Document:

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                                                                    EXHIBIT 10.1
                               AMB PROPERTY, L.P.

                     $400,000,000 SERIES B MEDIUM-TERM NOTES

                     DUE 9 MONTHS OR MORE FROM DATE OF ISSUE

                             DISTRIBUTION AGREEMENT

                                   MAY 7, 2002

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                                   MAY 7, 2002

Morgan Stanley & Co. Incorporated
A.G. Edwards & Sons, Inc.
Banc of America Securities LLC
Bear, Stearns & Co. Inc.
Commerzbank Capital Markets Corp.
First Union Securities, Inc.
J.P. Morgan Securities Inc.
Lehman Brothers Inc. and
PNC Capital Markets, Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036

Dear Ladies and Gentleman:

         AMB Property, L.P., a Delaware limited partnership (the "OPERATING
PARTNERSHIP"), confirms its agreement with each of you with respect to the issue
and sale from time to time by the Operating Partnership of up to $400,000,000
(or the equivalent thereof in one or more foreign currencies or composite
currencies) aggregate initial public offering price of Series B medium-term
notes due from 9 months or more from date of issue (the "NOTES"), which amount
may be increased from time to time in accordance with the Indenture (as defined
below). The Notes will be issued pursuant to the provisions of an Indenture and
the First Supplemental Indenture, the Second Supplemental Indenture and the
Third Supplemental Indenture thereto, each dated as of June 30, 1998, the Fourth
Supplemental Indenture, dated as of August 15, 2000 and the Fifth Supplemental
Indenture dated as of May 7, 2002 (collectively, the "INDENTURE"), and each by
and among the Operating Partnership, AMB Property Corporation, a Maryland
corporation, the sole general partner of the Operating Partnership and guarantor
of the Notes (the "GUARANTOR"), and State Street Bank and Trust Company of
California, N.A., as Trustee (the "TRUSTEE"), and will have the maturities,
interest rates, redemption provisions, if any, and other terms as set forth in
supplements to the Basic Prospectus referred to below.

         As used herein, the "COMPANY" shall include the Operating Partnership,
the Guarantor and each of the subsidiaries of the Operating Partnership or the
Guarantor which is a significant subsidiary as defined in Rule 405 of Regulation
C of the Securities Act of 1933, as amended (the "SECURITIES ACT"), as set forth
on Schedule I hereto (each, a "SUBSIDIARY," and, collectively, the
"SUBSIDIARIES").

      The Operating Partnership hereby appoints Morgan Stanley & Co.
Incorporated ("MORGAN STANLEY"), A.G. Edwards & Sons, Inc., Banc of America
Securities LLC, Bear, Stearns & Co. Inc., Commerzbank Capital Markets Corp.,
First Union Securities, Inc., J.P. Morgan Securities Inc., Lehman Brothers Inc.
and PNC Capital Markets, Inc., and each other agent set forth on Schedule II
hereto (individually, an "AGENT" and collectively, the "AGENTS") as

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its agents, subject to Section 8 and the other terms and conditions herein set
forth, for the purpose of soliciting and receiving offers to purchase Notes from
the Operating Partnership by others and, on the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, each Agent agrees to use reasonable best efforts to solicit and receive
offers to purchase Notes upon terms acceptable to the Operating Partnership at
such times and in such amounts as the Operating Partnership shall from time to
time specify. In addition, any Agent may also purchase Notes as principal
pursuant to the terms of a terms agreement relating to such sale (a "TERMS
AGREEMENT") in accordance with the provisions of Section 2(b) hereof. The
Operating Partnership reserves the right to sell Notes through one or more
additional agents or directly to or through certain investment banking firms as
underwriters for resale to the public. The Operating Partnership has
additionally reserved the right to sell Notes to investors on its own behalf in
those jurisdictions where it is authorized to do so. No commission will be
payable to the Agents on any Notes sold as described in the immediately
preceding two sentences.

         The Operating Partnership and the Guarantor have filed with the
Securities and Exchange Commission (the "COMMISSION") a registration statement
on Form S-3 (File No. 333-86842), including a prospectus, relating to the Notes
and the guarantees of the Notes (the "GUARANTEES"). Such registration statement,
including the exhibits thereto, as amended at the Commencement Date (as
hereinafter defined), but excluding the statement of eligibility of the trustee
on Form T-1, is hereinafter referred to as the "REGISTRATION STATEMENT." The
Operating Partnership proposes to file with the Commission from time to time,
pursuant to Rule 424 under the Securities Act, supplements to the prospectus
included in the Registration Statement that will describe certain terms of the
Notes. The prospectus in the form in which it appears in the Registration
Statement is hereinafter referred to as the "BASIC PROSPECTUS." The term
"PROSPECTUS" means the Basic Prospectus together with the prospectus supplements
and/or the pricing supplements referred to therein and issued from time to time
(each a "PROSPECTUS SUPPLEMENT") specifically relating to Notes, as filed with,
or transmitted for filing to, the Commission pursuant to Rule 424. As used
herein, the terms "BASIC PROSPECTUS" and "PROSPECTUS" shall include in each case
the documents, if any, incorporated by reference therein. The terms
"SUPPLEMENT," "AMENDMENT" and "AMEND" as used herein shall include all documents
deemed to be incorporated by reference in the Prospectus that are filed
subsequent to the date of the Basic Prospectus by the Operating Partnership or
the Guarantor with the Commission pursuant to the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT").

      1. REPRESENTATIONS AND WARRANTIES. The Operating Partnership and the
Guarantor, jointly and severally, represent and warrant to and agree with each
Agent as of the Commencement Date, as of each date on which an Agent solicits
offers to purchase Notes, as of each date on which the Operating Partnership
accepts an offer to purchase Notes (including any purchase by an Agent pursuant
to a Terms Agreement), as of each date the Operating Partnership issues and
delivers Notes and as of each date the Registration Statement or the Basic
Prospectus is amended or supplemented, as follows (it being understood that such
representations, warranties and agreements shall be deemed to relate to the
Registration Statement, the Basic Prospectus and the Prospectus, each as amended
or supplemented to each such date):

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      (a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or, to the knowledge of the
Operating Partnership and the Guarantor, threatened by the Commission.

