regarding any negotiation between such taxing authority and the Company, and
each such Member, if it so requests, may participate in such negotiation.

          (h)  If at any time and from time to time in the review of the
reports, studies, operating statements or other documents relating to the
Properties delivered by the Company to NYSTRS pursuant to this Section, NYSTRS
shall become aware of any action which would result in the realization by NYSTRS
of UBTI, NYSTRS shall promptly notify the Managing Member of the same.

          (i)  The Managing Member shall use commercially reasonable efforts to
have property management software developed by Management Reports, Inc. ("MRI")
installed and utilized as soon as practical, or any other property management
software which NYSTRS shall reasonably require; provided, however that if NYSTRS
shall require more than one such change after conversion to MRI, then such
further conversion shall be at NYSTRS' expense.  The modules required for
implementation shall include general ledger, commercial management, and
distributive processing.  NYSTRS, at its sole discretion, may require at the
Company's expense appropriate enhancements to the property management software.
The database structure, system type, and property number will be provided by
NYSTRS and will not be modified without the consent of NYSTRS.  NYSTRS will
provide Managing Member with a standard chart of accounts, tenant charge
(billing) codes, and report formats which are to be used unless otherwise agreed
to in advance by NYSTRS.  Manager shall submit concurrently with the other
monthly reports a monthly electronic download of selected financial and
operational data, including general ledger and lease information, using the
distributive processing function of MRI.

     SECTION 7.4.  The Accountant.  The Company shall retain KPMG Peat Marwick
                   --------------
to be the initial accountant and auditor for the Company (the "Accountant").
The fees and expenses of the Accountant shall be an Operating Expense.  Any
change in the Accountant shall be a Major Decision as set forth in Section 6.3.
If the Management Committee cannot agree upon a substitute Accountant, then
NYSTRS may retain a second accountant to review the work of the Accountant.  The
fees and expenses of the second accountant shall be an Operating Expense.

     SECTION 7.5.  Appraisals.  NYSTRS shall have the right, from time to time
                   ----------
but not more often than once every three Fiscal Years, to retain qualified
independent MAI real estate appraisers experienced in appraising commercial
properties in the locations where the Properties are located (the "Appraisers")
to appraise the value of the Properties, using methods of appraisal acceptable
to NYSTRS.  The fees and expenses of the Appraisers shall be an Operating
Expense,

                                      -45-
<PAGE>

provided the cost of such appraisals does not exceed the fees which are paid for
similar appraisals of commercial properties in the areas where the Properties
are located. All such appraisals shall be certified and delivered to both NYSTRS
and the Company. All such appraisals shall be distributed to the Members by the
Company following the Company's receipt of the same.

     SECTION 7.6.  The Budget.  Not later than seventy-five (75) days prior to
                   ----------
the commencement of each calendar year, the Managing Member shall submit to the
Management Committee a proposed budget for each of the Properties, each of the
Subportfolios and for all of the Properties for the ensuing year in form and
content acceptable to the Management Committee which shall include, but not
necessarily be limited to, a description of the management and operating
activities to be undertaken during such year, projected monthly statement of
operating revenues and expenses, reserves or additions to reserves or estimates
of Net Cash Flow with regard to the Properties, expenditures for capital
improvements and repairs for the Properties.  The budgets, once approved by the
Management Committee, shall be aggregated into a single budget for all of the
Properties, and shall be referred to herein collectively as the "Budget."  Once
approved, the Company shall not supplement, modify or amend a Budget in any
"Material" way without the approval of the Management Committee.  The Managing
Member agrees to notify the Management Committee promptly of any fact or
circumstance that may render an approved Budget inaccurate in any Material
respect.  The Managing Member shall use commercially reasonable efforts to
conduct the operations of the Company business in accordance with the then-
current Budget.  For purposes of this Section 7.6, "Material" means a variance
of greater than five percent (5%) in total revenues or total expenses in a
budget for any single Property, or a decrease in net operating income of greater
than five percent (5%) in the budget for any single Property.

     SECTION 7.7.  Leasing and Property Guidelines.  Not later than seventy-five
                   -------------------------------
(75) days prior to the commencement of each calendar year, the Managing Member
shall submit to the Management Committee leasing and property guidelines for the
Properties for the ensuing year in a form acceptable to the Management Committee
which shall include, but not necessarily be limited to, (i) basic, additional
and percentage rent parameters for the leasing of space at the Properties, (ii)
tenant improvement, take-back, take-over, free rent, tenant allowances and other
incentive parameters for the leasing of space at the Properties, (iii) credit
worthiness parameters for prospective tenants at the Properties, (iv) a
narrative description setting forth leasing strategies for the Properties, (v) a
description of the nature of acceptable tenants for the Properties, and (vi) a
form lease in each jurisdiction where the Properties are located (which may be
subject in each instance to modifications customary for the applicable market
area and type and quality of tenant).  Said leasing and property guidelines,
once approved by the Management Committee, shall herein be referred to
collectively as the "Leasing and Property Guidelines."  Once approved, the
Company shall not supplement, modify or amend the Leasing and Property
Guidelines without the approval of the Management Committee.  Attached hereto
and made a part hereof as Exhibit E are the Leasing and Property Guidelines in
                          ---------
effect for the 2000 calendar year.

                                      -46-
<PAGE>

                                 ARTICLE VIII

                TRANSFER OF COMPANY INTERESTS; SALE OF PROPERTY
                -----------------------------------------------

     SECTION 8.1.  Transfers; Certain Defined Terms. (a) As used herein:
                   --------------------------------

               (i)   "Transfer" shall mean any sale, assignment, transfer, gift,
hypothecation or encumbrance by any Member of all or any portion of its Company
Interest.

               (ii)  "Change in Control" shall mean a transaction, related
series of transactions or events, occurring at any time either before or after
the Lockout Date in which (i) in the case where the common stock of CarrAmerica
or any surviving company under Section 8.4(b) (or if CarrAmerica or such company
is not the surviving company, of the surviving company immediately following
such transaction), is publicly traded, either (a) less than a majority of the
board of directors of CarrAmerica or the surviving company, as applicable,
immediately following such transaction consists of persons who were directors of
CarrAmerica immediately prior to such transaction or (b) less than a majority of
the senior management team of CarrAmerica or the surviving company, as
applicable, immediately following such transaction consists of persons who were
members of senior management of CarrAmerica immediately prior to such
transaction, (ii) in the case where the common stock of CarrAmerica, or the
surviving company if CarrAmerica is not the surviving company, is not publicly
traded, less than a majority of the senior management team of Carr America or
the surviving company, as applicable, immediately following such transaction
consists of persons who were members of senior management of CarrAmerica
immediately prior to such transaction, (iii) the CarrAmerica entities or any
surviving company under Section 8.4(b) which are Members of the Company cease to
own at least 35%, in the aggregate, of the Company, (iv) more than (4) Named
Officers resign from the CarrAmerica in any three (3) month period, as used
herein, the term "Named Officers" shall mean Thomas A. Carr, Karen Dorigan, Paul
Adkins, Kent Gregory, Philip Hawkins, Richard Katchuk and Jamie Williams, or (v)
CarrAmerica or any surviving company under Section 8.4(b) ceases to own at least
51% of each of the Carr Members.

               (iii) "Unpermitted Transfer" shall mean (i) a Transfer that is
not permitted pursuant to Sections 8.2, 8.3(a), 8.4(a) or 8.4(b), (ii) a Change
in Control or, (iii) a Transfer which would result in creating a non-exempt
prohibited transaction under the Employee Retirement Income Security Act of
1974, as amended ("ERISA").

          (b)  Should an Unpermitted Transfer by the Carr Members occur, either
before or after the Lockout Date, then such Unpermitted Transfer shall not
constitute a breach or default of this Agreement, but in such circumstance
NYSTRS shall have the rights afforded to it pursuant to this Agreement,
including, without limitation, the rights afforded pursuant to Sections 6.4 and
6.12.  Should an Unpermitted Transfer by NYSTRS occur, either before or after
the Lockout Date, then in such circumstance such Unpermitted Transfer shall not
constitute a

                                      -47-
<PAGE>

breach or default of this Agreement, but the Carr Members shall have the right
to exercise sale rights pursuant to Section 8.6 or buy-sell rights pursuant to
Section 8.7 or 8.8 for all Properties or all of the Company Interests of NYSTRS.

     SECTION 8.2.  Succession by Operation of Law.  Subject to Section 8.1 and
                   ------------------------------
the other provisions of this Article VIII, in the event of the death or
incapacity of an individual Member or in the event of the merger, consolidation,
dissolution or liquidation of any Member not an individual, all of such Member's
rights hereunder, including such Member's Company Interest, shall pass to such
Member's personal representative, heir or distributee, in the case of an
individual Member, or to such Member's legal successor, in the case of any
Member not an individual, which personal representative, heir, distributee or
legal successor shall become a Member of the Company.

     SECTION 8.3.  Transfers by NYSTRS.
                   -------------------

          (a)  Notwithstanding any other term of this Agreement, at any time
NYSTRS may from time to time, in its sole discretion, Transfer all or any
portion of its Company Interest to any Affiliate of NYSTRS.  From and after the
Lockout Date, NYSTRS may Transfer all of its Company Interest, subject to the
provisions of Section 8.3(b), to any person, firm, corporation or entity,
provided any such assignee assumes the obligations to be performed by NYSTRS
hereunder, and provided further that the Carr Members approve any such Transfer,
such approval not to be unreasonably withheld or delayed.  In connection with
such approval, the Carr Members shall be acting reasonably if the Carr Members
refuse to grant approval because the proposed transferee or its Affiliate is (i)
a competitor of the Carr Members in connection with the ownership and/or
development of office real estate in the markets where the Carr Members or their
Affiliates own properties (but not as a passive, non-controlling investor), (ii)
a real estate company (not including a real estate subsidiary of an
institutional investor, such as an insurance company) whose shares are publicly
traded, or (iii) an entity or an Affiliate thereof with which the Carr Members
have engaged in litigation or have engaged in a material dispute.

          (b)  Should NYSTRS desire to Transfer all of its Company Interest as
permitted by Section 8.3(a), then NYSTRS shall first deliver to the Carr Members
an offer (the "NYSTRS Offer") to sell the NYSTRS's Company Interest together
with the material terms (the "NYSTRS Sale Material Terms"), which shall be the
same terms, including, without limitation, sales price, as offered to the
proposed transferee by NYSTRS in connection with the Transfer proposed under
Section 8.3(a).  The Carr Members shall have sixty (60) days from the receipt of
the NYSTRS Offer, time being of the essence, to deliver a notice (the "Carr
Acceptance") to NYSTRS, in writing, that the Carr Members agree to purchase the
NYSTRS's Company Interest on the NYSTRS Sale Material Terms in accordance with
the provisions of this Section.  In the event the Carr Members deliver the Carr
Acceptance as aforesaid, (i) the purchase and sale shall occur on the NYSTRS
Sale Material Terms (provided, however, the closing shall occur no later than
ninety (90) days from the date of the NYSTRS Offer), (ii) NYSTRS shall deliver
to the Carr Members at the closing of such purchase and sale, a duly executed,
sealed and acknowledged

                                      -48-
<PAGE>

instrument assigning to the Carr Members, the NYSTRS's Company Interest, which
assignment shall be accompanied by such other documents and instruments,
including, without limitation, corporate resolutions, as may be requested by the
Carr Members and the Company in the exercise of their reasonable judgment (iii)
on the effective date of such assignment, the Company shall deliver a release to
NYSTRS releasing NYSTRS from all liabilities and obligations of the Company
arising from and after the date of such assignment. Such assignment shall be
free and clear of all liens and encumbrances, and NYSTRS shall deliver to the
Carr Members a written representation and warranty to such effect at the
closing, which representation and warranty shall survive the closing. All costs
and expenses in connection with the conveyance of NYSTRS's Company Interest to
the Carr Members (including, without limitation, transfer taxes payable in
connection therewith) shall be borne by NYSTRS. In the event that the Carr
Members shall fail to deliver the Carr Acceptance as aforesaid, the Carr Members
shall finally and conclusively be deemed to have declined to purchase NYSTRS's
Company Interest on the terms set forth in the NYSTRS Offer and the rights and
privileges granted to the Carr Members in this Section with regard to such
NYSTRS Offer (as opposed to a subsequent NYSTRS Offer) shall be deemed null and
void ab initio and of no further force or effect. Notwithstanding that the
foregoing provision shall be self-operative and not in limitation thereof, in
the event the Carr Members do not deliver the Carr Acceptance in accordance with
the provisions of this Section, the Carr Members shall, within ten (10) days
after request by NYSTRS, execute and deliver to NYSTRS any document or
instrument requested by NYSTRS in the exercise of NYSTRS's reasonable judgment
to confirm that all rights and privileges granted to the Carr Members under this
clause are null and void ab initio and of no further force or effect with regard
to such NYSTRS Offer. In the event that the Carr Members shall fail to execute
and deliver any such document or instrument in such ten (10) day period, the
Carr Members hereby constitute and appoint NYSTRS attorney-in-fact, coupled with
an interest, for the Carr Members to execute and deliver any such instrument for
and on behalf of the Carr Members. Thereupon NYSTRS shall be entitled to sell
the NYSTRS's Company Interest to the proposed transferee upon the terms set
forth in the NYSTRS Sale Material Terms. If such sale is not consummated within
one (1) year from the date the NYSTRS Offer is first transmitted, then NYSTRS
shall be obligated to again comply with the provisions of this Section 8.3(b)
for any subsequent sale.

          (c)  No Transfer shall be made pursuant to this Section in any manner
which would violate any provision of any mortgage or deed of trust encumbering
all or any portion of the Properties.

          (d)  If NYSTRS or the Carr Members, as the case may be, shall fail or
refuse for any reason whatsoever to perform their obligations under this Section
in the manner herein prescribed, the non-defaulting Member may pursue any of its
rights and remedies as herein provided, or at law or equity, including, without
limitation, the remedy of specific performance.

          (e)  Notwithstanding anything to the contrary set forth herein, in the
event that any rights under this Section 8.3 shall be exercised prior in time to
the exercise of any rights under Section 8.4 or Sections 8.6, 8.7 or 8.8 hereof,
the rights under this Section 8.3 shall

                                      -49-
<PAGE>

supersede any other rights existing pursuant to Section 8.4 or Sections 8.6, 8.7
or 8.8 and in the event that any rights under Section 8.4 or Sections 8.6, 8.7
or 8.8 shall be exercised prior in time to the exercise of any rights under this
Section 8.3, the rights under Section 8.4 or Sections 8.6, 8.7 or 8.8 shall
supersede any other rights existing pursuant to this Section 8.3.

     SECTION 8.4.  Transfers by the Carr Members.
                   -----------------------------

          (a)  Notwithstanding any other term of this Agreement, the individual
Carr Members may, from time to time, in their sole discretion, Transfer all or
any portion of their respective Company Interests to (x) any other Carr Member,
or (y) any Affiliate, provided that such Affiliate shall assume the obligations
to be performed by such Carr Member hereunder.

          (b)  The Carr Members may Transfer all of their Company Interests (i)
at any time before or after the Lockout Date, to a new entity in connection with
the merger, sale of all or substantially all of the assets of CarrAmerica or
other business combination involving CarrAmerica in which the purchaser or
survivor assumes CarrAmerica's obligations, and where such entity assumes all of
the obligations of the transferring Carr Member hereunder, or (ii) after the
Lockout Date, subject to the provisions of Section 8.4(c) hereof, to any person,
firm, corporation or entity, provided that such entity assumes the obligations
to be performed by the Carr Members hereunder, and provided further that NYSTRS
shall approve such Transfer pursuant to clause (ii), such approval not to be
unreasonably withheld or delayed.  In connection with such approval, NYSTRS
shall be acting reasonably if NYSTRS refuses to grant approval because the
proposed transferee or its Affiliate is an entity with which NYSTRS has engaged
in litigation or has been engaged in a material dispute.  Notwithstanding any
other provision of this Agreement, no Transfer pursuant to Section 8.4(b)(i) on
the part of the Carr Members shall constitute a default or breach of this
Agreement; it being understood that if such Transfer constitutes a Change in
Control, certain rights are granted to NYSTRS hereunder.