      (b) Except for statements in such documents which do not constitute part
of the Registration Statement or Prospectus pursuant to Rule 412 of Regulation C
under the Securities Act, (i) each document, if any, filed or to be filed
pursuant to the Exchange Act and incorporated by reference in the Prospectus
complied or will comply when so filed in all material respects with the Exchange
Act and the applicable rules and regulations of the Commission thereunder, (ii)
each part of the Registration Statement, when such part became effective, did
not contain and each such part, as amended or supplemented, if applicable, will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, (iii) the Registration Statement and the Prospectus complied
when originally filed, comply and, as amended or supplemented, if applicable,
will comply in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder and (iv) the Prospectus does
not contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that (A) the representations and
warranties set forth in this paragraph 1(b) do not apply to (1) statements or
omissions in the Registration Statement or the Prospectus based upon information
relating to any Agent furnished to the Operating Partnership in writing by such
Agent expressly for use therein, which are the names of the Agents in the first
paragraph, the second, third, fourth and fifth sentences of the third paragraph,
the first sentence of fifth paragraph, beginning with the language "but have
been advised . . .", the sixth paragraph and the eighth paragraph (it being
understood that First Union Securities, Inc. shall be solely responsible for the
contents of this eighth paragraph) under the heading "Plan of Distribution", or
(2) that part of the Registration Statement that constitutes the Statement of
Eligibility (Form T-1) under the Trust Indenture Act of 1939, as amended (the
"TRUST INDENTURE ACT"), of the Trustee and (B) the representations and
warranties set forth in clauses 1(b)(iii) and 1(b)(iv) above, when made as of
the Commencement Date or as of any date on which an Agent solicits offers to
purchase Notes or on which the Operating Partnership accepts an offer to
purchase Notes, shall be deemed not to cover information concerning an offering
of particular Notes to the extent such information will be set forth in a
supplement to the Basic Prospectus or the Prospectus Supplement.

      (c) The Guarantor has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Maryland, and has
all power and authority necessary to own, lease and operate its properties and
to conduct the businesses in which it is engaged or proposes to engage as
described in the Prospectus and to enter into and perform its obligations under
this Distribution Agreement, the Guarantees, the Indenture and any applicable
Written Terms Agreement (as hereinafter defined). The Guarantor is duly
qualified or registered as a foreign corporation and is in good standing in
California and is in good standing in each other jurisdiction in which

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such qualification or registration is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure so to qualify or be registered or to be in good standing in such other
jurisdiction would not result in a material adverse effect on the consolidated
financial position, results of operations or business of the Operating
Partnership, the Guarantor and their subsidiaries, taken as a whole (a "MATERIAL
ADVERSE EFFECT").

      (d) The Operating Partnership is a limited partnership duly formed and
existing under and by virtue of the laws of the State of Delaware and is in good
standing under the Delaware Revised Uniform Limited Partnership Act with
partnership power and authority to own, lease and operate its properties, to
conduct the business in which it is engaged or proposes to engage as described
in the Prospectus and to enter into and perform its obligations under this
Distribution Agreement, the Notes, the Indenture, the Calculation Agency
Agreement between the Operating Partnership and the Trustee (the "CALCULATION
AGENCY AGREEMENT") and any applicable Written Terms Agreement. The Operating
Partnership is duly qualified or registered as a foreign partnership and is in
good standing in California and is in good standing in each other jurisdiction
in which such qualification or registration is required, whether by reason of
the ownership or leasing of property or the conduct of business, except where
the failure so to qualify or be registered or to be in good standing in such
other jurisdiction would not have Material Adverse Effect. The Guarantor is the
sole general partner of the Operating Partnership and owns the percentage
interest in the Operating Partnership as set forth or incorporated by reference
in the Prospectus.

      (e) Each Subsidiary has been, as the case may be, duly incorporated or
organized, is validly existing as a partnership, corporation or limited
liability company in good standing under the laws of its respective jurisdiction
of organization, has the corporate, partnership or other power and authority to
own its property and to conduct its business as described in the Prospectus.
Each Subsidiary is duly qualified to transact business and is in good standing
in each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a Material
Adverse Effect; all of the issued shares of capital stock or other ownership
interests of each Subsidiary have been duly and validly authorized and issued,
are fully paid and non-assessable and, except as set forth or incorporated by
reference in the Prospectus, are owned directly or indirectly by the Operating
Partnership or the Guarantor, free and clear of all liens, encumbrances,
equities or claims.

      (f) Each of the joint venture partnerships or limited liability companies
listed on Schedule III hereto (the "JOINT VENTURES") has been duly formed and is
validly existing as a limited partnership or limited liability company in good
standing under the laws of its state of organization, with power and authority
to own, lease and operate its properties and to conduct the business in which it
is engaged. Each Joint Venture is duly qualified or registered as a foreign
limited partnership or limited liability company to transact business in each
jurisdiction in which such qualification or registration is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or be registered would not have a
Material

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Adverse Effect. The Operating Partnership, the Guarantor or a subsidiary of the
Operating Partnership or the Guarantor owns the percentage of the partnership or
other equity interest in each of the Joint Ventures as set forth on Schedule III
hereto (the "JOINT VENTURE INTERESTS"), and each of the Joint Venture Interests
is validly issued and fully paid and free and clear of any security interest,
mortgage, pledge, lien encumbrance, claim or equity. The Operating Partnership
and the Guarantor have no other interests in joint ventures, partnerships or
limited liability companies in which unrelated third parties have interests,
other than as set forth on Schedule III hereto or the Subsidiaries.

      (g) This Distribution Agreement, the Calculation Agency Agreement and any
applicable Written Terms Agreement have been duly authorized, executed and
delivered by the Operating Partnership and the Guarantor and constitute the
valid and binding agreement of each of them, enforceable against them in
accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and general principles of equity.

      (h) The Indenture has been duly qualified under the Trust Indenture Act
and has been duly authorized, executed and delivered by the Operating
Partnership and the Guarantor and is a valid and binding agreement of each of
them, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and general principles of equity.

      (i) The Notes have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and delivered
to and paid for by the purchasers thereof, will be entitled to the benefits of
the Indenture and will be valid and binding obligations of the Operating
Partnership, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and general principles of equity.

      (j) The Guarantees have been duly authorized and, when executed and the
Notes are authenticated in accordance with the provisions of the Indenture, will
be entitled to the benefits of the Indenture and will be valid and binding
obligations of the Guarantor, enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally and general principles of
equity.

      (k) The Notes, the Guarantees and the Indenture will conform in all
material respects to the respective statements relating thereto contained in the
Prospectus and will be in substantially the respective forms filed as exhibits
to the Registration Statement.

      (l) All of the issued and outstanding partnership units of the Operating
Partnership (the "UNITS") have been duly and validly authorized and issued and
conform to the description thereof contained or incorporated by reference in the
Prospectus. The Units owned by the Guarantor are owned directly by the
Guarantor, free and clear of all liens, encumbrances, equities or claims.

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      (m) The execution and delivery by the Operating Partnership and the
Guarantor of, and the performance by each of the Operating Partnership and the
Guarantor of its respective obligations under, this Distribution Agreement, the
Notes, the Guarantees, the Indenture, the Calculation Agency Agreement and any
applicable Written Terms Agreement and the consummation of the transactions
contemplated hereby and thereby, will not (i) conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement, joint
venture agreement, partnership agreement, limited liability company agreement or
any other agreement or instrument to which the Company is a party or by which
the Company is bound or to which any of the property or assets of the Company is
subject, except for such conflicts, breaches or violations which would not,
singly or in the aggregate, have a Material Adverse Effect, (ii) result in any
violation of the provisions of the charter, by-laws, certificate of limited
partnership, partnership agreement or other organizational documents of the
Operating Partnership, the Guarantor or any Subsidiary, as the case may be, or
(iii) result in any violation of any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the Company,
except where such noncompliance or violation of any such statute, order, rule or
regulation would not, singly or in the aggregate, have a Material Adverse
Effect. No consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is required for
the execution and delivery by the Operating Partnership and the Guarantor of,
and the performance by each of the Operating Partnership and the Guarantor of
its respective obligations under, this Distribution Agreement, the Notes, the
Guarantees, the Indenture, the Calculation Agency Agreement and any applicable
Written Terms Agreement and the consummation of the transactions contemplated
hereby and thereby, except for (A) the registration of the Notes under the
Securities Act or the rules and regulations thereunder and such consents,
approvals, authorizations, registrations or qualifications as may be required
under the Securities Act, Exchange Act of 1934, the Trust Indenture Act, or the
rules and regulations thereunder, and applicable state and foreign securities
laws in connection with issuance, offer and sale of the Notes or (B) consents,
approvals, authorizations, orders, filings or registrations that will be
completed on or prior to the Commencement Date or in connection with the
issuance of Notes.

      (n) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened, to which the Company is a party or to
which any of the properties of the Company is subject that are required to be
described in the Registration Statement or the Prospectus and are not so
described or incorporated by reference, or any statutes, regulations, contracts
or other documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement that are not described, incorporated by reference or filed as
required.

      (o) None of the Operating Partnership, the Guarantor or any Subsidiary is,
and after giving effect to the offering and sale of the Notes and the
application of the proceeds thereof as described in the Prospectus, none will
be, an "investment company" as such term is defined in the Investment Company
Act of 1940, as amended.

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      (p) There has not occurred any material adverse change, or any development
involving a prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Operating
Partnership, the Guarantor and their subsidiaries, taken as a whole, from that
set forth or incorporated by reference in the Prospectus. Subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, except as described in or contemplated by the Prospectus or
a document incorporated therein by reference, (i) the Company has not incurred
any liability or obligation, direct or contingent, nor entered into any
transaction not in the ordinary course of business that is material with respect
to the Operating Partnership, the Guarantor and their subsidiaries, taken as a
whole; and (ii) there has not been any change in the capital stock or increase
in the short-term debt or long-term debt that is, in either case, material with
respect to the Operating Partnership, the Guarantor and their subsidiaries,
taken as a whole (excluding Notes issued under the medium-term note program
established by this Distribution Agreement and excluding debt resulting from a
draw down on the Operating Partnership's credit facility).

      (q) Except as otherwise disclosed or incorporated by reference in the
Prospectus:

            (i) as of March 31, 2002 the Company (directly or indirectly) owned
      921 buildings and centers (the "PROPERTIES"), comprised of 914 industrial
      buildings and 7 retail centers;

            (ii) the Company (directly or indirectly) has good and marketable
      fee simple title to the land underlying the Properties and good and
      marketable title to the improvements thereon, other than those
      improvements located on land which the Company (directly or indirectly)
      acts as the ground lessor (the "TENANT OWNED IMPROVEMENTS"), and all other
      assets that are required for the effective operation of such Properties in
      the manner in which they currently are operated, subject, however, to
      existing mortgages on such Properties, to utility easements serving such
      Properties and other immaterial easements, reciprocal easement agreements
      and licenses, to liens of ad valorem taxes and other assessments not
      delinquent, to zoning and similar governmental land use matters affecting
      such Properties that are consistent with the current uses of such
      Properties, to matters of title not adversely affecting marketability of
      title to such Properties, other immaterial statutory liens not due and
      payable, title matters that may be material in character, amount or extent
      but which do not materially detract from the value, or interfere with the
      use of, the Properties or otherwise materially impair the business
      operations being conducted or proposed to be conducted thereon, service
      marks and trade names used in connection with such Properties, ownership
      by others of certain items of equipment and other items of personal
      property that are not material to the conduct of business operations at
      such Properties and ownership of improvements pursuant to certain valid,
      existing and enforceable ground leases;

            (iii) except as would not have a Material Adverse Effect, with
      respect to the Properties held through Joint Ventures (the "JOINT VENTURE
      PROPERTIES"),

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      the Joint Ventures that currently own such Properties have good and
      marketable fee simple title to the land underlying such Properties, and
      good and marketable title to the improvements thereon, other than the
      Tenant Owned Improvements, and all other assets that are required for the
      effective operation of such Properties in the manner in which they
      currently are operated, subject to the exceptions set forth in clause (ii)
      above;

            (iv) all liens, charges, encumbrances, claims, or restrictions on or
      affecting any of the Properties or the assets of the Company which are
      required to be disclosed in the Prospectus are disclosed or incorporated
      by reference therein;