          (c)  Should the Carr Members desire to Transfer all of their Company
Interests as permitted by Section 8.4(b)(ii), then the Carr Members shall first
deliver to NYSTRS an offer (the "Carr Offer") to sell the Carr Members Company
Interests together with the material terms (the "Carr Sale Material Terms"),
which shall be the same terms, including, without limitation, sales price,  as
offered to the proposed transferee by the Carr Members in connection with the
Transfer proposed under Section 8.4(b)(ii).  NYSTRS shall have sixty (60) days
from the receipt of Carr's Notice, time being of the essence, to deliver a
notice (the "NYSTRS Acceptance") to the Carr Members, in writing, that NYSTRS
agrees to purchase the Carr Members Company Interests on the Carr Sale Material
Terms in accordance with the provisions of this Section.  In the event NYSTRS
delivers the NYSTRS Acceptance as aforesaid, (i) the purchase and sale shall
occur on the Carr Sale Material Terms (provided, however, the closing shall
occur no later than ninety (90) days from the date of the Carr Offer), (ii) the
Carr Member shall deliver to NYSTRS at the closing of such purchase and sale, a
duly executed, sealed and acknowledged instrument assigning to NYSTRS the Carr
Members Company Interests, which assignment shall be accompanied by such other
documents and instruments, including, without limitation, corporate

                                      -50-
<PAGE>

resolutions, as may be requested by NYSTRS and the Company in the exercise of
their reasonable judgment and (iii) on the effective date of such assignment,
the Company shall deliver a release to the Carr Members releasing the Carr
Members from all liabilities and obligations of the Company arising from and
after the date of such assignment. Such assignment shall be free and clear of
all liens and encumbrances, and the Carr Members shall deliver to NYSTRS a
written representation and warranty to such effect at the closing, which
representation and warranty shall survive the closing. All costs and expenses in
connection with the conveyance of the Carr Members Company Interests to NYSTRS
(including, without limitation, transfer taxes payable in connection therewith)
shall be borne by the Carr Members. In the event that NYSTRS shall fail to
deliver the NYSTRS Acceptance as aforesaid, NYSTRS shall finally and
conclusively be deemed to have declined to purchase the Carr Members Company
Interests on the terms set forth in the Carr Offer and the rights and privileges
granted to NYSTRS in this Section with regard to such Carr Offer (as opposed to
a subsequent Carr Offer) shall be deemed null and void ab initio and of no
further force or effect. Notwithstanding that the foregoing provision shall be
self-operative and not in limitation thereof, in the event NYSTRS does not
deliver the NYSTRS Acceptance in accordance with the provisions of this Section,
NYSTRS shall, within ten (10) days after request by the Carr Members, execute
and deliver to the Carr Members any document or instrument requested by the Carr
Members in the exercise of the Carr Member's reasonable judgment to confirm that
all rights and privileges granted to NYSTRS under this clause are null and void
ab initio and of no further force or effect with regard to such Carr Offer. In
the event that NYSTRS shall fail to execute and deliver any such document or
instrument in such ten (10) day period, NYSTRS hereby constitutes and appoints
the Carr Members attorneys-in-fact, coupled with an interest, for NYSTRS to
execute and deliver any such instrument for and on behalf of NYSTRS; thereupon
the Carr Members shall be entitled to sell the applicable portion of the
NYSTRS's Company Interests to the proposed transferee upon the terms set forth
in the Carr Offer. If such sale is not consummated within one (1) year from the
date the Carr Offer is first transmitted, then the Carr Members shall be
obligated to again comply with the provisions of this Section 8.4(c) for any
subsequent sale.

          (d)  No Transfer shall be made pursuant to this Section in any manner
which would violate any provision of any mortgage or deed of trust encumbering
all or any portion of the Properties.

          (e)  If NYSTRS or the Carr Members, as the case may be, shall fail or
refuse for any reason whatsoever to perform their obligations under this Section
in the manner herein prescribed, the non-defaulting Member may pursue any of its
rights and remedies as herein provided, or at law or equity, including, without
limitation, the remedy of specific performance.

     SECTION 8.5.  New Members.  Notwithstanding Sections 8.2, 8.3 and 8.4
                   -----------
hereof, no person or entity, not then a Member, shall become a Member hereunder
under any of the provisions hereof unless such person or entity shall expressly
assume and agree to be bound by all of the terms and conditions of this
Agreement.  Each such person or entity shall also cause to be delivered to the
Company, at his or its sole cost and expense, a favorable opinion of legal

                                      -51-
<PAGE>

counsel acceptable to the Company in the exercise of its reasonable judgment, to
the effect that (i) the contemplated Transfer of such Company Interest to such
person or entity does not violate any applicable Federal or state law, and (ii)
that such person or entity has the legal right, power and capacity to own the
Company Interest. All reasonable costs and expenses incurred by the Company in
connection with any Transfer of a Company Interest and, if applicable, the
admission of a person or entity as a Member hereunder, shall be paid by the
transferor. Upon compliance with all provisions hereof applicable to such person
or entity becoming a Member, all other Members agree to execute and deliver such
amendments hereto as are necessary to constitute such person or entity a Member
of the Company.

     SECTION 8.6.  Sale of Properties; Right of First Offer.  (a) From time to
                  -----------------------------------------
time after the Lockout Date (except as otherwise provided in this Agreement),
either Member (the "Initiating Member") may elect to cause the Company to sell
any single Property (provided such Property has been in operation for at least
48 months), any one or more Subportfolios (in which case the 48 month operation
requirement would not apply to any Property therein) or all of the Properties
(the "Marketed Property"), by delivering written notice to the other Member (the
"Responding Member") of (i) its intention to market the Marketed Property, and
(ii) the purchase price (the "Stipulated Price") and other material terms (the
"Sale Terms") at which it believes the Company can sell the Marketed Property
(the "Sale Notice").  All sales of Marketed Properties shall be all-cash sales;
provided, however, that if feasible the Sale Terms may include the assumption by
the purchaser of assumable financing.  The material Sale Terms shall include,
without limitation, the following: (i) the identity of the marketing agent for
the Marketed Property (who shall not be a Member or an affiliate of a Member),
and (ii) applicable brokerage fees and/or sales commissions.  For purposes of
this Section 8.6, the Carr Members shall be considered a single Member.

          (b)  In the event the Initiating Member delivers the Sale Notice as
aforesaid, the Responding Member shall have thirty (30) days for a single
Property or one or more Subportfolios, and ninety (90) days for all the
Properties, following the receipt of the Sale Notice, time being of the essence,
to deliver a written notice (the "Response Notice") to the Initiating Member,
that the Responding Member agrees to purchase the Marketed Property at the
Stipulated Price and on the Sale Terms, including the payment of (x) all
existing Company debts (unless assumed) and liabilities related to the Marketed
Property, and (y) any prepayment penalties or bank transfer charges actually
incurred with regard to financing to be paid in full at closing or assumption
fees paid in connection with assumed financing (pursuant to the terms of any
mortgage encumbering the Marketed Property, without further negotiations with
the holder of such mortgage) in connection with the exercise of the right
contained in this Section 8.6 and such other terms and conditions as are usual
and customary in all material respects.  In the event the Responding Member
delivers the Response Notice as aforesaid, (x) the purchase and sale shall occur
on the Sale Terms and such other terms and conditions as are usual and customary
in all material respects (provided, however, the closing shall occur no later
than ninety (90) days from the date of the Responding Member's Notice if the
Marketed Property is a single Property or one or more Subportfolios and 150 days
if the Marketed Property is all of the Properties), (y) the Company shall
deliver to the Responding Member at the closing of such purchase and sale, a

                                      -52-
<PAGE>

duly executed, sealed and acknowledged special warranty deed conveying to the
Responding Member the Marketed Property, which special warranty deed shall be
accompanied by such other documents and instruments, including, without
limitation, corporate resolutions, as may be requested by the Responding Member
and the Company in the exercise of their reasonable judgment.  The conveyance
shall be subject to all encumbrances of record and assumed financing.  All costs
and expenses in connection with the conveyance of the Marketed Property to the
Responding Member (including, without limitation, transfer taxes payable in
connection therewith), not paid by the purchaser, shall be borne by the Company.
In the event that the Responding Member shall fail to deliver the Response
Notice as aforesaid, the Initiating Member may, but shall have no obligation to,
cause the Company to sell the Marketed Property to any third party at no less
than 95% of the Stipulated Price (or at a higher price) on the Sales Terms and
such other terms and conditions as are usual and customary in all material
respects (or on terms more beneficial to the Company) for a period of six (6)
months thereafter.  In the event that the Initiating Member shall elect to
market the Marketed Property for sale to a third party in accordance with the
previous sentence, the Responding Member shall have an opportunity to bid to
purchase the Marketed Property along with other third parties.  In the event
that the Initiating Member shall fail to cause the Company to effectuate a sale
of the Marketed Property pursuant to and in accordance with the provisions of
this Section 8.6 within said six (6) month period, then the Initiating Member
may exercise buy-sell rights with regard to the Property or Properties in
question pursuant to Section 8.7, or, if the Marketed Property consists of all
the Properties, the buy-sell rights with regard to the Company Interest of the
Responding Member pursuant to Section 8.8.  If the Initiating Member does not
effect a sale within the six (6) month period and does not elect to exercise
rights under Section 8.7, or, if respect to all the Properties, Section 8.8,
then the Initiating Member shall once again be required to comply with the
provisions of this Section 8.6 prior to effectuating a sale of the Marketed
Property to a third party.  In the event of a sale of the Marketed Property
pursuant to the provisions of this Section 8.6, the Responding Member shall
cooperate fully in the sale of the Marketed Property and shall execute and
deliver any and all documents and instruments requested by the Initiating Member
in the exercise of its reasonable judgment necessary or desirable to consummate
such sale.  If the Responding Member shall fail to execute and deliver any such
document or instrument within ten (10) days after request therefor, the
Responding Member shall be in default under this Agreement, and in addition to
any other rights and remedies the Initiating Member may have hereunder, or at
law or equity, the Responding Member hereby constitutes and appoints the
Initiating Member attorney-in-fact, coupled with an interest, for the Responding
Member to execute and deliver any such document or instrument for and on behalf
of the Responding Member.

          (c)  No Transfer shall be made pursuant to this Section in any manner
which would violate any provision of any mortgage or deed of trust encumbering
all or any portion of the Properties.

          (d)  If NYSTRS or the Carr Members, as the case may be, shall fail or
refuse for any reason whatsoever to perform their obligations under this Section
in the manner herein prescribed, the non-defaulting Initial Member may pursue
any of its rights and remedies as

                                      -53-
<PAGE>

herein provided, or at law or equity, including, without limitation, the remedy
of specific performance.

     SECTION 8.7.  Buy/Sell for Marketed Properties.
                   --------------------------------

          (a)  After expiration of the six (6) month marketing period set forth
in Section 8.6(b) with respect to one or more single Properties, one or more
Subportfolios or all of the Properties, for a period of six (6) months
thereafter, or at such other times or under such circumstances as may be
otherwise permitted by this Agreement, either NYSTRS, on the one hand, or the
Carr Members acting as a group, on the other hand, may cause the Company to sell
one or more single Properties, one or more Subportfolios, or all of the
Properties, to a Member (the Carr Members being considered a single Member) in
accordance with this Section.  One Member shall first give written notice to the
Company (the "Property Call Notice") of its intent to purchase one or more
single Properties, one or more Subportfolios or all of the Properties (the "Buy-
Sell Property") from the Company.  The Property Call Notice shall make reference
to this Section and shall state (i) the purchase price for the Buy-Sell
Property, which shall be all cash (provided that if feasible the sale terms may
include the assumption by the purchaser of assumable financing) (the "Property
Call Purchase Price") that such Member shall be willing to pay for the Buy-Sell
Property and (ii) a specified date for such purchase, which shall be no later
than ninety (90) days if the Buy-Sell Property is a single Property or
Properties or one or more Subportfolios or 150 days if the Buy-Sell Property is
all of the Properties.  The Member exercising such right and option and
delivering the Property Call Notice to the Company shall hereinafter be referred
to as the "Property Initiating Party."

          (b)  In the event that the Property Initiating Party delivers the
Property Call Notice as aforesaid, the other Member shall, by delivery of notice
(the "Property Call Response Notice") to the Property Initiating Party within
thirty (30) days following the receipt of the Property Call Notice, time being
of the essence, choose to (i) accept the Property Initiating Party's offer to
purchase the Buy-Sell Property for the Property Call Purchase Price, and on the
date set forth in the Property Call Notice, or (ii) give notice to the
Initiating Member that the other Member desires to purchase the Buy-Sell
Property for the Property Call Purchase Price, and on the date set forth in the
Property Call Notice.  Failure to deliver the Property Call Response Notice
within said thirty (30) day period shall be deemed to constitute an acceptance
by the other Member of the Property Initiating Party's offer to purchase the
Buy-Sell Property  for the Property Call Purchase Price, and on the date set
forth in the Property Call Notice.  In the event such other Member shall choose
to purchase the Buy-Sell Property, then the Property Initiating Party shall be
deemed to have approved the sale of the Buy-Sell Property to such other Member
for the Property Call Purchase Price, and on the date set forth in the Property
Call Notice.

          (c)  The closing of the purchase and sale of the Buy-Sell Property
pursuant to the terms of this Section shall be held on the date provided in the
Property Call Notice, at the office of the Company.  At the closing (i) the
Property Purchaser (hereinafter defined) shall pay

                                      -54-
<PAGE>

to the other Member the net proceeds (as a deemed contribution by the Property
Purchaser and a deemed distribution to the other Member) that such other Member
would have received if the Company had received the Property Call Purchase Price
and distributed the net proceeds in accordance with Section 4.2 or Article IX,
as applicable, such amount to be paid, by unendorsed certified or bank check or
by wire transfer of immediately available federal funds, and (ii) the Company
shall deliver to the Member purchasing the Buy-Sell Property (the "Property
Purchaser") a duly executed, sealed and acknowledged special warranty deed
conveying to the Property Purchaser the Buy-Sell Property, which assignment
shall be accompanied by such other documents and instruments, including, without
limitation, corporate resolutions, as may be requested by the Property Purchaser
and the Company in the exercise of their reasonable judgment. The Company and
the Property Purchaser shall each pay their own legal fees in connection with
the conveyance of the Buy-Sell Property pursuant to this Section and all other
costs and expenses (including, without limitation, transfer taxes) shall be
shared equally as between the Company and the Property Purchaser. The Property
Purchaser shall pay all existing Company debts (except for assumed financing)
and liabilities encumbering the Buy-Sell Property, any prepayment fees related
to financing or assumption fees paid in connection with assumed financing.

          (d)  If either Member shall fail or refuse for any reason whatsoever
to perform its obligations under this Section in the manner herein prescribed,
the non-defaulting Member may pursue any of its rights and remedies as herein
provided, or at law or equity, including, without limitation, the remedy of
specific performance.

          (e)  The right to purchase as a Property Initiating Party set forth in
this Section 8.7 may be exercised only by a Member that is not in default under
Section 2.3 hereof.

          (f)  No conveyance shall be made pursuant to the provisions of this
Section 8.7 if such conveyance would result in the violation of any provision
contained in any mortgage or deed of trust encumbering all or any portion of the
Properties.