            (v) neither the Company nor, to the knowledge of the Operating
      Partnership or the Guarantor, any tenant of any of the Properties is in
      default under any of the leases pursuant to which the Company, as lessor,
      leases its Property (and the Company does not know of any event which, but
      for the passage of time or the giving of notice, or both, would constitute
      a default under any of such leases) other than such defaults that would
      not result in a Material Adverse Effect;

            (vi) any real property and buildings held under lease by the Company
      are held by it under valid, subsisting and enforceable leases with such
      exceptions as are not material and do not interfere with the use made and
      proposed to be made of such property and buildings by the Company, except
      as described in or contemplated by the Prospectus;

            (vii) no person has an option or right of first refusal to purchase
      all or part of any Property or any interest therein which is material to
      the Operating Partnership, the Guarantor and their subsidiaries, taken as
      a whole;

            (viii) each of the Properties complies with all applicable codes,
      laws and regulations (including, without limitation, building and zoning
      codes, laws and regulations and laws relating to access to the
      Properties), except if and to the extent disclosed or incorporated by
      reference in the Prospectus and except for such failures to comply that
      would not individually or in the aggregate result in a Material Adverse
      Effect;

            (ix) neither the Operating Partnership nor the Guarantor has
      knowledge of any pending or threatened condemnation proceedings, zoning
      change, or other similar proceeding or action that will in any manner
      affect the size of, use of, improvements on, construction on or access to
      any of the Properties, except such proceedings or actions that would not
      have a Material Adverse Effect; and

            (x) except as would not result in a Material Adverse Effect,

                  (i) the ground leases under which the Company (directly or
            indirectly) or a Joint Venture holds or uses real property relating
            to the Properties are in full force and effect, and

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                  (ii) the Company and, to the knowledge of the Company, the
            Joint Ventures or other named lessees under such leases (A) are not
            in default in respect of any of the terms or provisions of such
            leases and (B) have not received notice of the assertion of any
            claim by anyone adverse to such person's or entity's rights as
            lessees under such leases, or affecting or questioning such person's
            or entity's right to the continued possession or use of the Property
            under such leases or of a default under such leases.

      (r) Except as disclosed or incorporated by reference in the Prospectus:

            (i) each Property, including, without limitation, the Environment
      (as defined below) associated with such Property, is free of any Hazardous
      Substance (as defined below) in violation of any Environmental Law (as
      defined below) applicable to such Property, except for Hazardous
      Substances that would not result in a Material Adverse Effect;

            (ii) the Company has not caused or suffered to occur any Release (as
      defined below) of any Hazardous Substance into the Environment on, in,
      under or from any Property, and no condition exists on, in, under or, to
      the knowledge of the Company, adjacent to any Property that could result
      in the incurrence of liabilities or any violations of any Environmental
      Law applicable to such Property, give rise to the imposition of any Lien
      (as defined below) under any Environmental Law, or cause or constitute a
      health, safety or environmental hazard to any property, person or entity,
      except in each case that would not, singly or in the aggregate, have a
      Material Adverse Effect;

            (iii) neither the Company nor, to the knowledge of the Company, any
      tenant of any of the Properties has received any written notice of a claim
      under or pursuant to any Environmental Law applicable to a Property or
      under common law pertaining to Hazardous Substances on or originating from
      any Property, except for any such claims which would not, singly or in the
      aggregate, have a Material Adverse Effect;

            (iv) neither the Company nor, to the knowledge of the Company, any
      tenant of any of the Properties has received any written notice from any
      Governmental Authority (as defined below) claiming any violation of any
      Environmental Law applicable to a Property that is uncured or unremediated
      as of the date hereof, except for any such violations which would not,
      singly or in the aggregate, have a Material Adverse Effect;

            (v) no Property is included or, to the knowledge of the Company,
      proposed for inclusion on the National Priorities List issued pursuant to
      CERCLA (as defined below) by the United States Environmental Protection
      Agency (the "EPA"), nor has the Company received any written notice from
      the EPA or any other Governmental Authority proposing the inclusion of any
      Property on such list;

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            (vi) the Company and, to the knowledge of the Company, each tenant
      at any of the Properties (A) has received all permits, licenses or other
      approvals required of them under applicable Environmental Laws to conduct
      their respective businesses and (B) is in compliance with all terms and
      conditions of any such permit, license or approval, except in each case
      where such noncompliance, failure to receive required permits, licenses or
      other approvals or failure to comply with the terms and conditions of such
      permits, licenses or approvals would not, singly or in the aggregate, have
      a Material Adverse Effect; and

            (vii) there are no costs or liabilities associated with
      Environmental Laws (including, without limitation, any capital or
      operating expenditures required for clean-up, closure of properties or
      compliance with Environmental Laws or any permit, license or approval, any
      related constraints on operating activities and any potential liabilities
      to third parties) which would, singly or in the aggregate, have a Material
      Adverse Effect.

      As used herein: "HAZARDOUS SUBSTANCE" shall include, without limitation,
any hazardous substance, hazardous waste, toxic or dangerous substance,
pollutant, solid waste or similarly designated materials, including, without
limitation, oil, petroleum or any petroleum-derived substance or waste, asbestos
or asbestos-containing materials, PCBs, pesticides, explosives, radioactive
materials, dioxins, urea formaldehyde insulation or any constituent of any such
substance, pollutant or waste, including any such substance, pollutant or waste
identified or regulated under any Environmental Law (including, without
limitation, materials listed in the United States Department of Transportation
Optional Hazardous Material Table, 49 C.F.R. Section 172.101, as heretofore
amended, or in the EPA's List of Hazardous Substances and Reportable Quantities,
40 C.F.R. Part 302, as heretofore amended); "ENVIRONMENT" shall mean any surface
water, drinking water, ground water, land surface, subsurface strata, river
sediment, buildings, structures, and ambient, workplace and indoor air;
"ENVIRONMENTAL LAW" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et
seq.) ("CERCLA"), the Resource Conservation and Recovery Act of 1976, as amended
(42 U.S.C. Section 6901, et seq.), the Clean Air Act, as amended (42 U.S.C.
Section 7401, et seq.), the Clean Water Act, as amended (33 U.S.C. Section 1251,
et seq.), the Toxic Substances Control Act, as amended (15 U.S.C. Section 2601,
et seq.), the Occupational Safety and Health Act of 1970, as amended (29 U.S.C.
Section 651, et seq.), the Hazardous Materials Transportation Act, as amended
(49 U.S.C. Section 1801, et seq.), and all other applicable Federal, state and
local laws, ordinances, regulations, rules, orders, decisions and permits
relating to the protection of the environment or of human health from
environmental effects; "GOVERNMENTAL AUTHORITY" shall mean any Federal, state or
local governmental office, agency or authority having the duty or authority to
promulgate, implement or enforce any Environmental Law; "LIEN" shall mean, with
respect to any Property, any mortgage, deed of trust, pledge, security interest,
lien, encumbrance, penalty, fine, charge, assessment, judgment or other
liability in, on or affecting such Property; and "RELEASE" shall mean any
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping, emanating or disposing of any Hazardous Substance
into the Environment, including, without limitation, the

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abandonment or discard of barrels, containers, tanks (including, without
limitation, underground storage tanks) or other receptacles containing or
previously containing any Hazardous Substance or any release, emission,
discharge or similar term, as those terms are defined or used in any
Environmental Law.