     SECTION 8.8.  Buy/Sell for Member's Interests.
                   -------------------------------

          (a)  Pursuant to Sections 6.4, 6.14 or 6.15, or after expiration of
the six-month marketing period set forth in Section 8.6(b) (and for a period of
six-months thereafter), with respect to all of the Properties, either NYSTRS, on
the one hand, or the Carr Members acting as a group, on the other hand, shall
have the right and option, exercisable upon the delivery of written notice to
the other Member (the "Call Notice") to purchase all of the Company Interests of
the other Member, and NYSTRS or the Carr Members, as the case may be, agree to
sell such interests in accordance with the provisions of this Section. The Call
Notice shall make reference to this Section and shall state (i) the purchase
price (the "Call Purchase Price") that such Member shall be willing to pay as a
purchase price for all of the Properties and (ii) a specified date for such
purchase, which such date shall be no later than 150 days after the delivery of
the Call Notice. The Member exercising such right and option and delivering the
Call Notice to the

                                      -55-
<PAGE>

other Member shall hereinafter be referred to as the "Initiating Party" and the
other Member to whom the Call Notice shall be delivered shall hereinafter be
referred to as the "Non-Initiating Party". For purposes hereof (i) the
"Initiating Party Call Purchase Price" shall mean the net proceeds that the Non-
Initiating Party would receive upon a hypothetical sale of all of the Properties
for the Call Purchase Price and a distribution of all of the proceeds thereof
upon liquidation of the Company in accordance with Article IX, and (ii) the
"Non-Initiating Party Call Purchase Price" shall mean the net proceeds that the
Initiating Party would receive upon such a hypothetical sale/liquidation.

          (b)  In the event that the Initiating Party delivers the Call Notice
as aforesaid, the Non-Initiating Party shall, by delivery of notice (the "Call
Response Notice") to the Initiating Party within thirty (30) days following the
receipt of the Call Notice, time being of the essence, choose to (i) accept the
Initiating Party's offer to purchase the Non-Initiating Party's Company
Interests for the Initiating Party Call Purchase Price, and on the date set
forth in the Call Notice, or (ii) purchase the Initiating Party's Company
Interests for the Non-Initiating Party Call Purchase Price, and on the date set
forth in the Call Notice. Failure to deliver the Call Response Notice within
said thirty (30) day period shall be deemed to constitute an acceptance by the
Non-Initiating Party of the Initiating Party's offer to purchase the Non-
Initiating Party's Company Interests for the Initiating Party Call Purchase
Price, and on the date set forth in the Call Notice. In the event the Non-
Initiating Party shall choose to purchase the Initiating Party's Company
Interest pursuant to the terms of this Section, the Initiating Party shall be
obligated to sell its Company Interests to the Non-Initiating Party for the
Initiating Party Call Purchase Price, and on the date set forth in the Call
Notice.

          (c)  The closing of the purchase and sale of the Company Interests of
the Member selling its Company Interests pursuant to the terms of this Section
(the "Seller") shall be held on the date provided in the Call Notice, at the
office of the Company, or at such other location as NYSTRS and the Carr Members
shall find mutually agreeable.  At the closing (i) the Seller shall receive, by
unendorsed certified or bank check payable to the order of the Seller or its
designee, or, at the Seller's election, by wire transfer of immediately
available federal funds to an account designated by the Seller, an amount equal
to the Initiating Party Call Purchase Price or the Non-Initiating Party Call
Purchase Price, as the case may be, (ii) the Seller shall deliver to the Member
purchasing the Seller's Company Interest (the "Purchaser") a duly executed,
sealed and acknowledged instrument assigning to the Purchaser the Seller's
Company Interest, which assignment shall be accompanied by such other documents
and instruments, including, without limitation, corporate resolutions, as may be
requested by the Purchaser and the Company in the exercise of their reasonable
judgment and (iii) on the effective date of such assignment, the Company shall
deliver a release to the Seller releasing the Seller from all liabilities and
obligations of the Company arising from and after the date of such assignment.
Such assignment shall be free and clear of all liens and encumbrances, and the
Seller shall deliver a written representation and warranty to such effect at the
closing, which representation and warranty shall survive the closing.  Each
Member shall pay its legal fees in connection with the conveyance of Company
Interests pursuant to this Section and all other costs and expenses (including,
without

                                      -56-
<PAGE>

limitation, transfer taxes) shall be shared by the Members in accordance with
their Company Interests.

          (d)  If either Member shall fail or refuse for any reason whatsoever
to perform its obligations under this Section in the manner herein prescribed,
the non-defaulting Member may pursue any of its rights and remedies as herein
provided, or at law or equity, including, without limitation, the remedy of
specific performance.

          (e)  The right to purchase as an Initiating Party set forth in this
Section 8.8 may be exercised only by a Member that is not in default under
Section 2.3 hereof.

          (f)  No Transfer shall be made pursuant to the provisions of this
Section 8.8 if such Transfer would result in the violation of any provision
contained in any mortgage or deed of trust encumbering all or any portion of the
Properties.

          (g)  In lieu of purchasing a Member's Company Interest pursuant to the
procedure set forth in Section 8.8, the transaction may be accomplished through
a redemption of the Company Interests of the Seller by the Company.

     SECTION 8.9.  First Right to Invest.  Except as set forth below, until the
                   ---------------------
earlier of (i) the date that CarrAmerica is no longer a Member of the Company or
(ii) the occurrence of a Change of Control not resulting in a liquidation of the
Company, the Company shall have the first right to invest (which right shall be
exercised by NYSTRS within thirty (30) days after notice from CarrAmerica) in
any property located in the following submarkets, which property CarrAmerica
intends to invest in directly or contribute and/or sell to a joint venture in
which CarrAmerica will retain an interest: (a) Las Colinas, Dallas, Texas; (b)
northwest Austin, Texas (except for the Braker site); (c) north suburban
Chicago, Illinois; and (d) the Panorama/Dry Creek submarket, Denver, Colorado
(except for the Dry Creek Corporate Center site).  The Company shall not have
the foregoing right to invest in the case of (i) an investment in a property to
be leased to an existing CarrAmerica tenant, a "build-to-suit" project or an
expansion of an existing project in which the Company has not previously made an
investment, or (ii) the contribution or sale of multiple properties to such a
joint venture where the value of the properties in such submarkets represents
less than twenty percent (20%) of the aggregate value of all properties to be
contributed or sold to such joint venture.

                                  ARTICLE IX

                                  TERMINATION
                                  -----------

     SECTION 9.1.  Dissolution.  Except as hereinafter provided to the contrary,
                   -----------
the Company shall be dissolved and its business wound up upon the happening of
any of the following events, whichever shall first occur:

                                      -57-
<PAGE>

          (a)  the sale, condemnation or other disposition of all or
substantially all of the Properties and the receipt of all consideration
therefor;

          (b)  at any time that there are no Members; provided that the Company
shall not be dissolved if within ninety (90) days after the occurrence of the
event that terminated the continued membership of the last remaining Member, the
personal representative of the last remaining Member agrees in writing to
continue the Company and to the admission of such personal representative or its
nominee or designee to the Company as a Member effective as of the occurrence of
the event that terminated the continued membership of the last remaining Member;

          (c)  December 31, 2050, the termination date set forth in Section 1.4
hereof; or

          (d)  The occurrence of any event, other than those referred to in
paragraph (b), which causes dissolution of a limited liability company under the
Delaware Act.

     SECTION 9.2.  Termination.  Notwithstanding any other provision of this
                   -----------
Agreement, in all cases of dissolution of the Company, the business of the
Company shall be wound up and the Company terminated as promptly as practicable
thereafter, and each of the following shall be accomplished:

          (a)  The Liquidating Member shall cause to be prepared a statement
setting forth the assets and liabilities of the Company as of the date of
dissolution, a copy of which statement shall be furnished to all of the Members.

          (b)  The property and assets of the Company shall be liquidated by the
Liquidating Member as promptly as possible, but in an orderly and businesslike
and commercially reasonable manner. The Liquidating Member may, in the exercise
of its business judgment and if commercially reasonable, determine to defer the
sale of all or any portion of the property and assets of the Company if deemed
necessary or appropriate to realize the fair market value of any such property
or assets.

          (c)  The proceeds of sale and all other assets of the Company shall be
applied and distributed as follows and in the following order of priority:

               (i)  To the payment of (x) the debts and liabilities of the
Company (including any outstanding amounts due on any recourse indebtedness
encumbering the Property, or any part thereof) and (y) the expenses of
liquidation, other than liabilities for distribution to Members under Section
18-601 or 18-604 of the Delaware Act.

               (ii) Except as provided in this Agreement, to Members and former
Members in satisfaction of liabilities for distribution under Section 18-601 or
18-604 of the Delaware Act.

                                      -58-
<PAGE>

               (iii) To the setting up of any reserves which the Liquidating
Member shall determine to be reasonably necessary for contingent, unliquidated
or unforeseen liabilities or obligations of the Company or the Members arising
out of or in connection with the Company. Such reserves may, in the discretion
of the Liquidating Member, be paid over to a national bank or national trust
company selected by it and authorized to conduct business as an escrowee to be
held by such bank or trust company as escrowee for the purposes of disbursing
such reserves to satisfy the liabilities and obligations described above, and at
the expiration of such period as the Liquidating Member may reasonably deem
advisable, distributing any remaining balance as provided in clause (iv) below.

               (iv)  To the Members in accordance with the provisions of Section
4.2; provided, however, that no distribution shall be made that creates or
increases a Capital Account deficit for any Member which exceeds such Member's
obligation (deemed or actual) to restore such deficit, determined as follows:
Distributions shall first be determined tentatively pursuant to Section 4.2
without regard to the Member's Capital Account, and then the allocation
provisions of Section 5 shall be applied tentatively as if such tentative
distributions had been made. The actual distribution to such Member pursuant to
this Section 9.2(c)(iv) shall be equal to (x) in the case of a Member that has
no deficit Capital Account after such tentative distributions and allocations
have been made, the tentative distribution to such Member, and (y) in the case
of a Member that has a deficit Capital Account after such tentative
distributions and allocations are made, the tentative distribution to such
Member less the amount of the deficit.

               (v)   The balance, if any, to the Members, in accordance with and
to the extent of the Members' ending positive Capital Account balances, after
giving effect to all contributions, distributions and allocations for all
periods, including, without limitation, any allocations of Profits or Losses
from any Capital Transactions causing or resulting in the dissolution and
termination of the Company.

Distributions pursuant to the preceding clauses (iv) and (v) shall be made by
the end of the Fiscal Year during which the dissolution of the Company occurs
(or, if later, within ninety (90) days of such dissolution).

          (d)  The Liquidating Member shall cause the filing of the Certificate
of Cancellation pursuant to Section 18-203 of the Delaware Act and shall take
all such other actions as may be necessary to terminate the Company.

     SECTION 9.3.  Liquidating Member. (a) The term "Liquidating Member" shall
                   ------------------
mean the Managing Member.

          (b)  Without limiting the foregoing, the Liquidating Member shall,
upon the dissolution and upon completion of the winding up of the affairs of the
Company, file appropriate certificate(s) to such effect in the proper
governmental office or offices under the

                                      -59-
<PAGE>

Delaware Act as then in effect. Notwithstanding the foregoing, each Member, upon
the request of the Liquidating Member, shall promptly execute, acknowledge and
deliver all such documents, certificates and other instruments as the
Liquidating Member shall reasonably request to effectuate the proper dissolution
and termination of the Company, including the winding up of the business of the
Company.

     SECTION 9.4.  No Redemption.  The Company may not acquire, by purchase,
                   -------------
redemption or otherwise any Company Interest of any Member, except as otherwise
provided by Section 8.8.

     SECTION 9.5.  No Distribution in Kind.  The Company may not distribute
                   -----------------------
Company Assets to the Members in kind without the approval of all of the
Members.

                                   ARTICLE X

                                 MISCELLANEOUS
                                 -------------

     SECTION 10.1. Further Assurances. Each Member agrees to execute,
                   ------------------
acknowledge, deliver, file, record and publish such further certificates,
amendments to certificates, instruments and documents, and do all such other
acts and things as may be required by law, or as may be required to carry out
the intent and purposes of this Agreement.

     SECTION 10.2. Indemnities; Liability; Exculpation. (a) The Members shall be
                   -----------------------------------
indemnified and held harmless by the Company from and against any and all
expenses (including reasonable attorneys' fees), losses, damages, liabilities,
charges and claims of any kind or nature whatsoever (collectively "Indemnified
Losses"), incurred by them in their capacities as Members, arising out of or
incidental to any act performed or omitted to be performed by any one or more of
the Members in their capacities as Members in connection with the business of
the Company; provided, however, that, such act or omission was in good faith
believed to be within the scope of authority granted to such Member(s) by the
terms of this Agreement and did not constitute willful misconduct or fraud; and,
provided, further, that an indemnity under this Section 10.2(a) shall be paid
solely out of and to the extent of Company Assets and shall not be a personal
obligation of any Member.

          (b)  The Company and the Members shall be indemnified and held
harmless by each Member from and against any and all Indemnified Losses arising
out of or incidental to any fraudulent act performed by such Member.

          (c)  Notwithstanding anything to the contrary contained in this
Agreement, under no circumstances shall any Member or its trustees, officers,
directors, shareholders, partners or members have any personal liability under
this Agreement, and no assets of any Member (or of such listed parties) other
than such Member's interest in the Company and

                                      -60-
<PAGE>

Company Assets shall be subject to any judgment or attachment in connection with
any action or claim in connection with this Agreement.

     SECTION 10.3.  Notices. All notices, demands, consents, approvals, requests
                    -------
or other communications which any of the parties to this Agreement may desire or
be required to give hereunder (collectively, "Notices") shall be in writing and
shall be given by personal delivery or telecopy or United States registered or
certified mail (postage prepaid, return receipt requested) addressed as
hereinafter provided. Except as otherwise specified herein, the time period in
which a response to any notice or other communication must be made, if any,
shall commence to run on the earliest to occur of (a) if by personal delivery,
the date of receipt, or attempted delivery, if such communication is refused;
(b) if given by telecopy, the date on which such telecopy is transmitted and
confirmation of delivery thereof is received; and (c) if sent by mail (as
aforesaid), the date of receipt or attempted delivery, if such mailing is
refused. Until further notice, notices and other communications under this
Agreement shall be addressed to the parties listed below as follows:

     (i)  If to the Company, to:

               Carr Office Park, LLC
               c/o CarrAmerica Realty Corporation
               1850 K Street NW, Suite 500
               Washington, DC 20006
               Attention: Linda Madrid, Esq.
               Fax Number: (202) 729-1080

          with a copy to:

               Jeffrey Usow, Esq.
               Mayer Brown & Platt
               190 South La Salle Street
               Chicago, Illinois 60603
               Fax Number: (312) 706-8725

     (ii) If to NYSTRS, to

               New York State Teachers' Retirement System
               10 Corporate Woods Drive
               Albany, New York 12211-2395
               Attn:  Mr. John Virtanen
               Fax Number: (518) 447-2766

          and:

                                      -61-
<PAGE>

               J.P. Morgan Investment Management Inc.
               522 Fifth Avenue
               New York, New York 10036
               Attn: Mr. Benjamin Gifford
               Fax Number: (212) 837-1709

            with a copy to:

               Joseph M. Fries, Esq.
               Arent Fox Kintner Plotkin & Kahn, PLLC
               1050 Connecticut Avenue, NW
               Washington, D.C. 20036-5339
               Fax Number: (202) 857-6395

     (iii)  If to the Carr Members, to:

               c/o CarrAmerica Realty Corporation
               1850 K Street NW, Suite 500
               Washington, DC 20006
               Attention: Linda Madrid, Esq.
               Fax Number: (202) 729-1080

            with a copy to:

               Jeffrey Usow, Esq.
               Mayer Brown & Platt
               190 South La Salle Street
               Chicago, Illinois 60603
               Fax Number: (312) 706-8725

Any Member may designate another addressee (and/or change its address) for
Notices hereunder by a Notice given pursuant to this Section.

     SECTION 10.4.  Governing Law.  This Agreement, the rights and obligations
                    -------------
of the parties hereto, and any claims or disputes relating thereto shall be
governed by and construed in accordance with the laws of the State of Delaware
(but not including the choice of law rules thereof).