      (s) The independent auditors of the Company, who have certified certain
financial statements in the Registration Statement, whose report appears in the
Prospectus, are independent public accountants as required by the Securities Act
and the rules and regulations of the Commission thereunder during the periods
covered by the financial statements on which they reported contained in the
Prospectus.

      (t) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which they are engaged; the Company has not
been refused any insurance coverage sought or applied for; and the Company does
not have any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business at a
cost that would not have a Material Adverse Effect, except as described in or
contemplated by the Prospectus or in a document incorporated by reference in the
Prospectus.

      (u) The Company possesses all certificates, authorizations and permits
issued by the appropriate Federal, state or foreign regulatory authorities
necessary to conduct its businesses, and the Company has not received any notice
of proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect, except as described in or contemplated by the
Prospectus or in a document incorporated by reference in the Prospectus.

      (v) The Company has filed all Federal, state, and local income tax returns
which have been required to be filed and has paid all taxes required to be paid
and any other assessment, fine or penalty levied against it, to the extent that
any of the foregoing is due and payable, except, in all cases, for any such tax,
assessment, fine or penalty that is being contested in good faith (and except in
any case in which the failure to so file or pay would not have a Material
Adverse Effect).

      (w) The financial statements (including the notes thereto) included in the
Registration Statement and the Prospectus present fairly the financial position
of the respective entity or entities presented therein at the respective dates
indicated and the results of their operations for the respective periods
specified, and except as otherwise stated or incorporated by reference in the
Registration Statement, said financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP") applied on a
consistent basis. The supporting schedules included in the Registration
Statement present fairly the information required to be stated or incorporated
by reference therein. The financial information and data included in the
Registration Statement and the Prospectus present fairly the information
included therein and have been prepared on a basis consistent with that of the
books and records of the

                                       11
<PAGE>

respective entities presented therein. Pro forma financial information included
or incorporated by reference in the Prospectus has been prepared in accordance
with the applicable requirements of Rules 11-01 and 11-02 of Regulation S-X
under the Securities Act, and the necessary pro forma adjustments have been
properly applied to the historical amounts in the compilation of such
information, and, in management's opinion, the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred to
therein.

      (x) The Company is currently in compliance with all presently applicable
provisions of the Americans with Disabilities Act, except for such noncompliance
which would not, singly or in the aggregate, have a Material Adverse Effect, and
no failure of the Company to comply with all presently applicable provisions of
the Americans with Disabilities Act would have a Material Adverse Effect.

      (y) The Guarantor has elected to be taxed as a "real estate investment
trust" under the Internal Revenue Code of 1986, as amended (the "CODE"),
commencing with its taxable year ended December 31, 1997; the Guarantor has
qualified and expects that it will continue to qualify as a "real estate
investment trust" under the Code beginning with its taxable year ended December
31, 1997, and will continue to qualify as a "real estate investment trust" under
the Code after consummation of the transactions contemplated by the Prospectus;
and the Guarantor's present and contemplated operations, assets and income will
enable it to meet the requirements for qualification as a "real estate
investment trust" under the Code.

      (z) Each of the Second Amended and Restated Credit Agreement dated
November 26, 1997 among the Operating Partnership and the banks listed therein,
the Amendment thereto dated as of May 29, 1998, the Second Amendment thereto
made as of September 30, 1998, and the Third Amendment thereto made as of March
22, 1999 (collectively, the "PRIOR CREDIT AGREEMENT"), have been superceded and
terminated by all of the parties thereto and no longer have any force or effect
and the Company does not have any obligations under or with respect to such
agreements.

2. SOLICITATIONS AS AGENT; PURCHASES AS PRINCIPAL.

      (a) Solicitations as Agent. In connection with an Agent's actions as agent
hereunder, such Agent agrees to use reasonable best efforts to solicit offers to
purchase Notes upon the terms and conditions set forth in the Prospectus as then
amended or supplemented.

      The Operating Partnership reserves the right, in its sole discretion, to
instruct the Agents to suspend at any time, for any period of time or
permanently, the solicitation of offers to purchase Notes. As soon as
practicable, but in any event not later than one business day after written
notice from the Operating Partnership, the Agents will forthwith suspend
solicitations of offers to purchase Notes from the Operating Partnership until
such time as the Operating Partnership has advised the Agents that such
solicitation may be resumed. While such solicitation is suspended, the Company
shall

                                       12
<PAGE>

not be required to deliver any certificates, opinions or letters in accordance
with Sections 5(a), 5(b) and 5(c); provided, however, that if the Registration
Statement or Prospectus is amended or supplemented during the period of
suspension (other than by an amendment or supplement providing solely for a
change in the interest rates, redemption provisions, amortization schedules or
maturities offered on the Notes or for a change the Agents deem to be
immaterial), no Agent shall be required to resume soliciting offers to purchase
Notes until the Company has delivered such certificates, opinions and letters as
such Agent may request.