     SECTION 10.5.  Captions.  All titles or captions contained in this
                    --------
Agreement are inserted only as a matter of convenience and for reference and in
no way define, limit, extend, or describe the scope of this Agreement or the
intent of any provision hereof.

                                      -62-
<PAGE>

     SECTION 10.6.  Pronouns.  All pronouns and any variations thereof shall be
                    --------
deemed to refer to the masculine, feminine, and neuter, singular and plural, as
the identity of the party or parties may require.

     SECTION 10.7.  Successors and Assigns.  This Agreement shall be binding
                    ----------------------
upon the parties hereto and their respective executors, administrators, legal
representatives, heirs, successors and permitted assigns, and shall inure to the
benefit of the parties hereto and, except as otherwise provided herein, their
respective executors, administrators, legal representatives, heirs, successors
and assigns.

     SECTION 10.8.  Extension Not a Waiver.  No delay or omission in the
                    ----------------------
exercise of any power, remedy or right herein provided or otherwise available to
a Member or the Company shall impair or affect the right of such Member or the
Company thereafter to exercise the same.  Any extension of time or other
indulgence granted to a Member hereunder shall not otherwise alter or affect any
power, remedy or right of any other Member or of the Company, or the obligations
of the Member to whom such extension or indulgence is granted.

     SECTION 10.9.  Construction.  None of the provisions of this Agreement
                    ------------
shall be for the benefit of or enforceable by any creditor of the Company or any
third party.  No Member shall be obligated personally for any debt, obligation
or liability of the Company solely by being a Member of the Company.

     SECTION 10.10. Severability.  In case any one or more of the provisions
                    ------------
contained in this Agreement or any application thereof shall be invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein and other application thereof shall
not in any way be effected or impaired thereby.

     SECTION 10.11. Consents.  Any consent or approval to any act or matter
                    --------
required under this Agreement must be in writing and shall apply only with
respect to the particular act or matter to which such consent or approval is
given, and shall not relieve any Member from the obligation to obtain the
consent or approval, as applicable, wherever required under this Agreement to
any other act or matter.

     SECTION 10.12. Entire Agreement.  This Agreement contains the entire
                    ----------------
agreement between the parties relating to the subject matter hereof and all
prior agreements relative hereto which are not contained herein are terminated.
Amendments, variations, modifications or changes herein may be made effective
and binding upon the parties by, and only by, the setting forth of same in a
document duly executed by each party, and any alleged amendment, variation,
modification or change herein which is not so documented shall not be effective
as to any party.

     SECTION 10.13. Consent to Jurisdiction.  Any action, suit or proceeding in
                    -----------------------
connection with this Agreement may be brought against any Member or the Company
in a court of record of the State of New York, County of New York, or of the
United States District Court for the

                                      -63-
<PAGE>

Southern District of New York, each Member and the Company hereby consenting and
submitting to the jurisdiction thereof; and service of process may be made upon
any Member or the Company, by certified or registered mail, at the address to be
used for the giving of notice to such Member under Section 10.3. Each Member
hereby appoints CT Corporation System, 1633 Broadway, New York, New York 10019
as its agent for service of process. Nothing herein shall affect the right of
any Member to commence legal proceedings or otherwise to proceed against any
other Member or the Company in any other jurisdiction or to serve process in any
manner permitted by applicable law. In any action, suit or proceeding in
connection with this Agreement, each Member and the Company hereby waives trial
by jury, and any claim that New York County or the Southern District of New York
is an inconvenient forum.

     SECTION 10.14.  Counterparts. This Agreement may be executed in any number
                     ------------
of counterparts, and each such counterpart will for all purposes be deemed an
original, and all such counterparts shall constitute one and the same
instrument.

     SECTION 10.15.  Tax Election.  The Members will not take any actions to
                     ------------
cause the Company to fail to be treated as a partnership for federal, state and,
if applicable, local income tax purposes.  The Members shall make all elections
necessary for the Company to be treated as a partnership under any applicable
Check The Box Regulations.

                                      -64-
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.

                         NEW YORK STATE TEACHERS' RETIREMENT SYSTEM, a public
                         pension system created and existing pursuant to Article
                         11 of the Education Law of the State of New York and
                         having powers and privileges of a corporation pursuant
                         to Section 502 thereof

                         By: /s/ George Philip
                             --------------------------------------
                             George Philip
                             Executive Director

                         By: /s/ John W. Virtanen
                             --------------------------------------
                             John W. Virtanen
                             Associate Real Estate Officer

                                      -65-
<PAGE>

                         CARRAMERICA REALTY CORPORATION, a
                         Maryland corporation

                         By: /s/ Karen B. Dorigan
                             -------------------------------------
                             Name:  Karen B. Dorigan
                             Title: Managing Director/Capital Markets and
                                    Investments

                         CARRAMERICA REALTY, L.P., a Delaware limited
                         partnership

                             By: CarrAmerica Realty GP Holdings, Inc., a
                                 Delaware corporation

                             By: /s/ Karen B. Dorigan
                                 ------------------------------------
                                 Name:  Karen B. Dorigan
                                 Title: Executive Vice President

                         CARR PARKWAY NORTH I CORPORATION, a
                         Delaware corporation

                             By: /s/ Karen B. Dorigan
                                 ------------------------------------
                                 Name:  Karen B. Dorigan
                                 Title: Executive Vice President<PAGE>

                                                                    Exhibit 10.2

                   CONTRIBUTION AND PURCHASE/SALE AGREEMENT

                                     among

                        CARRAMERICA REALTY CORPORATION,
                           CARRAMERICA REALTY, L.P.,
                        CARRAMERICA DEVELOPMENT, INC.,
                    CARR DEVELOPMENT & CONSTRUCTION, L.P.,
                       CARR PARKWAY NORTH I CORPORATION

                                      and

                  NEW YORK STATE TEACHERS' RETIREMENT SYSTEM

                            Dated: August __, 2000

                                   Premises:
                 Panorama Corporate Park, Englewood, Colorado
                      Parkway North, Deerfield, Illinois
                      Riata Corporate Park, Austin, Texas
                        Riata Crossing , Austin, Texas
                          Royal Ridge, Irving, Texas
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                     Page
                                                                                                     ----
<S>                                                                                                  <C>
1.   Certain Definitions.........................................................................       2
     -------------------

2.   Contribution of NYSTRS......................................................................       8
     ----------------------

3.   Contribution and Sale by the Carr Entities/ Distributions to the Carr Entities..............       8
     ------------------------------------------------------------------------------

4.   Closing Date................................................................................       9
     ------------

5.   Condition of the Property...................................................................       9
     -------------------------

6.   Brokerage...................................................................................       9
     ---------

7.   Intentionally Omitted.......................................................................       9
     ---------------------

8.   Recording Charges and Transfer Taxes........................................................       9
     ------------------------------------

9.   Representations and Warranties..............................................................      10
     ------------------------------

10.  Deliveries to be made on the Closing Date...................................................      17
     -----------------------------------------

11.  Payment of Closing Costs; Apportionments; Post-Closing Adjustments..........................      20
     ------------------------------------------------------------------

12.  Indemnification.............................................................................      22
     ---------------

13.  Survival....................................................................................      23
     --------

14.  Notices.....................................................................................      23
     -------

15.  Amendments..................................................................................      25
     ----------

16.  Governing Law; Construction.................................................................      25
     ---------------------------

17.  Partial Invalidity..........................................................................      25
     ------------------

18.  Counterparts................................................................................      25
     ------------

19.  No Third Party Beneficiaries................................................................      25
     ----------------------------

20.  Waiver......................................................................................      25
     ------
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                        <C>
21.    Assignment........................................................  25
       ----------

22.    Binding Effect....................................................  25
       --------------

23.    Entire Agreement..................................................  26
       ----------------

24.    Further Assurances................................................  26
       ------------------

25.    Paragraph Headings................................................  26
       ------------------
</TABLE>

                                       ii
<PAGE>

                   CONTRIBUTION AND PURCHASE/SALE AGREEMENT
                   ----------------------------------------

     THIS CONTRIBUTION AND PURCHASE/SALE AGREEMENT (this "Agreement"), made as
of the ____ day of August, 2000, among CARRAMERICA REALTY CORPORATION, a
Maryland corporation, having an office at 1850 K Street, NW, Suite 500,
Washington, DC 20006 (hereinafter "CarrAmerica"), CARRAMERICA REALTY, L.P., a
Delaware limited partnership ("Carr L.P."), CARRAMERICA DEVELOPMENT, INC., a
Delaware corporation ("Development Inc."), CARR DEVELOPMENT & CONSTRUCTION,
L.P., a Delaware limited partnership ("Development LP"), CARR PARKWAY NORTH I
CORPORATION, a Delaware corporation ("Parkway Corp."), (CarrAmerica, Carr L.P.,
Development Inc., Development LP and Parkway Corp. are sometimes hereinafter
individually referred to as a "Carr Entity" and collectively as the "Carr
Entities"), and NEW YORK STATE TEACHERS' RETIREMENT SYSTEM, a public pension
system created and existing pursuant to Article 11 of the Education Law of New
York and having powers and privileges of a corporation pursuant to Section 502
thereof, having an office at 10 Corporate Woods Drive, Albany, New York 12211
(hereinafter "NYSTRS").

                             W I T N E S S E T H:
                             - - - - - - - - - -

     WHEREAS, the Carr Entities collectively own all right, title and interest
in and to the Property (as hereinafter defined);

     WHEREAS, CarrAmerica is the sole member of Carr Office Park, LLC, a
Delaware limited liability company (the "LLC");

     WHEREAS, Carr L.P., Parkway Corp. and NYSTRS desire to be admitted as
members of the LLC;

     WHEREAS, CarrAmerica, Carr L.P. and Parkway Corp. (the "Contributing Carr
Entities") desire (i) to contribute to the LLC or an Affiliate thereof all
right, title and interest in and to the portion of the Property owned by them,
(ii) to acquire and/or restate, inter alia, in consideration therefor, thirty-
                                ----- ----
five percent (35%) of the membership interests in the LLC (the ACarr
Interests@), and (iii) to receive from the LLC a distribution of cash equal to
the difference between the value of the portion of the Property contributed by
the Contributing Carr Entities as of the Closing Date (the "Contribution Value")
and the value of the Carr Interests as of the Closing Date;

     WHEREAS, NYSTRS desires to contribute the NYSTRS Contribution (as
hereinafter defined) to the LLC and to acquire, in consideration therefor,
sixty-five percent (65%) of the membership interests in the LLC (the "NYSTRS
Interests");

     WHEREAS, Development LP and Development Inc. (the "Selling Carr Entities")
desire to convey to the LLC all right, title and interest in and to the portion
of the Property owned by them, and to receive from the LLC a purchase
consideration equal to the value of the portion of

                                       1
<PAGE>

the Property conveyed by the Selling Carr Entities to the LLC as of the Closing
Date (the "Purchase Value"); and

     WHEREAS, the Contributing Carr Entities, together with NYSTRS, desire to
amend and restate the limited liability company agreement of the LLC;

     NOW THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Carr Entities and NYSTRS agree as follows:

     1.   Certain Definitions.  For purposes of this Agreement, the following
          -------------------
terms shall have the respective meanings set forth below:

          "Acquisition Value" means the sum of the Contribution Value and the
Purchase Value.

          "Actions" means any claims, actions, suits, proceedings or
investigations, whether at law, in equity or in admiralty or before any court,
arbitrator, arbitration panel or Governmental Authority.

          "Advisor" means Goldman Sachs & Company, advisor to the Carr Entities.

          "Adjoining Land" means, collectively, any land in the bed of any
street, road, avenue, open or proposed, public or private, in front of or
adjoining the Land or any portion thereof, to the center line thereof, and any
award to be made in lieu thereof and in and to any unpaid award for damage to
the Land or Buildings by reasons of change of grade of any street occurring
after the date of execution and delivery of this Agreement, but only to the
extent, if any, of any Carr Entity's interest therein.

          "Affiliate" of a party means any Person which, directly or indirectly,
controls, is controlled by or is under common control with, such party.

          "Appurtenances" means, collectively, all easements, rights of way,
privileges, appurtenances, strips, gores and other rights pertaining to the
Land, Buildings and Adjoining Land, if any, including, without limitation,
development rights, and all income therefrom.

          "Association Documents" has the meaning set forth in Section
9(a)(xxviii).

          "Buildings" means, collectively, all buildings and improvements
located on the Land.

          "Carr Entity Taxes" has the meaning set forth in Section 9(a)(iv).

          "Carr Interests" means thirty-five percent (35%) of the limited
liability company interests in the LLC which are owned collectively by the
Contributing Carr Entities.

          "Closing" means the closing of the transactions contemplated hereby,
which shall take place at the offices of Arent Fox Kintner Plotkin & Kahn, PLLC,
1050 Connecticut Avenue, NW, Washington, DC 20036, on the Closing Date at 10:00
A.M., or at such other time or place as the parties may agree upon in writing.

                                       2
<PAGE>

          "Closing Date" means August ____, 2000 (the date of this Agreement).

          "Code" means the Internal Revenue Code of 1986, as amended.

          "Contributing Carr Entities" shall have the meaning set forth in the
recitals to this Agreement.

          "Contribution Value" has the meaning set forth in the recitals to this
Agreement and is calculated on Schedule 3(a).

          "Court Order" means any judgment, decree, injunction, order, decision,
directive, regulation or ruling of any Governmental Authority that is binding on
any Person or its property under Law.

          "Damages" mean losses, liabilities, costs, damages, claims and
expenses (including reasonable attorneys' fees and disbursements).

          "Default" means (i) a breach of or default under any contract,
agreement, covenant, document or other instrument, (ii) the occurrence of an
event that with the passage of time or the giving of notice or both would
constitute a breach of or default under any such contract, agreement, covenant,
document or other instrument, or (iii) the occurrence of an event that with or
without the passage of time or the giving of notice or both would give rise to a
right of termination, renegotiation or acceleration under any such contract,
agreement, covenant, document or other instrument.

          "Developed Properties" means those Properties identified on Exhibit B-
                                                                      ---------
1 annexed hereto and made a part hereof.
-

          "Development Documents" has the meaning set forth in Section
9(a)(xxiii).

          "Development Services Agreements" means collectively, those five
certain Development Services Agreements in the form of Exhibit AA attached
                                                       ----------
hereto relating to the five Office Parks.

          "Documents" means collectively any and all plans, specifications and
drawings related to the Buildings; warranties for the Buildings and Personalty;
current surveys of the Land and Buildings; current booklets, manuals, files,
logs, records, material correspondence with existing tenants and other material
correspondence, current tenant lists, current tenant prospect lists and other
mailing lists, current leasing brochures and materials, current advertising
materials and other items, including without limitation, soil, engineering and
environmental inspections, studies and reports, and similar inspections with
respect to the sale, management, leasing, promotion, ownership, maintenance,
use, occupancy, operation, construction and development of the Premises; all of
the foregoing to the extent that they are in the possession or control of the
Carr Entities.

          "Employment Liabilities" shall have the meaning set forth in Section
9(a)(xxiv).