      The Operating Partnership agrees to pay to each Agent, as consideration
for the sale of each Note resulting from a solicitation made or an offer to
purchase received by such Agent, a commission in the form of a discount from the
purchase price of such Note equal to the percentage set forth below of the
purchase price of such Note:
<TABLE>
<CAPTION>
TERM                                                COMMISSION RATE
----                                                ---------------
<S>                                                 <C>
From 9 months to less than 1 year                           .125%
From 1 year to less than 18 months                          .150%
From 18 months to less than 2 years                         .200%
From 2 years to less than 3 years                           .250%
From 3 years to less than 4 years                           .350%
From 4 years to less than 5 years                           .450%
From 5 years to less than 6 years                           .500%
From 6 years to less than 7 years                           .550%
From 7 years to less than 10 years                          .600%
From 10 years to less than 15 years                         .625%
From 15 years to less than 20 years                         .700%
From 20 years to less than 30 years                         .750%
From 30 years and beyond                            To be Negotiated
</TABLE>

      Each Agent shall communicate to the Operating Partnership, orally or in
writing, each offer to purchase Notes received by such Agent as agent that in
its judgment should be considered by the Operating Partnership. The Operating
Partnership shall have the sole right to accept offers to purchase Notes and may
reject any offer in whole or in part. Each Agent shall have the right to reject
any offer to purchase Notes that it, in its reasonable discretion, considers to
be unacceptable, and any such rejection shall not be deemed a breach of its
agreements contained herein. Each Agent shall make reasonable best efforts to
assist the Operating Partnership in obtaining performance by each purchaser
whose offer to purchase Notes has been solicited by such Agent and accepted by
the Operating Partnership. The procedural details relating to the issue and
delivery of Notes sold by the Agents as agents and the payment therefor shall be
as set forth in the

                                       13
<PAGE>

Administrative Procedures (as hereinafter defined). All Notes sold through an
Agent as agent will be sold at 100% of their principal amount, unless otherwise
agreed to by the Operating Partnership and such Agent or provided in the
applicable Note or pricing supplement.

      (b) Purchases as Principal. Each sale of Notes to an Agent as principal
shall be made in accordance with the terms of this Distribution Agreement. In
connection with each such sale, the Operating Partnership will enter into a
Terms Agreement that will provide for the sale of such Notes to and the purchase
thereof by such Agent. Each Terms Agreement will take the form of either (i) a
written agreement between such Agent and the Operating Partnership, which,
unless otherwise agreed by the Operating Partnership and such Agent, may be
substantially in the form of Exhibit A hereto (a "WRITTEN TERMS AGREEMENT"), or
(ii) an oral agreement between such Agent and the Operating Partnership
confirmed in writing by such Agent to the Operating Partnership.

      An Agent's commitment to purchase Notes pursuant to a Terms Agreement
shall be deemed to have been made on the basis of the representations and
warranties of the Operating Partnership and the Guarantor herein contained and
shall be subject to the terms and conditions herein set forth. Each Terms
Agreement shall specify the principal amount of Notes to be purchased by such
Agent pursuant thereto, the maturity date of such Notes, the price to be paid to
the Operating Partnership for such Notes, the interest rate and interest rate
formula, if any, applicable to such Notes and any other terms of such Notes.
Each purchase of Notes, unless otherwise agreed, shall be at a discount from the
principal amount of each such Note equivalent to the applicable commission set
forth in Section 2(a) above. Each such Terms Agreement may also specify any
requirements for officers' certificates, opinions of counsel and letters from
the independent public accountants of the Company pursuant to Section 4 hereof.
A Terms Agreement may also specify certain provisions relating to the reoffering
of such Notes by such Agent.

      Each Terms Agreement shall specify the time and place of delivery of and
payment for such Notes. Unless otherwise specified in a Terms Agreement, the
procedural details relating to the issue and delivery of Notes purchased by an
Agent as principal and the payment therefor shall be as set forth in the
Administrative Procedures. Each date of delivery of and payment for Notes to be
purchased by an Agent as principal pursuant to a Terms Agreement is referred to
herein as a "SETTLEMENT DATE."

      Unless otherwise specified in a Terms Agreement, if an Agent is purchasing
Notes as principal it may resell such Notes to other dealers. Any such sales may
be at a discount, which shall not exceed the amount set forth in the Prospectus
Supplement relating to such Notes.

      (c) Administrative Procedures. The Agents and the Operating Partnership
and the Guarantor agree to perform their respective duties and obligations
specifically provided to be performed in the Medium-Term Notes Administrative
Procedures (attached hereto as Exhibit B) (the "ADMINISTRATIVE PROCEDURES"), as
amended from time to time. The Administrative Procedures may be amended only by
written agreement of the Operating Partnership, the Guarantor and the Agents.

                                       14
<PAGE>

      (d) Delivery. The documents required to be delivered by Section 4 of this
Distribution Agreement as a condition precedent to each Agent's obligation to
begin soliciting offers to purchase Notes as an agent of the Operating
Partnership shall be delivered at the office of Latham & Watkins, counsel for
the Operating Partnership and the Guarantor, not later than 9:00 A.M., San
Francisco time, on the date hereof, or at such other time and/or place as the
Agents and the Operating Partnership and the Guarantor may agree upon in
writing, but in no event later than the day prior to the earlier of (i) the date
on which the Agents begin soliciting offers to purchase Notes and (ii) the first
date on which the Operating Partnership accepts any offer by an Agent to
purchase Notes pursuant to a Terms Agreement. The date of delivery of such
documents is referred to herein as the "COMMENCEMENT DATE."

      (e) Obligations Several. The Operating Partnership and the Guarantor
acknowledge that the obligations of the Agents under this Distribution Agreement
are several and not joint.

      3. AGREEMENTS. The Operating Partnership and the Guarantor agree with each
Agent that:

            (a) Prior to the termination of the offering of the Notes pursuant
      to this Distribution Agreement or any Terms Agreement, the Operating
      Partnership and the Guarantor will not file any Prospectus Supplement
      relating to the Notes or any amendment to the Registration Statement
      unless the Operating Partnership and the Guarantor have previously
      furnished to the Agents copies thereof for their review and will not file
      any such proposed supplement or amendment to which the Agents reasonably
      object; provided, however, that (i) the foregoing requirement shall not
      apply to the filing of documents which are incorporated by reference in
      the Prospectus and (ii) any Prospectus Supplement that merely sets forth
      the terms or a description of particular Notes shall only be reviewed and
      approved by the Agent or Agents offering such Notes. Subject to the
      foregoing sentence, the Operating Partnership and the Guarantor will
      promptly cause each Prospectus Supplement to be filed with or transmitted
      for filing to the Commission in accordance with Rule 424(b) under the
      Securities Act. The Operating Partnership and the Guarantor will promptly
      advise the Agents (A) of the filing of any amendment or supplement to the
      Basic Prospectus (except that notice of the filing of an amendment or
      supplement to the Basic Prospectus that merely sets forth the terms or a
      description of particular Notes shall only be given to the Agent or Agents
      offering such Notes and the Operating Partnership and the Guarantor shall
      not be required to so advise the Agents of the filing of documents which
      are incorporated by reference therein), (B) of the filing and
      effectiveness of any amendment to the Registration Statement, except for
      the filing of documents which are incorporated by reference therein, (C)
      of any request by the Commission for any amendment to the Registration
      Statement or any amendment or supplement to the Basic Prospectus or for
      any additional information, (D) of the issuance by the Commission of any
      stop order suspending the effectiveness of the Registration Statement or
      the institution or threatening of any proceeding for that purpose and (E)
      of the receipt by the Company of any notification with respect to the
      suspension of the qualification of the Notes for sale in any jurisdiction
      or the initiation or threatening of any proceeding for such purpose. The

                                       15
<PAGE>

      Operating Partnership and the Guarantor will use best efforts to prevent
      the issuance of any such stop order or notice of suspension of
      qualification and, if issued, to obtain as soon as possible the withdrawal
      thereof. If the Basic Prospectus is amended or supplemented as a result of
      the filing under the Exchange Act of any document incorporated by
      reference in the Prospectus, no Agent shall be obligated to solicit offers
      to purchase Notes so long as it is not reasonably satisfied with such
      document.

            (b) If, at any time when a prospectus relating to the Notes is
      required to be delivered under the Securities Act, any event occurs or
      condition exists as a result of which the Prospectus, as then amended or
      supplemented, would include an untrue statement of a material fact, or
      omit to state any material fact necessary to make the statements therein,
      in the light of the circumstances when the Prospectus, as then amended or
      supplemented, is delivered to a purchaser, not misleading, or if, in the
      opinion of the Agents or in the opinion of the Operating Partnership and
      the Guarantor, it is necessary at any time to amend or supplement the
      Prospectus, as then amended or supplemented, to comply with applicable
      law, the Operating Partnership and the Guarantor will immediately notify
      the Agents by telephone (with confirmation in writing) to suspend
      solicitation of offers to purchase Notes and, if so notified by the
      Operating Partnership and the Guarantor, the Agents shall forthwith
      suspend such solicitation and cease using the Prospectus, as then amended
      or supplemented. If the Operating Partnership and the Guarantor shall
      decide to amend or supplement the Registration Statement or Prospectus, as
      then amended or supplemented, it shall so advise the Agents promptly by
      telephone (with confirmation in writing) and, at its expense, shall
      prepare and cause to be filed promptly with the Commission an amendment or
      supplement to the Registration Statement or Prospectus, as then amended or
      supplemented, satisfactory in all respects to the Agents, that will
      correct such statement or omission or effect such compliance and will
      supply such amended or supplemented Prospectus to the Agents in such
      quantities as they may reasonably request. If the documents, certificates,
      opinions and letters furnished to the Agents pursuant to Sections 3(f),
      5(a), 5(b) and 5(c) hereof in connection with the preparation and filing
      of such amendment or supplement are satisfactory in all respects to the
      Agents, upon the filing with the Commission of such amendment or
      supplement to the Prospectus or upon the effectiveness of an amendment to
      the Registration Statement, the Agents will resume the solicitation of
      offers to purchase Notes hereunder. Notwithstanding any other provision of
      this paragraph, until the distribution of any Notes an Agent may own as
      principal has been completed, if any event described above in this
      paragraph occurs, the Operating Partnership and the Guarantor will, at
      their own expense, forthwith prepare and cause to be filed promptly with
      the Commission an amendment or supplement to the Registration Statement or
      Prospectus, as then amended or supplemented, satisfactory in all respects
      to such Agent and the Operating Partnership and the Guarantor, will supply
      such amended or supplemented Prospectus to such Agent in such quantities
      as it may reasonably request and shall furnish to such Agent pursuant to
      Sections 3(f), 5(a), 5(b) and 5(c) hereof such documents, certificates,
      opinions and letters specified therein in connection with the preparation
      and filing of such amendment or supplement.

            (c) Each of the Operating Partnership and the Guarantor will make
      generally available to its respective security holders and to the Agents
      as soon as practicable

                                       16
<PAGE>

      earning statements that satisfy the provisions of Section 11(a) of the
      Securities Act and the rules and regulations of the Commission thereunder
      covering twelve month periods beginning, in each case, not later than the
      first day of the Operating Partnership's and the Guarantor's respective
      fiscal quarter next following the "effective date" (as defined in Rule 158
      under the Securities Act) of the Registration Statement with respect to
      each sale of Notes. If such fiscal quarter is the last fiscal quarter of
      the Operating Partnership's and the Guarantor's respective fiscal year,
      such earning statement shall be made available not later than 90 days
      after the close of the period covered thereby and in all other cases shall
      be made available not later than 45 days after the close of the period
      covered thereby.

            (d) The Operating Partnership and the Guarantor will furnish to each
      Agent, without charge, a signed copy of the Registration Statement,
      including exhibits and all amendments thereto, and as many copies of the
      Prospectus, any documents incorporated by reference therein and any
      supplements and amendments thereto as such Agent may reasonably request.

            (e) The Operating Partnership and the Guarantor will endeavor to
      qualify the Notes and the Guarantees for offer and sale under the
      securities or Blue Sky laws of such jurisdictions as the Agents shall
      reasonably request and to maintain such qualifications for as long as the
      Agents shall reasonably request.

            (f) The Operating Partnership and the Guarantor shall furnish to the
      Agents such relevant documents and certificates of officers of the Company
      relating to the business, operations and affairs of the Company, the
      Registration Statement, the Basic Prospectus, any amendments or
      supplements thereto, the Indenture, the Notes, this Distribution
      Agreement, the Administrative Procedures, any Terms Agreement and the
      performance by the Company of its obligations hereunder or thereunder as
      the Agents may from time to time reasonably request.