          "Environmental Laws" mean all federal, state, local and foreign
environmental, health and safety laws, codes and ordinances and all rules and
regulations promulgated thereunder, including, without limitation laws relating
to emissions, discharge, releases or

                                       3
<PAGE>

threatened releases of pollutants, contaminants, chemicals, or industrial, toxic
or hazardous substances or wastes into the environment (including, without
limitation, air, surface water, ground water, land surface or subsurface strata)
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants,
chemicals, or industrial, solid, toxic or hazardous substances or wastes. As
used in this Agreement, the term "Hazardous Substances or Wastes" includes,
without limitation, (i) all substances which are designated pursuant to Section
311(b)(2)(A) of the Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C.
'1251 et seq.; (ii) any element, compound, mixture, solution, or substance which
      ------
is designated pursuant to Section 102 of the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. '9601 et seq.;
                                                                     ------
(iii) any hazardous waste having the characteristics which are identified under
or listed pursuant to Section 3001 of the Resource Conservation and Recovery Act
("RCRA"), '6901 et seq.; (iv) any toxic pollutant listed under Section 307(a) of
                ------
the FWPCA; (v) any hazardous air pollutant which is listed under Section 112 of
the Clean Air Act, 42 U.S.C. '7401 et seq.; (vi) any imminently hazardous
                                   ------
chemical substance or mixture with respect to which action has been taken
pursuant to Section 7 of the Toxic Substance Control Act, 15 U.S.C. '2601 et
                                                                          --
seq.; and (vii) petroleum, petroleum products, petroleum by-products, petroleum
---
decomposition by-products, and waste oil; (viii) "hazardous materials" within
the meaning of the Hazardous Materials Transportation Act, 49 U.S.C. ' 1802 et
                                                                            --
seq., (ix) any hazardous substance or material identified or regulated by or
---
under any applicable provisions of the laws of the state in which any portion of
the Premises is located; (x) asbestos or any asbestos-containing materials; (xi)
any radioactive material or substance; (xii) all toxic wastes, hazardous wastes
and hazardous substances as defined by, used in, controlled by or subject to all
implementing regulations adopted and publications promulgated pursuant to the
foregoing statutes; and (xiii) any other hazardous or toxic substance or
pollutant identified in or regulated under any other applicable federal, state
or local Laws.

          "Escrow Reserves" means the Carr Entities' interest in a cash reserve,
loan reserve, tax escrow and insurance escrow maintained by the Existing Lender
pursuant to the Loan Documents.

          "Existing Lender" means CBA Conduit, Inc., its successors and assigns,
which is the lender under the Loan Documents.

          "Existing Lender's Estoppel Certificate" shall have the meaning set
forth in Section 10(a)(xix).

          "Financial Statements" shall have the meaning set forth in Section
9(a)(xxv).

          "Funds" means collectively, the Escrow Reserves and all other funds
which the Carr Entities shall, at Closing, have on deposit with any person or
entity (including, without limitation, any lender) to be applied to, for or in
connection with the Property or any loan secured by the Premises.

          "Governmental Authority" means any agency, instrumentality,
department, commission, court, tribunal or board of any government, whether
foreign or domestic and whether national, federal, state, provincial or local.

          "Interim Financial Statements" shall have the meaning set forth in
Section

                                       4
<PAGE>

9(a)(xxv).

          "Land" means all that certain real property underlying the following
Office Parks: (i) Panorama Corporate Park, Englewood, Colorado; (ii) Parkway
North, Deerfield, Illinois (excluding Building 2 therein); (iii) Riata Corporate
Park, Austin, Texas; (iv) Riata Crossing, Austin, Texas; and (v) Royal Ridge,
Irving, Texas, more particularly described in Exhibits A-1, A-2, A-3, A-4 and A-
                                              ---------------------------------
5 annexed hereto and made a part hereof.
-

          "Laws" mean all laws, statutes, rules, regulations, codes, orders,
ordinances, judgments, injunctions and decrees.

          "Liabilities" mean debts, liabilities, obligations, guarantees,
indemnities, duties and responsibilities of any kind and description, whether
absolute or contingent, monetary or non-monetary, direct or indirect, known or
unknown or matured or unmatured, or of any other nature.

          "LIBOR Rate" means a variable per annum rate equal to the daily London
Interbank Offered Rate for 30-day U.S. Dollar deposits as quoted by Riggs
National Bank, N.A.  The LIBOR Rate shall change with each change in such rate
as of the date of any such change, without notice.

          "Licenses and Permits" means collectively, all assignable licenses,
permits, approvals and certificates issued to any of the Carr Entities by any
Governmental Authorities (or assigned to any of the Carr Entities) required or
used in or relating to the ownership, use, maintenance, occupancy, development
or operation of any part of the Premises.

          "Lien" means any security interest, lien, mortgage, claim, charge,
pledge, restriction, equitable interest, restrictive covenant or encumbrance of
any nature.

          "LLC" means Carr Office Park, LLC, a limited liability company formed
under the laws of the State of Delaware.

          "LLC Agreement" means the amended and restated limited liability
company agreement of the LLC, the form of which is attached hereto as Exhibit Y.
                                                                      ---------

          "LLC Certificate" means the articles of organization or limited
liability company certificate of the LLC, filed with the Secretary of State of
the State of Delaware.

          "Loan Documents" means collectively the Mortgage and the note,
assignments and other documents and instruments evidencing and/or securing the
Mortgage, as more particularly described in Exhibit C annexed hereto and made a
                                            ---------
part hereof, and all rights and privileges of the Carr Entities thereunder.

          "Major Tenants" shall have the meaning set forth in Section
10(a)(xviii).

          "Management and Leasing Agreements" means collectively, those five
certain Management and Leasing Agreements in the form of Exhibit Z attached
                                                         ---------
hereto relating to the five Office Parks.

          "Mortgage" means that certain deed of trust and/or mortgage in favor
of the

                                       5
<PAGE>

Existing Lender in the original principal amount of $29,250,000 encumbering
Parkway North, Building 1 on the date hereof.

          "Names" means all of the Carr Entities' right, title and interest in
and to the names "Parkway North," "Panorama Corporate Park," "Royal Ridge,"
"Riata Crossing" and "Riata Corporate Park."

          "NYSTRS Contribution" shall have the meaning set forth in Section
2(a).

          "NYSTRS Interests" means sixty-five percent (65%) of the limited
liability company interests in the LLC which are owned by NYSTRS.

          "Office Park" means any one of Parkway North, Panorama, Royal Ridge,
Riata Crossing or Riata Corporate Park.

          "Office Park Association" means each of Parkway North Owners'
Association and  Riata Owners' Association, Inc. (hereinafter collectively
referred to as the "Office Park Associations").

          "Operating Agreements" means collectively all operating, service and
maintenance agreements and any other contracts and agreements (other than the
Documents, the Development Documents, the Loan Documents and the Tenant Leases)
affecting the Premises to which any Carr Entity is a party.

          "Panorama" means that certain Office Park located in Englewood,
Colorado, commonly known as Panorama Corporate Park, as the Land relating
thereto is more particularly described in Exhibit A-1 annexed hereto and made a
                                          -----------
part hereof, and the Appurtenances and Adjoining Land, if any, related thereto.

          "Parkway North" means that certain Office Park located in Deerfield,
Illinois, commonly known as Parkway North Office Park (excluding Building 2), as
the Land relating thereto is more particularly described in Exhibit A-2 annexed
                                                            -----------
hereto and made a part hereof, and the Appurtenances and Adjoining Land, if any,
related thereto.

          "Percentage Interest" shall have the meaning set forth in Section
9(a)(xvi).

          "Permitted Exceptions" shall have the meaning set forth in Section
10(c)(ii).

          "Person" means any natural person, corporation, business trust, joint
venture, association, company, limited liability entity, firm, partnership, or
other entity or government or Governmental Authority.

          "Personalty" means, collectively, the fixtures, equipment, machinery,
furniture, furnishings, appliances, supplies and other items of personal
property (and replacements thereof), now owned or leased or hereafter acquired
by the Carr Entities and contained in or on the Premises.  "Personalty" does not
include any computer hardware or software or other Personalty located in and
used in the operation of any management office in any Building; however,
"Personalty" does include all books and records relating to the operation or
development of the Property located in any management office in any Building,
regardless of medium.

                                       6
<PAGE>

          "Premises" means, collectively, the Land, the Buildings, the
Appurtenances and the Adjoining Land.

          "Proceedings" has the meaning set forth in Section 9(a)(xxx).

          "Properties Under Development" means those Properties under
development as of the date hereof, as the Land relating thereto is more
particularly described in Exhibit B-2 annexed hereto and made a part hereof.
                          -----------

          "Property" means collectively all of the Carr Entities' right, title
and interest in, to and under the following: the Premises, the Personalty, the
Tenant Leases, the Operating Agreements (to the extent the same relate to the
Property), the Documents, the Licenses and Permits, the Funds, the Loan
Documents, the Names, and the Proprietary Rights.

          "Proprietary Rights" means collectively all trade names, trademarks,
service marks, patents or copyrights and any applications for any of the
foregoing and all internet web sites and intellectual property rights relating
to the Property.

          "Purchase Value" shall have the meaning set forth in the recitals to
this Agreement and is calculated on Schedule 3(b).

          "Reports" shall have the meaning set forth in Section 9(a)(xiv).

          "Riata Corporate Park" means the Office Park located in Austin, Texas,
commonly known as Riata Corporate Park, as the Land relating thereto is more
particularly described in Exhibit A-3 annexed hereto and made a part hereof, and
                          -----------
the Appurtenances and Adjoining Land, if any, related thereto.

          "Riata Crossing" means the Office Park located in Austin, Texas,
commonly known as Riata Crossing, as the Land relating thereto is more
particularly described in Exhibit A-4 annexed hereto and made a part hereof, and
                          -----------
the Appurtenances and Adjoining Land, if any, related thereto.

          "Royal Ridge" means the Office Park located in Irving, Texas, commonly
known as Royal Ridge, as the Land relating thereto is more particularly
described in Exhibit A-5 annexed hereto and made a part hereof, and the
             -----------
Appurtenances and Adjoining Land, if any, related thereto, which constitutes the
portion being contributed or sold pursuant hereto by a Carr Entity of a larger
office park development.

          "Selling Carr Entities" shall have the meaning set forth in the
recitals to this Agreement.

          "Taxes" mean all taxes, charges, fees, levies or other assessments,
including, without limitation, income, gross receipts, excise, real and personal
property, sales, transfer, recordation, deed, stamp, license, payroll and
franchise taxes, imposed by any Governmental Authority and shall include any
interest, penalties or additions to tax attributable to any of the foregoing.

          "Tenants" means the tenants under the Tenant Leases (each,
individually, a "Tenant").

                                       7
<PAGE>

          "Tenant Estoppel Certificates" shall have the meaning set forth in
Section 10(a)(xviii).

          "Tenant Leases" means all leases, licenses or occupancy agreements
(written or oral) to which any Carr Entity is a party and all amendments,
modifications, supplements, additions, extensions, renewals and side letters
thereof or thereto, and any guaranties thereof, and, except as expressly
provided herein, security and other deposits held by or on behalf of the Carr
Entities thereunder, affecting the Property (each, individually, a "Tenant
Lease").

          "Undeveloped Properties" means those undeveloped parcels of land
comprising a portion of the Land and identified on Exhibit B-3 annexed hereto
                                                   -----------
and made a part hereof.

     2.   Contribution of NYSTRS.
          ----------------------

          (a)  Based upon and subject to the terms, agreements, warranties,
representations and conditions of this Agreement, at the Closing NYSTRS shall
contribute a cash amount equal to sixty-five percent (65%) of the Acquisition
Value (the "NYSTRS Contribution") to the LLC, and in consideration therefor,
NYSTRS shall be admitted as a member of the LLC and shall acquire the NYSTRS
Interests.

          (b)  The NYSTRS Contribution shall be paid to the LLC on the Closing
Date by wire transfer of immediately available federal funds to an account or
accounts as mutually agreed by the Carr Entities and NYSTRS.

     3.   Contribution and Sale by the Carr Entities/ Distributions to the Carr
          ---------------------------------------------------------------------
Entities.
--------

          (a)  Based upon and subject to the terms, agreements, warranties,
representations and conditions of this Agreement, the Contributing Carr Entities
shall collectively contribute the portion of the Property set forth on Schedule
3(a) owned by them (to the extent assignable, as provided herein) to the LLC
(or, if directed by the LLC, to an Affiliate or Affiliates of the LLC), and in
consideration therefor, Carr L.P. and Parkway shall be admitted as members of
the LLC, and Carr L.P. and Parkway shall acquire the Carr Interests, and the
interest of CarrAmerica in the LLC shall be restated, all as set forth in the
LLC Agreement. The Contribution Value of the portion of the Property contributed
by the Contributing Carr Entities is calculated and set forth on Schedule 3(a).
                                                                 -------------

          (b)  Based upon and subject to the terms, agreements, warranties,
representations and conditions of this Agreement, the Selling Carr Entities
shall collectively convey the portion of the Property set forth on Schedule 3(b)
owned by them to the LLC or an Affiliate thereof, and in consideration therefor,
the Contributing Carr Entities and NYSTRS shall cause the LLC and/or its
Affiliates to distribute to the Selling Carr Entities by wire transfer a sum
equal to the Purchase Value, as that sum is calculated and set forth on Schedule
                                                                        --------
3(b). The calculation of the Purchase Value, to the extent based on estimates,
----
or as necessary to correct manifest error, shall be subject to readjustment
pursuant to Section 11(a).

          (c)  On the Closing Date, the Carr Entities and NYSTRS shall cause the
LLC to distribute to the Contributing Carr Entities by wire transfer the sum of
money as calculated and set forth on Schedule 3(c), so that the resulting
                                     -------------
proportion of ownership of the member interests in the LLC shall be sixty-five
percent (65%) vested in NYSTRS and thirty-five percent

                                       8
<PAGE>

(35%) vested in the Contributing Carr Entities. The calculation of the
Contribution Value, to the extent based on estimates, or as necessary to correct
manifest error, shall be subject to readjustment pursuant to Section 11(a).

     4.   Closing Date. The Closing shall take place on the Closing Date at
          ------------
10:00 A.M.

     5.   Condition of the Property. Except for (i) the Carr Entities'
          -------------------------
representations and warranties set forth in this Agreement, (ii) the warranties
of title in the deeds and (iii) any warranties expressly set forth in the
assignments delivered at Closing ((i), (ii) and (iii) collectively, the "Carr
Entities' Warranties"), the contribution or sale of the Property is made without
representation, covenant, or warranty of any kind (whether express, implied, or,
to the maximum extent permitted by applicable law, statutory) by the Carr
Entities. As a material part of the consideration for this Agreement, NYSTRS and
the LLC shall accept the Property on an "As is" and "Where is" basis, with all
faults and any and all latent and patent defects, and without any representation
or warranty, all of which NYSTRS and the LLC hereby disclaim, except for the
Carr Entities' Warranties. No other warranties whatsoever are made by the Carr
Entities except for the Carr Entities' Warranties. NYSTRS acknowledges that it
has entered into this Agreement with the intention of making and relying upon
its own investigation of the physical, environmental, economic use, compliance,
and legal condition of the Property and that NYSTRS is not now relying, and will
not later rely, upon any representations or warranties made by the Carr Entities
or anyone acting or claiming to act, by, through or under or on the Carr
Entities' behalf concerning the Property, except for the Carr Entities'
Warranties.

     6.   Brokerage. The Carr Entities on one hand, and NYSTRS on the other,
          ---------
each represents and warrants to the other that it has not dealt with any broker
or other intermediary in connection with or relating to the sale and purchase
which is the subject of this Agreement, except that the Carr Entities have dealt
with the Advisor as an advisor. The Carr Entities and NYSTRS shall each defend,
indemnify and hold the other harmless from and against any and all Damages
incurred by the other as a result of any breach by the indemnitor of the
foregoing representation. The Carr Entities shall defend, indemnify and hold
harmless NYSTRS from and against any claims of the Advisor and shall pay the
Advisor pursuant to a separate agreement between the Carr Entities and the
Advisor.

     7.   Intentionally Omitted.
          ---------------------

     8.   Recording Charges and Transfer Taxes.  The LLC shall pay all state and
          ------------------------------------
local deed taxes, real property transfer taxes, if any (other than any of the
Carr Entities' franchise or income taxes which shall be paid by the Carr
Entities), title insurance premiums for title insurance (including, without
limitation, the cost of reinsurance and endorsements) in the amounts set forth
on Exhibit G, survey costs, and all recording charges and fees (the "Charges").
The LLC shall pay for any assumption costs associated with the LLC's assumption
of the Mortgage (including, without limitation, any transfer fees, processing
fees, legal fees, Existing Lender's costs or any other expense payable to the
Existing Lender as a result of the transactions contemplated hereunder). The
Carr Entities and NYSTRS shall each pay the costs and expenses of its legal
counsel, accountants, experts and Representatives incurred in connection with
the transactions contemplated by this Agreement. NYSTRS shall pay the costs and
expenses of its due diligence investigations.

                                       9
<PAGE>

     9.   Representations and Warranties.
          ------------------------------

          (a)  Each of the Carr Entities severally, with respect to itself and
to the portion of the Property contributed or sold by it pursuant to this
Agreement, represents and warrants to NYSTRS that, as of the date hereof:

               (i)   Due Organization, Etc. Each of the Carr Entities is a
                     ---------------------
limited partnership or corporation, as appropriate, duly organized, validly
existing and in good standing under the laws of the state of its formation, and
is qualified to do business in the State(s) in which that portion of the
Property it owns is located. Each of the Carr Entities has the full power and
authority to own, lease and operate its assets and properties and to conduct its
business as now being conducted. The Carr Entities have delivered to NYSTRS
true, complete and correct copies of the organizational documents of each of the
Carr Entities, as amended or modified and as in effect on the date hereof.

               (ii)  Liabilities. Except as otherwise disclosed in Exhibit T to
                     -----------                                   ---------
this Agreement, and except for (a) obligations under the Tenant Leases,
Operating Agreements, Development Documents, the Permitted Exceptions or the
Loan Documents, or (b) any other matter specifically disclosed in this Agreement
(including the Exhibits), there are no material contractual Liabilities
affecting the Property. For purposes of this Section 9(a)(ii), the term
"material" means an obligation in excess of $10,000.00.

               (iii) Ownership. Except for the Permitted Exceptions, the
                     ---------
Mortgage, those matters disclosed on Exhibit E to this Agreement, and any other
                                     ---------
matters specifically disclosed in this Agreement (including the Exhibits), (a)
the Carr Entities have not sold, conveyed, transferred, given, pledged,
mortgaged or otherwise disposed of, encumbered or granted in any manner any
interest in the Property, and (b) there are no outstanding rights (including,
without limitation, options, rights of first refusal, rights of first offer or
other agreements) relating to or providing for the sale, conveyance, transfer,
net lease, gift, pledge, mortgage or other disposition of or encumbrance on the
Property or any portion thereof.

               (iv)  Taxes. Each Carr Entity has paid all Taxes due and payable
                     -----
by it prior to delinquency for all periods ending on or prior to the Closing
Date with respect to that portion of the Property owned by it (the "Carr Entity
Taxes"). The Carr Entities have not received from any Governmental Authority any
written notice (i) of underpayment of any Carr Entity Taxes, (ii) that any
Actions relating to the Carr Entity Taxes or tax status of any of the Carr
Entities are pending or (iii) that the institution of any such Action is
contemplated by any authority. No Carr Entity has waived restrictions on
assessment or collection of the Carr Entity Taxes or consented to the extension
of any statute of limitations with respect to the Carr Entity Taxes.

               (v)   Authority.  This Agreement constitutes the legal, valid and
                     ---------
binding obligation of each Carr Entity, enforceable against each Carr Entity in
accordance with its terms.  Each Carr Entity has taken all necessary action to
authorize and approve the execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement.

               (vi)  No Violation of Laws.  The execution and delivery of this
                     --------------------
Agreement

                                       10
<PAGE>

and the performance by the Carr Entities of their respective obligations
hereunder do not and will not conflict with or violate any Laws of any
Governmental Authority with jurisdiction over any Carr Entity or the Property,
including, without limitation, the United States of America, the state of
formation of each respective Carr Entity, the state in which any portion of the
Property is located or any political subdivision of any of the foregoing, or any
decision or ruling of any arbitrator to which any Carr Entity is a party or by
which any Carr Entity or any portion of the Property is bound or affected.

               (vii)  No Conflict. To the Carr Entities' knowledge, and except
                      -----------
as disclosed in the Exhibits to this Agreement, neither the Property nor any
Carr Entity is a party to, or is subject to or bound by, any agreement (other
than the Loan Documents and agreements requiring the consent of third parties
where such consent has been obtained), or Laws of any Governmental Authority,
that could prevent the performance of all or any of the terms of this Agreement.

               (viii) Eminent Domain, Etc. The Carr Entities have no knowledge
                      --------------------
of any plans of any Governmental Authority to change the highway or road system
in the vicinity of the Property or to restrict or change access from any such
highway or road to the Property or of any pending, or threatened in writing,
condemnation or eminent domain proceedings relating to or affecting the
Property.

               (ix)   Insolvency, Etc. Neither the Carr Entities, nor any of the
                      ----------------
general partners of Carr Entities that are limited partnerships, has (i) made a
general assignment for the benefit of its creditors, (ii) admitted in writing
its inability to pay its debts as they mature, (iii) had an attachment,
execution or other judicial seizure of any property interest which remains in
effect, (iv) taken, failed to take or submitted to any action indicating a
general inability to meet its financial obligations as they accrue, or (v)
received written notice of the pending or threatened bankruptcy of any of the
Tenants (except as set forth on Exhibit M attached hereto and made a part
                                ---------
hereof). There is not pending any case, proceeding or other action seeking
reorganization, arrangement, adjustment, liquidation, dissolution or
recomposition of the Carr Entities, or any of the general partners of Carr
Entities that are limited partnerships, or any of its or their debts under any
law relating to bankruptcy, insolvency, reorganization or relief of debtors,
seeking appointment of a receiver, trustee, custodian or other similar official
for it for all or any substantial part of its or their property.

               (x)    Leasing Commissions.  No leasing commission is now or will
                      -------------------
hereafter become due or owing by the owner of the Property (or any portion
thereof) in connection with any of the Tenant Leases, including, without
limitation, in connection with any renewals or extensions of the term thereof,
except as disclosed on Exhibit I attached hereto.  All leasing commissions due
                       ---------
and payable as of the date hereof with respect to leases executed prior to March
1, 2000 have been paid.

               (xi)   Zoning; Use.  To the Carr Entities knowledge, the existing
                      -----------
zoning approvals would permit the projected development as proposed by the Carr
Entities of the Properties Under Development and Undeveloped Properties.  Except
as disclosed on Exhibit U, the Carr Entities have not received any notice of
                ---------
noncompliance with, or violation or default of, the deed restrictions and other
title covenants or restrictions, site plan approvals, zoning and

                                       11
<PAGE>

subdivision regulations and redevelopment plans constituting Permitted
Exceptions hereunder. All current assessments, dues, charges and other payments
required under any such Permitted Exceptions have been paid in full and the Carr
Entities are not in arrears with respect to any such payments.

               (xii)  Assessments. Except as set forth on the current tax bills,
                      -----------
true and complete copies of which have been provided to NYSTRS, to the knowledge
of the Carr Entities, there are no special assessments which have been levied
against the Property, and the Carr Entities do not know of any pending, or
threatened in writing, special assessments affecting the Property.

               (xiii) Management. Except for the Management and Leasing
                      ----------
Agreements, there are no contracts or agreements with any third party for the
management of the Property or any portion thereof which will be binding on the
LLC as of the Closing Date.

               (xiv)  Environmental Reports. (1) Except as set forth in the
                      ---------------------
final environmental reports in the Carr Entities' possession or control, all of
which are listed in Exhibit K annexed hereto and made a part hereof (the
                    ---------
"Reports"), to the Carr Entities' knowledge, the Carr Entities (with respect to
the Premises) and the Premises are not in violation of any applicable
Environmental Laws.

                      (2)  The Carr Entities have delivered or made readily
available to NYSTRS, true and complete copies of the Reports.

                      (3)  Except as set forth in the Reports, to the knowledge
of the Carr Entities, there is no pending, or threatened in writing, Action,
demand, hearing, notice of violation, notice or demand letter that affects or
applies to the Premises relating in any way to any Environmental Laws.

                      (4)  Except as set forth in the Reports, to the Carr
Entities' knowledge, there has been no emission, spill, release or discharge
from the Premises into or upon (i) the air, (ii) soils or improvements, (iii)
surface water or ground water, or (iv) the sewer, septic system or waste
treatment, storage or disposal system servicing the Premises of any toxic or
Hazardous Substances or Wastes in violation of Environmental Laws. To the
knowledge of the Carr Entities, no Carr Entity or Tenant has stored, generated,
transported, released, disposed of or used any toxic or Hazardous Substances or
Wastes in, at, on, about or under the Property, in violation of Environmental
Laws.

                      (5)  To the Carr Entities' knowledge, neither the Premises
nor any portion thereof is now or has ever been a Superfund site. Except as set
forth in the Reports, to the Carr Entities' knowledge, there are no underground
storage tanks located on the Premises.

               (xv)   Operating Agreements. Exhibit L annexed hereto and made a
                      --------------------
part hereof sets forth each of the material Operating Agreements. To the Carr
Entities' knowledge, each of the Operating Agreements is a valid and subsisting
Operating Agreement of all of the parties thereto in full force and effect
without modification, except as set forth in Exhibit L. To the Carr Entities'
                                             ---------
knowledge, each Carr Entity has performed all material obligations required to
be performed by it and is not in material Default under any Operating Agreement.
To the

                                       12
<PAGE>

knowledge of the Carr Entities, no other party is in material Default under any
such Operating Agreement. The Carr Entities have delivered or made readily
available to NYSTRS copies of the Operating Agreements which are true, correct
and complete in all material respects.

               (xvi)  Tenant Leases.  The Carr Entities have delivered or made
                      -------------
readily available to NYSTRS copies of all of the Tenant Leases, such copies
being true, correct and complete in all material respects.  Exhibit M sets forth
                                                            ---------
all Tenant Leases to which any Carr Entity is a party.  The representations in
the remainder of this subparagraph are made only with respect to Tenant Leases
for which a Tenant Estoppel Certificate has not been delivered to NYSTRS, and
shall remain in effect, subject to the time limit prescribed in Section 13, with
respect to each such Tenant Lease until a Tenant Estoppel Certificate with
respect to such Tenant Lease is delivered to NYSTRS in connection with this
transaction (either at or after the Closing).  To the Carr Entities' knowledge,
the Tenant Leases are in full force and effect and there are no parties in
possession of the Premises, except the Tenants and any subtenants disclosed in
Exhibit M.  Except as set forth in Exhibit M, all material tenant improvements
---------                          ---------
required under the Tenant Leases to be completed by the date hereof by the
landlord thereunder have been completed and all tenant allowances required under
the Tenant Leases to be paid in full as of the date hereof have been paid in
full; except as set forth in Exhibit M, there are no unsatisfied "Take-Over"
                             ---------
space obligations or "Take-Back" space obligations ("Take-Over" space
obligations means rent obligations of the Tenant in other buildings assumed by
the landlord and "Take-Back" space obligations means obligations imposed upon
the landlord to sublet or otherwise be responsible for the obligations of a
Tenant under a Tenant Lease); except as set forth in Exhibit M or Exhibit N, to
                                                     ---------    ---------
the Carr Entities' knowledge there are no disputes with Tenants as to the amount
of their rent or other charges (including, without limitation, charges for
operating costs) under any Tenant Lease; to the Carr Entities' knowledge, except
as set forth in the Tenant Leases, no Tenant has any option to cancel its Tenant
Lease; except as set forth on Exhibit M, to the Carr Entities' knowledge there
                              ---------
is no Default by the landlord under any Tenant Lease and the Carr Entities have
not received from any Tenant any written notice claiming any Default by the
landlord under its Tenant Lease; except as set forth in Exhibit M, the Carr
                                                        ---------
Entities have not delivered to any Tenant any written notice claiming a Default
by Tenant under its Tenant Lease; except as set forth on Exhibit M or Exhibit N,
                                                         ---------    ---------
or otherwise specifically disclosed in this Agreement (including the Exhibits),
to the Carr Entities' knowledge no Tenant has asserted in writing, or has any
rights to, offsets or claims against rental payable or obligations under any
Tenant Lease; and to the Carr Entities' knowledge, no guarantor of any Tenant
Lease has been released or discharged voluntarily from any obligation related to
such Tenant Lease.  To the Carr Entities' knowledge, the Percentage Interest for
each Tenant has been and is currently calculated accurately and correctly in
accordance with the method of calculation prescribed in such Tenant's Tenant
Lease.  For purposes of this Agreement, "Percentage Interest" means the
percentage interest or pro-rata share for each Tenant under its Tenant Lease
with respect to that portion of the Premises for which such Tenant is
responsible for operating costs or any other charge payable to the landlord
under such Tenant Lease.  Exhibit M-1 sets forth a true, correct and complete
                          -----------
list of all security deposits held under Tenant Leases.  Exhibit M-1 also sets
                                                         -----------
forth (1) annual percentage rent payable and percentage rent break point for
each Tenant required to pay percentage rent under its Tenant Lease; and (2)
frequency rent is payable under each Tenant Lease (if other than monthly).

                                       13
<PAGE>

               (xvii)  Rent Roll. Attached hereto as Exhibit N is a rent roll
                       ---------                     ---------
(the "Rent Roll") for all Tenant Leases in effect as of the date of the Rent
Roll. The Rent Roll contains the following information with respect to each
Tenant Lease: (1) name of Tenant, (2) rentable space (as specified in the
related Tenant Lease), (3) base annual rent payable, (4) amounts of operating
expenses and real property taxes payable, (5) commencement date, (6) expiration
date, and (7) rent per square foot.

               (xviii) Litigation. Except as set forth on Exhibit O attached
                       ----------                         ---------
hereto (the "Litigation List"), there are no pending, or to the Carr Entities'
knowledge threatened in writing, Actions affecting all or any portion of the
Property or the Carr Entities (with respect to the Property) which are not
otherwise covered by insurance.

               (xix)   No Violations.  Except as set forth on Exhibit U attached
                       -------------                          ---------
hereto, the Carr Entities have not received any written notice of any material
violation of any Laws of any Governmental Authority affecting the Property
(collectively, "Violations"), and the Carr Entities have not received any
written notice that an investigation has been commenced respecting any such
possible Violations.

               (xx)    Insurance.  To the Carr Entities' knowledge, all pending
                       ---------
Actions, if any, against the Property which are covered by insurance are being
defended by the appropriate insurance companies.  None of the Carr Entities has
received any written notice from any insurance company which has issued a policy
with respect to the Premises or from the holder of any mortgage encumbering the
Premises requesting or requiring performance of any structural or other major
repairs or alterations to the Premises which has not been complied with.

               (xxi)   Licenses and Permits. The Carr Entities have delivered or
                       --------------------
made readily available to NYSTRS copies of all Licenses and Permits held by the
Carr Entities with respect to the Property. The Carr Entities have received no
written notice of any pending or threatened modification or cancellation of any
of the Licenses and Permits, any notice that they lack any License or Permit, or
any notice of the violation of any of the Licenses or Permits.

               (xxii)  Personalty. The list of Personalty set forth in Exhibit R
                       ----------                                      ---------
annexed hereto and made a part hereof is, in all material respects, a true,
accurate and complete list of all Personalty having a fair market value (per
item) of $10,000 or more. In those instances where the Carr Entity has leasehold
title (rather than fee title) to any Personalty listed in Exhibit R, the leases
                                                          ---------
related thereto (including all amendments thereof) are described on Exhibit R.
                                                                    ---------
The Personalty listed in Exhibit R is located on the Premises and is the
                         ---------
Personalty used in the ownership, use, operation, leasing, maintenance,
development and construction of the Premises.

               (xxiii) Development Documents. Exhibit S attached hereto sets
                       ---------------------  ---------
forth, in all material respects, a true and complete list of all material
construction contracts, development contracts, engineering and other third-party
professional contracts relating to the Properties Under Development and
Undeveloped Properties (collectively, the "Development Documents"), and all
Licenses and Permits relating to the Properties Under Development. Except as set
forth on Exhibit S, the Carr Entities have not received from any party to the
         ---------
Development Documents or such Licenses and Permits any written notice claiming
any Default by the Carr Entities; except as set forth in Exhibit S, the Carr
                                                         ---------
Entities have not delivered to any party any written notice claiming a Default
by such party under the Development Documents. Exhibit S-1 contains a
                                               -----------

                                       14
<PAGE>

schedule, true and correct in all material respects, of all construction costs
incurred to date in connection with the development of the Properties Under
Development. The information set forth in Exhibit S-1 shall be superseded to the
                                          -----------
extent that such information is provided in estoppels or in consents and
acknowledgments delivered by contractors, architects and other consultants to
the Carr Entities in connection with the transactions contemplated in this
Agreement.

               (xxiv)   Employees. Except as set forth on Exhibit Q attached
                        ---------                         ---------
hereto, there are no union or employment contracts or agreements (written or
oral) affecting the Premises and, to the knowledge of the Carr Entities, there
are no employees of the Carr Entities, at the Premises or otherwise, who, by
reason of any Federal, State, County, municipal or other law, ordinance, order,
requirement or regulation, or by reason of any union or other employment
contract, written or otherwise, or any other reason whatsoever, would become
employees of the LLC or NYSTRS as a result of the transactions contemplated in
this Agreement. By the execution of this Agreement, NYSTRS is neither expressly
nor implicitly assuming any liability, obligation, cost or expense whatsoever
with respect to any employment contract, employee benefit plan or arrangement,
employment policy or practice, collective bargaining agreement, union contract,
employment related claims whether based on statute, common law, tort or
otherwise or any other liability relating in any way to employees (collectively,
"Employment Liabilities").

               (xxv)    Financial Statements for Developed Properties. Annexed
                        ---------------------------------------------
hereto as Exhibit T and made a part hereof is a list of the financial statements
          ---------
relating to the Developed Properties for the two years ended December 31, 1999,
consisting of balance sheets and income statements (collectively, the "Financial
Statements"), together with a list of any operating statements relating to the
Developed Properties covering the period from January 1, 2000 through June 30,
2000 (collectively, the "Interim Financial Statements"). The Financial
Statements and Interim Financial Statements have been delivered to NYSTRS, and
in each case are true and complete in all material respects and fairly present
the financial position and results of operations of the Developed Properties as
at, or for the periods ended on, such dates. The budgets for the Developed
Properties covering the period from January 1, 2000 through June 30, 2000 have
been delivered to NYSTRS and were prepared with customary and ordinary
thoroughness and in a manner consistent with the Carr Entities' past business
practices.

               (xxvi)   Loan Documents. The Carr Entities have provided true and
                        --------------
correct copies of, or have readily made available, to NYSTRS all Loan Documents
in the possession or control of the Carr Entities. To the knowledge of the Carr
Entities, each of the Loan Documents is in full force and effect and has not
been modified or amended, except as indicated on Exhibit C. None of the Carr
                                                 ---------
Entities has received any written notice claiming that a Default exists under
the Loan Documents.

               (xxvii)  Court Orders. None of the Carr Entities has received
                        ------------
notice of any Court Order issued against, or binding on, the Property which do
or may affect, limit or control the Property or the LLC's method or manner of
doing business. No Carr Entity has received written notice that it is in Default
with respect to any Court Order.

               (xxviii) Office Park Associations. Exhibit V attached hereto sets
                        ------------------------   ---------
forth a true and complete (in all material respects) list of all material
documents relating to the Office

                                       15
<PAGE>

Park Associations to which any Carr Entity is a party and which bind the
Premises or the Carr Entity, its successors or assigns (the "Association
Documents"). Except as set forth on Exhibit V, the Carr Entities have not
                                    ---------
received written notice claiming any Default by the Carr Entities under any
Association Documents; except as set forth in Exhibit V, the Carr Entities have
                                              ---------
not delivered to any party any written notice claiming a Default by such party
under the Association Documents.

               (xxix)  Tax Parcels. The Property is assessed for real estate tax
                       -----------
purposes as one or more wholly independent tax lots, and when contributed or
conveyed to the LLC and/or Affiliates thereof, neither the Property nor any
portion thereof will be assessed or taxed together with any property that is not
contributed or conveyed to the LLC and/or Affiliates thereof pursuant to this
Agreement.

               (xxx)     Assessed Value. No proceedings for the correction of
                         --------------
the assessed valuation of the Premises (the "Proceedings") have been filed on
behalf of any Carr Entity and is pending, other than as set forth in Exhibit W
                                                                     ---------
annexed hereto and made a part hereof.

               (xxxi)    Certificates of Occupancy.  The Carr Entities have made
                         -------------------------
readily available to NYSTRS all certificates of occupancy in the Carr Entities'
possession or control issued for the Buildings and all tenant spaces.

               (xxxii)   Development Budgets. True, correct and complete copies
                         -------------------
of the summary pages of the development budgets for the Property, prepared in
the ordinary course of business of the Carr Entities, have been delivered to
NYSTRS [and the Carr Entities have no knowledge of any state of facts which
would cause construction costs to deviate materially from such development
budgets].

               (xxxiii)  ERISA.  None of the Contributing Carr Entities holds
                         -----
Plan Assets within the meaning of 29 C.F.R. (S) 2510.3-101.

          (b)  Whenever reference is made in this Section 12 to the "Carr
Entities' knowledge" or similar term, the "Carr Entities' knowledge" or similar
term shall mean the actual knowledge, without independent inquiry, of the
following individuals: Karen B. Dorigan, Tom Levy, Marilyn Lucas, and the
personnel with respect to each Office Park listed on Exhibit BB.
                                                     ----------

          (c)  NYSTRS represents and warrants to the Carr Entities that:

               (i)   Due Organization, Etc.  NYSTRS is duly organized, validly
                     ----------------------
existing and in good standing under the laws of the state of its formation, and
has the full power and authority to own, lease and operate its assets and
properties and to conduct its business as now being conducted.

               (ii)  Authority.  This Agreement constitutes the legal, valid and
                     ---------
binding obligation of NYSTRS, enforceable against NYSTRS in accordance with its
terms.  NYSTRS has taken all necessary action to authorize and approve the
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement.

               (iii) No Violation of Laws.  The execution and delivery of this
                     --------------------
Agreement and the performance by NYSTRS of its obligations hereunder do not and
will not conflict with or

                                       16
<PAGE>

violate any law, rule, judgment, regulation, order, writ, injunction or decree
of any court or governmental or quasi-governmental entity with jurisdiction over
NYSTRS, including, without limitation, the United States of America and the
state of formation of NYSTRS, or any political subdivision of any of the
foregoing, or any decision or ruling of any arbitrator to which NYSTRS is a
party or by which NYSTRS is bound or affected.

               (iv)  No Conflict. To NYSTRS' knowledge, NYSTRS is not a party
                     -----------
to, or subject to or bound by, any agreement, judgment, order, writ, injunction
or decree of any Governmental Authority that could prevent the performance of
all or any of the terms of this Agreement.

          (d)  The Carr Entities and NYSTRS will undertake commercially
reasonable efforts to inform the other party upon obtaining actual knowledge
that the other party has breached any representation or warranty contained in
this Agreement.

     10.  Deliveries to be made on the Closing Date.
          -----------------------------------------

          (a)  The Carr Entities' Deliveries: The Carr Entities shall deliver or
               -----------------------------
cause to be delivered to NYSTRS on the Closing Date the following documents
(collectively, the "Carr Entities' Deliveries"):

               (i)   Deeds. Special Warranty deeds, duly executed and
                     -----
acknowledged by the appropriate Carr Entities, conveying fee simple title to the
Premises and the Buildings to the LLC or an Affiliate thereof;

               (ii)  Bills of Sale. Bills of Sale duly executed by the
                     -------------
appropriate Carr Entities, transferring to the LLC or an Affiliate thereof all
of the Carr Entities' right, title and interest in and to the Personalty;

               (iii) Assignments and Assumptions of Tenant Leases. Assignments
                     --------------------------------------------
and assumptions of all Tenant Leases, duly executed and acknowledged by the
appropriate Carr Entities, in a form reasonably acceptable to NYSTRS;

               (iv)  Assignments and Assumptions of the Development Documents.
                     --------------------------------------------------------
Assignments and assumptions of all assignable Development Documents, duly
executed and acknowledged by the appropriate Carr Entities, in a form reasonably
acceptable to NYSTRS;

               (v)   Assignments of Licenses and Permits.  Assignments of all
                     -----------------------------------
assignable Licenses and Permits, duly executed and acknowledged by the
appropriate Carr Entities, in a form reasonably acceptable to NYSTRS;

               (vi)  Assignments and Assumptions of Operating Agreements.
                     ---------------------------------------------------
Assignments and assumptions (to the extent that such agreements relate to the
Property being contributed or sold pursuant hereto) of all assignable Operating
Agreements, duly executed and acknowledged by the appropriate Carr Entities, in
a form reasonably acceptable to NYSTRS;

               (vii) Assignment and Assumption of Loan Documents. Assignment and
                     -------------------------------------------
Assumption Agreement relating to the Loan Documents, duly executed and
acknowledged by the

                                       17
<PAGE>

appropriate Carr Entities and the Existing Lender, in a form reasonably
acceptable to NYSTRS;

               (viii) Assignment of Warranties and Intangibles. Assignments of
                      ----------------------------------------
all assignable warranties and intangibles, duly executed and acknowledged by the
appropriate Carr Entities, in a form reasonably acceptable to NYSTRS, assigning
to the LLC or an Affiliate thereof the Carr Entities' interests in the Names,
the Proprietary Rights, the Funds and other intangibles relating to the
Property.

               (ix)   Assignments of Declarant Rights and Estoppel Certificates.
                      ---------------------------------------------------------
Assignments of all rights of the Declarant under those Association Documents in
which a Carr Entity is the Declarant, in a form reasonably acceptable to NYSTRS,
and estoppel certificates from all associations and/or architectural committees
formed under recorded declarations (in a form reasonable acceptable to NYSTRS).

               (x)    FIRPTA Affidavit. The affidavit referred to in Section
                      ----------------
1445 of the Code with all pertinent information confirming that each Carr Entity
is not a foreign person, trust, estate, corporation or partnership.

               (xi)   Termination Agreements. Executed termination agreements or
                      ----------------------
other evidence reasonably satisfactory to NYSTRS that any existing management
agreements for the Premises have been duly and validly terminated effective upon
the Closing and at no cost to NYSTRS or the LLC.

               (xii)  The Carr Entities' Authority. Such proof and evidence of
                      ----------------------------
the Carr Entities' authority and authorization to enter into the transactions
contemplated hereby, and such proof of the power and authority of the
individual(s) executing and/or delivering any instruments, documents or
certificates on behalf of any entity to act for and bind such entity, as may be
reasonably required by the Title Company or NYSTRS, including, without
limitation, any and all consents of any directors, shareholders, partners,
limited partners or other persons whose consent to the transactions contemplated
hereby is required in accordance with the Carr Entities' respective internal
organizational structures.

               (xiii) LLC Agreement. A duly executed LLC Agreement in the form
                      -------------
of Exhibit Y annexed hereto and made a part hereof, and any certificates
   ---------
required by the law of the State of Delaware in connection with the formation of
the LLC.

               (xiv)  Good Standing Certificates. Good standing Certificates (or
                      --------------------------
analogous documents) with respect to each Carr Entity, the LLC, Carr PN One, LLC
and Carr Texas OP, LP (and its general partner) from the Secretary of State or
state taxing authority of the state in which each such entity is organized and
authorized to conduct business.

               (xv)   Management and Leasing Agreements. Five Management and
                      ---------------------------------
Leasing Agreements (one for each Office Park), in the form of Exhibit Z annexed
                                                              ---------
hereto and made a part hereof.

               (xvi)  Development Services Agreements. Five Development Services
                      -------------------------------
Agreements, in the form of Exhibit AA annexed hereto and made a part hereof.
                           ----------

               (xvii) Notices to Tenants and Service Providers. A notice to each
                      ----------------------------------------
tenant

                                       18
<PAGE>

and service provider at each Office Park informing such tenant or service
provider as to the sale of such Office Park, signed by the current manager of
such Office Park or if required by NYSTRS, jointly by such manager and the
appropriate Carr Entity, in form reasonably acceptable to NYSTRS;

               (xviii) Tenant Estoppel Certificates.  Original executed tenant
                       ----------------------------
estoppel certificates ("Tenant Estoppel Certificates") from all Tenants
occupying no less than an aggregate of 25,000 square feet of net rentable space
("Major Tenants"), and from Tenants (including Major Tenants) occupying no less
than eighty-five percent (85%) of the total rented space in the Premises, or
such lesser percentage as NYSTRS may deem satisfactory at Closing.

               (xix)   Existing Lender's Estoppel Certificate. An estoppel
                       --------------------------------------
certificate from the Existing Lender in form and substance satisfactory to
NYSTRS (the "Existing Lender's Estoppel Certificate").

               (xx)    Other Documents and Deliveries.  Such other documents,
                       ------------------------------
instruments and deliveries customarily delivered by sellers of property similar
to the Property, as may be reasonably required by the Title Company.

          (b)  NYSTRS' Deliveries. NYSTRS shall deliver or cause to be delivered
               ------------------
on the Closing Date the following:

               (i)     The NYSTRS Contribution. On the Closing Date, NYSTRS
                       -----------------------
shall make the NYSTRS Contribution to the LLC pursuant to Section 2 hereof;

               (ii)    LLC Agreement.  NYSTRS shall counterexecute the LLC
                       -------------
Agreement; and

               (iii)   NYSTRS' Authority. Such proof and evidence of NYSTRS'
                       -----------------
authority and authorization to enter into the transactions contemplated hereby,
and such proof of the power and authority of the individual(s) executing and/or
delivering any instruments, documents or certificates on behalf of NYSTRS to act
for and bind such entity, as may be reasonably required by the Title Company or
the Carr Entities, including, without limitation, any and all consents of any
managers, members or other persons whose consent to the transactions
contemplated hereby is required in accordance with NYSTRS' internal
organizational structure.

          (c)  Other Deliveries.  The Carr Entities and NYSTRS shall have
               ----------------
obtained the following additional items on or prior to the Closing Date:

               (i)     LLC Signatures. The execution of all documents
                       --------------
contemplated in this Agreement that require execution by the LLC, including, but
not limited to, the Management and Leasing Agreements and the Development
Services Agreements.

               (ii)    Title Policies. Title policies insuring title of the LLC
                       --------------
in the Premises, subject only to Tenant Leases, real estate taxes not yet due
and payable, zoning laws and regulations, and other exceptions reasonably
acceptable to NYSTRS (collectively, the "Permitted Exceptions").

          (d)  Deemed ApProval. For each delivery in this Section 10 required to
               ---------------
be "reasonably acceptable" or "satisfactory" (or words of similar import) to a
party, such

                                       19
<PAGE>

acceptability or satisfaction shall be deemed to have been met if the Closing
actually occurs.

     11.  Payment of Closing Costs; Apportionments; Post-Closing Adjustments.
          ------------------------------------------------------------------

          (a)  Except as expressly set forth herein to the contrary in this
Section 11, all items of income and expense at the Property shall be apportioned
between the Carr Entities and the LLC on a per diem basis in the manner
specified in clause (f) below.  The parties, by no later than ninety (90) days
subsequent to the Closing, agree to make such adjustments to the calculation of
Purchase Value and/or Contribution Value as may be required to correct manifest
error, in which event appropriate payments shall be made as between the Carr
Entities and NYSTRS to reflect such adjustments.  To the extent that all
information, bills and invoices are not available at Closing to allow for the
apportionment of any items of income and expense, the Carr Entities and NYSTRS
agree to readjust the apportionment within ninety (90) days after Closing or
such later time pursuant to clause (c) below.

          (b)  The following items shall be apportioned as of 11:59 PM of the
day immediately preceding the Closing Date:

               1.   Fixed rents, additional rents, percentage rents and all
other sums and credits due or payable under the Tenant Leases, as and when
collected, subject to the provisions of clause (g) of this Section 11 (it being
understood that final calculation of all tenant pass-through payments on account
of operating expenses shall not be apportioned at Closing but as between the
Carr Entities and the LLC no later than April 1, 2001);

               2.   Real estate taxes on the Premises, on the basis of the
fiscal year for which the same are levied, imposed or assessed, subject to the
provisions of clause (e) of this Section 11;

               3.   Charges for water, sewer rents, electricity, steam, gas and
telephone at the Premises, which are not metered or otherwise charged directly
to Tenants under the Tenant Leases; provided that if the consumption of any of
such utilities is measured by meters, the Carr Entities at the Closing shall
furnish a current reading of each meter; and further provided that if there is
not a meter or if the current bill for any of such utilities has not been issued
prior to the Closing Date, the charges therefor shall be adjusted at the Closing
on the basis of the charges for the prior period for which bills were issued and
shall be further adjusted when the bills for the current period are issued;

               4.   Fuel at the Premises, if any, at the Carr Entities' cost
therefor (as determined by the Carr Entities' fuel suppliers);

               5.   Amounts paid or payable under transferable Operating
Agreements (it being understood that such apportionment shall be made within 45
days after Closing);

               6.   Premiums on insurance policies or renewals of those expiring
prior to the Closing;

               7.   Interest under the Mortgage; and

               8.   Any other items of income, operating expenses or other items
pertaining to the Property which are customarily prorated between a purchaser
and seller of

                                       20
<PAGE>

property similar in character to the Property in the areas in which the Property
is located.

          (c)  If, on the Closing Date, any items of additional rent or
percentage rent under the Tenant Leases shall not have been ascertained, then
such items shall be adjusted retroactively as and when the same are ascertained.

          (d)  The Carr Entities shall maintain and make available to NYSTRS any
books or records necessary for the retroactive adjustment of any item pursuant
to clause (c) of this Section.

          (e)  If the Closing shall occur before the real estate tax rate is
fixed, the apportionment of real estate taxes shall be based upon the tax rate
for the next preceding year applied to the latest assessed valuation.

          (f)  All apportionments made under this Agreement shall be calculated
(1) as between the Carr Entities and the LLC to reflect that the Carr Entities
are contributing or conveying their interests in the Property to the LLC on the
Closing Date and then (2) the Contributing Carr Entities and NYSTRS shall share
in the credits and debits of the LLC in proportion to their respective interests
in the LLC immediately following the Closing.

          (g)  If any existing Tenant is in arrears in the payment of rent on
the Closing Date, the Contributing Carr Entities and NYSTRS shall cause the LLC
to use reasonable efforts to collect any such rent arrearages and any and all
rents received from such Tenant after the Closing shall be applied in the
following order of priority: (i) first to the month in which the Closing
occurred; (ii) then to any month or months following the month in which the
Closing occurred (provided, however, that no rent received shall be applied to
rent due for any month subsequent to the month in which it is received); and
(iii) then to the months preceding the month in which the Closing occurred. If
rents or any portion thereof received by the LLC or a Carr Entity after the
Closing are payable to the other by reason of this allocation, the appropriate
sum, less a proportionate share of any reasonable attorneys' fees, costs and
expenses of collection thereof, shall be promptly paid to the other, which
obligation shall survive the Closing.

          (h)  All costs of Closing (including, without limitation, transfer
taxes) shall be shared by the Carr Entities and NYSTRS ratably in the following
proportions: (1) the Carr Entities -- 35% and (ii) NYSTRS -- 65%.

          (i)  The Carr Entities and NYSTRS shall each pay for their own
counsel.

          (j)  The LLC shall pay, or cause to be paid, all costs associated with
the assumption of the loan from the Existing Lender.

          (k)  Any tax refund or the savings for any year or years prior to the
tax year in which the Closing occurs, to the extent not payable to any Tenants
pursuant to the terms of any Tenant Leases, shall belong solely to the Carr
Entities.  Any refund or the savings for the tax year in which the Closing
occurs, to the extent not payable to any Tenants pursuant to the terms of any
Tenant Leases, shall be prorated as of the Closing Date between the Carr
Entities and the LLC.  Any refund or the savings for any period after the tax
year in which the Closing occurs shall belong solely to the LLC.  From and after
the Closing, the LLC shall have the right to receive any refund payable to any
Tenant and to distribute such refunds to such Tenants in

                                       21
<PAGE>

accordance with the terms of their respective Tenant Leases. In the event the
Carr Entities shall receive any refund from any Governmental Authority which
refund is payable to a Tenant under its Tenant Lease or to the LLC in accordance
with the terms hereof, the Carr Entities agree to promptly deliver such funds to
the LLC. NYSTRS and the Carr Entities shall each execute, and cause the LLC to
execute, all consents, receipts, assignments, instruments and documents which
may reasonably be requested in order to facilitate settling such proceedings and
collecting the amount of any refund or tax savings.

     12.  Indemnification.
          ---------------

          (a)  Indemnification by the Carr Entities. From and after the Closing,
               ------------------------------------
each Carr Entity hereby agrees, severally, to defend, indemnify and hold NYSTRS
harmless from and against, and reimburse NYSTRS for, any and all Damages which
NYSTRS may sustain at any time by reason of the breach or inaccuracy of or
failure to comply with any of the warranties, representations, conditions,
covenants or agreements of such Carr Entity contained in this Agreement or in
any agreement or document delivered pursuant thereto or in connection therewith.

          (b)  Indemnification by NYSTRS.  From and after the Closing, NYSTRS
               -------------------------
shall defend, indemnify and hold the Carr Entities harmless from and against,
and reimburse the Carr Entities for, any and all Damages which the Carr Entities
may sustain at any time by reason of the breach or inaccuracy of or failure to
comply with any warranties, representations, conditions, covenants or agreements
of NYSTRS contained in this Agreement or in any agreement, certificate or
document delivered pursuant thereto or in connection therewith.

          (c)  Procedures for Indemnification.  In the event that any claim is
               ------------------------------
asserted against any party hereto, or any party hereto is made a party defendant
in any action or proceeding, and such claim, action or proceeding involves a
matter which is the subject of this indemnification, then such party (an
"Indemnified Party") shall give written notice to the other party hereto (the
"Indemnifying Party") of such claim, action or proceeding, and such Indemnifying
Party shall have the right to join in the defense of said claim, action or
proceeding at such Indemnifying Party's own cost and expense and, if the
Indemnifying Party agrees in writing to be bound by and to promptly pay the full
amount of any final judgment from which no further appeal may be taken, then at
the option of the Indemnifying Party, such Indemnifying Party may take over the
defense of such claim, action or proceeding, except that, in such case, the
Indemnified Party shall have the right to join in the defense of said claim,
action or proceeding at its own cost and expense.

          (d)  Limitation on Liability.  NYSTRS, on the one hand, and the Carr
               -----------------------
Entities, on the other hand, shall not be entitled to bring a claim against the
other on account of a breach of any covenant, indemnity, representation or
warranty under this Agreement or any agreement, certificate or document
delivered pursuant hereto unless such claim or series of claims exceeds
$250,000.00 in the aggregate.  The aggregate liability for each of (i) the Carr
Entities (collectively) and (ii) NYSTRS for any claim or series of claims
arising out of such covenants, indemnities, representations and warranties under
this Agreement or any agreement, certificate or document delivered pursuant
hereto, shall not exceed ten percent (10%) of the Acquisition Value.

     13.  Survival. The parties hereto agree that all representations,
          --------
warranties and

                                       22
<PAGE>

indemnifications contained herein, or in any instrument or other document
delivered pursuant to this Agreement shall survive the execution and delivery of
this Agreement, and the consummation of the transactions contemplated hereby for
a period of fourteen (14) months from the Closing Date, within which time
written notice of any claim must be given, in which event, any claim asserted
prior to the expiration of such fourteen (14) month period shall survive the
expiration of such fourteen (14) month period. The provisions of Section 11
shall survive for such length of time as any obligations or potential
obligations of any party may exist thereunder.

     14.  Notices. All demands, requests or other communications (collectively,
          -------
"notices") required to be given or which may be given hereunder shall be in
writing and shall be sent by (a) certified or registered mail, return receipt
requested, postage prepaid, or (b) national prepaid overnight delivery service,
or (c) telecopy or other facsimile transmissions (followed with hard copy sent
by national prepaid overnight delivery service), or (d) personal delivery with
receipt acknowledged in writing, directed to:

Each Carr Entity:   c/o CarrAmerica Realty Corporation

                    1850 K Street, N.W., Suite 500

                    Washington, D.C. 20006

                    Attn: Ms. Karen B. Dorigan

                    Fax Number: 202/729-1060

With a copy to:     Mayer Brown & Platt

                    190 South LaSalle Street

                    Chicago, Illinois 60603

                    Attn: Jeffrey Usow, Esq.

                    Fax Number: 312/706-8725

NYSTRS:             New York State Teachers' Retirement System

                    c/o J.P. Morgan Investment Management Inc.

                    522 Fifth Avenue

                    New York, New York 10036

                    Attention: Mr. Benjamin Gifford

                    Fax Number: 212/837-1696

with a copy to:     New York State Teachers' Retirement System

                    10 Corporate Woods Drive

                    Albany, New York 12211-2395

                    Attn: Mr. John Virtanen

                                       23
<PAGE>

                    Fax Number: 518/447-2766

with a copy to:     Joseph M. Fries, Esq.

                    Arent Fox Kintner Plotkin & Kahn, PLLC

                    1050 Connecticut Avenue, N.W.

                    Washington, D.C. 20036-5339

                    Fax Number: (202) 857-6395

Any notice so sent by certified or registered mail shall be deemed given on the
date of receipt or refusal as indicated on the return receipt. All other notices
shall be deemed given when actually received or refused by the party to whom the
same is directed. A notice may be given either by a party or by such party's
attorney. The Carr Entities and NYSTRS may designate by not less than five (5)
business days' notice given to the other in accordance with the terms of this
Section, additional or substituted parties to whom notices should be sent
hereunder.

     15.  Amendments. This Agreement may not be modified or terminated orally or
          ----------
in any manner other than by an agreement in writing signed by all the parties
hereto or their respective successors in interest.

     16.  Governing Law; Construction. This Agreement (a) shall be governed by
          ---------------------------
and construed in accordance with the laws of the State of New York, without
giving effect to principles of conflicts of law and (b) shall be given a fair
and reasonable construction in accordance with the intentions of the parties
hereto and without regard to, or aid of, any rules of construction requiring
construction against any party drafting this Agreement. Each party hereto
acknowledges that it has participated in the drafting of this Agreement, and any
applicable rule of construction to the effect that ambiguities are to be
resolved against the drafting party shall not be applied in connection with the
construction or interpretation hereof. Each party has been represented by
independent counsel in connection with this Agreement. For purposes of
construction of this Agreement, provisions which are deleted or crossed out and
initialed by the parties shall be treated as if never included herein.

     17.  Partial Invalidity. If any provision of this Agreement is held to be
          ------------------
invalid or unenforceable as against any person or under certain circumstances,
the remainder of this Agreement and the applicability of such provision to other
persons or circumstances shall not be affected thereby. Each provision of this
Agreement shall be valid and enforceable to the fullest extent permitted by law.

     18.  Counterparts. This Agreement may be executed in any number of
          ------------
counterparts, each of which shall constitute an original, but all of which,
taken together, shall constitute but one and the same instrument. This Agreement
may be executed by facsimile, which shall be deemed an original for all
purposes. In the event this Agreement is executed by the exchange of facsimile
copies, the parties agree to exchange ink-signed counterparts promptly after the
execution and delivery of this Agreement.

     19.  No Third Party Beneficiaries. The warranties, representations,
          ----------------------------
agreements and undertakings contained herein shall not be deemed to have been
made for the benefit of any

                                       24
<PAGE>

person or entity other than the parties hereto.

     20.  Waiver. No failure or delay of either party in the exercise of any
          ------
right given to such party hereunder or the waiver by any party of any condition
hereunder for its benefit (unless the time specified herein for exercise of such
right, or satisfaction of such condition, has expired) shall constitute a waiver
of any other or further right nor shall any single or partial exercise of any
right preclude other or further exercise thereof or any other right. The waiver
of any breach hereunder shall not be deemed to be waiver of any other or any
subsequent breach hereof.

     21.  Assignment.  Neither NYSTRS nor the Carr Entities may assign this
          ----------
Agreement or any of their rights hereunder, except to a permitted assignee of
its membership interest in the LLC, and any purported unpermitted assignment
shall be null and void.

     22.  Binding Effect. Subject to Section 21, this Agreement is binding upon,
          --------------
and shall inure to the benefit of, the parties and each of their respective
successors and permitted assigns, if any.

     23.  Entire Agreement. This is the entire agreement between the parties and
          ----------------
there are no other terms, obligations, covenants, representations, statements or
conditions, oral or otherwise, of any kind whatsoever. Any agreement hereafter
made shall be ineffective to change, modify, discharge or effect an abandonment
of this Agreement in whole or in part unless such agreement is in writing and
signed by the party against whom enforcement of the change, modification,
discharge or abandonment is sought.

     24.  Further Assurances. Both prior to and after the Closing Date, NYSTRS
          ------------------
and the Carr Entities shall execute and deliver each to the other such documents
and instruments and take such further actions as may be reasonably necessary or
required to consummate the transactions contemplated by this Agreement.  The
provisions of this Section 24 shall survive the Closing.

     25.  Paragraph Headings.  The headings of the various sections of this
          ------------------
Agreement have been inserted only for the purpose of convenience and are not
part of this Agreement and shall not be deemed in any manner to modify, expand,
explain or restrict any of the provisions of this Agreement.

                      [Signatures Begin on the Next Page]

                                       25
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the day and year first above written.

                         The Carr Entities:

                         CARRAMERICA REALTY CORPORATION,
                         a Maryland corporation

                         By: /s/ Karen B. Dorigan
                             --------------------
                             Karen B. Dorigan
                             Managing Director/Capital Markets and Investments

                         CARRAMERICA REALTY, L.P., a  Delaware limited
                         partnership

                         By: CARRAMERICA REALTY GP HOLDINGS, INC., a Delaware
                             corporation, its general partner

                             By: /s/ Karen B. Dorigan
                                 --------------------
                                 Karen B. Dorigan
                                 Executive Vice President

                         CARRAMERICA DEVELOPMENT, INC.
                         a Delaware corporation

                         By: /s/ Karen B. Dorigan
                             --------------------
                             Karen B. Dorigan
                             Executive Vice President

                                       26
<PAGE>

                         CARR DEVELOPMENT & CONSTRUCTION, L.P., a Delaware
                         limited partnership

                         By: CDC TEXAS HOLDINGS, INC., a Delaware corporation,
                             its general partner

                         By: /s/ Karen B. Dorigan
                             --------------------
                             Karen B. Dorigan
                             Executive Vice President

                         CARR PARKWAY NORTH I CORPORATION,
                         a Delaware corporation

                         By: /s/ Karen B. Dorigan
                             ---------------------
                             Karen B. Dorigan
                             Executive Vice President

                                       27
<PAGE>

                         NYSTRS:

                         NEW YORK STATE TEACHERS' RETIREMENT SYSTEM, a public
                         pension system created and existing pursuant to Article
                         11 of the Education Law of the State of New York and
                         having powers and privileges of a corporation pursuant
                         to Section 502 thereof

                         By: /s/ George Philip
                             -----------------
                             George Philip
                             Executive Director

                         By: /s/ John W. Virtanen
                             --------------------
                             John W. Virtanen
                             Associate Real Estate Officer

                                       28

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