            (g) The Operating Partnership and the Guarantor, as applicable,
      shall notify the Agents promptly in writing of any downgrading, or of its
      receipt of any notice of any intended or potential downgrading or of any
      review for possible change that does not indicate the direction of the
      possible change, in the rating accorded any of the Operating Partnership's
      or the Guarantor's securities by any "nationally recognized statistical
      rating organization," as such term is defined for purposes of Rule
      436(g)(2) under the Securities Act.

            (h) The Operating Partnership and the Guarantor will, whether or not
      any sale of Notes is consummated, pay all expenses incident to the
      performance of its obligations under this Distribution Agreement and any
      Terms Agreement, including: (i) the preparation and filing of the
      Registration Statement and the Prospectus and all amendments and
      supplements thereto, (ii) the preparation, issuance and delivery of the
      Notes and the Guarantees, (iii) the fees and disbursements of the
      Company's counsel and accountants and of the Trustee and its counsel, (iv)
      the qualification of the Notes and Guarantees under securities or Blue Sky
      laws in accordance with the provisions of Section 3(e) hereof, including
      filing fees and the fees and disbursements of counsel for the Agents in
      connection therewith and in connection with the preparation of any Blue

                                       17
<PAGE>

      Sky or Legal Investment Memoranda, (v) the printing and delivery to the
      Agents in quantities as hereinabove stated of copies of the Registration
      Statement and all amendments thereto and of the Prospectus and any
      amendments or supplements thereto, (vi) the printing and delivery to the
      Agents of copies of any Blue Sky or Legal Investment Memoranda, (vii) any
      fees charged by rating agencies for the rating of the Notes, (viii) any
      expenses incurred by the Company in connection with a "road show"
      presentation to potential investors, (ix) the reasonable fees and
      disbursements of counsel for the Agents incurred in connection with the
      offering and sale of the Notes, including any opinions to be rendered by
      such counsel hereunder, and (x) any out-of-pocket expenses incurred by the
      Agents; provided that any advertising expenses incurred by the Agents
      shall have been approved by the Operating Partnership and the Guarantor.

            (i) During the period beginning the date of any Terms Agreement and
      continuing to and including the Settlement Date with respect to such Terms
      Agreement, neither the Operating Partnership nor the Guarantor will,
      without such Agent's prior written consent, offer, sell, contract to sell
      or otherwise dispose of any debt securities of the Operating Partnership
      or the Guarantor or warrants to purchase debt securities of the Operating
      Partnership or the Guarantor substantially similar to such Notes (other
      than (i) the Notes that are to be sold pursuant to such Terms Agreement,
      (ii) Notes previously agreed to be sold by the Operating Partnership or
      the Guarantor and (iii) commercial paper issued in the ordinary course of
      business), except as may otherwise be provided in such Terms Agreement.

      4. CONDITIONS OF THE OBLIGATIONS OF THE AGENTS. Each Agent's obligation to
solicit offers to purchase Notes as agent of the Operating Partnership, each
Agent's obligation to purchase Notes pursuant to any Terms Agreement and the
obligation of any other purchaser to purchase Notes will be subject to the
accuracy of the representations and warranties on the part of the Operating
Partnership and the Guarantor herein, to the accuracy of the statements of the
Company's officers made in each certificate furnished pursuant to the provisions
hereof and to the performance and observance by the Company of all covenants and
agreements herein contained on its part to be performed and observed (in the
case of an Agent's obligation to solicit offers to purchase Notes, at the time
of such solicitation, and, in the case of an Agent's or any other purchaser's
obligation to purchase Notes, at the time the Operating Partnership accepts the
offer to purchase such Notes and at the time of issuance and delivery) and (in
each case) to the following additional conditions precedent when and as
specified:

            (a) Prior to such solicitation or purchase, as the case may be:

            (i) there shall not have occurred any change, or any development
      involving a prospective change, in the condition, financial or otherwise,
      or in the earnings, business or operations of the Operating Partnership,
      the Guarantor and their subsidiaries, taken as a whole, from that set
      forth in the Prospectus, as amended or supplemented (including by
      incorporation by reference) at the time of such solicitation or at the
      time such offer to purchase was made, that, in the judgment of the
      relevant Agent, is material and adverse and that makes it, in the judgment
      of such Agent, impracticable to market the Notes on the terms and in the
      manner contemplated by the Prospectus, as so amended or supplemented;

                                       18
<PAGE>

            (ii) there shall not have occurred any (A) suspension or material
      limitation of trading generally on or by, as the case may be, any of the
      New York Stock Exchange, the American Stock Exchange, the National
      Association of Securities Dealers, Inc., the Chicago Board Options
      Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade or
      a material disruption in securities settlement or clearance services, (B)
      suspension of trading of any securities of the Operating Partnership or
      the Guarantor on any exchange or in any over-the-counter market, (C)
      declaration of a general moratorium on commercial banking activities in
      New York by either Federal or New York State authorities or (D) any
      outbreak or escalation of hostilities or any change in financial markets
      or any calamity or crisis, including, without limitation, an act of
      terrorism, that, in the judgment of the relevant Agent, is material and
      adverse and, in the case of any of the events described in clauses
      4(a)(ii)(A) through 4(a)(ii)(D), such event, singly or together with any
      other such event, makes it, in the judgment of such Agent, impracticable
      or inadvisable to market the Notes on the terms and in the manner
      contemplated by the Prospectus, as amended or supplemented (including by
      incorporation by reference) at the time of such solicitation or at the
      time such offer to purchase was made; and

            (iii) there shall not have occurred any downgrading, nor shall any
      notice have been given of any intended or potential downgrading or of any
      review for a possible change that does not indicate the direction of the
      possible change, in the rating accorded the Operating Partnership, the
      Guarantor or any of their respective securities or the rating outlook for
      any of them by any "nationally recognized statistical rating
      organization," as such term is defined for purposes of Rule 436(g)(2)
      under the Securities Act;

                  (A) except, in each case described in Section 4(a)(i),
            4(a)(ii) or 4(a)(iii) above, as disclosed to the relevant Agent in
            writing by the Operating Partnership and the Guarantor prior to such
            solicitation or, in the case of a purchase of Notes, as disclosed to
            the relevant Agent before the offer to purchase such Notes was made;
            or

                  (B) unless in each case described in Section 4(a)(ii) above,
            the relevant event shall have occurred and been known to the
            relevant Agent before such solicitation or, in the case of a
            purchase of Notes, before the offer to purchase such Notes was made.

      (b) On the Commencement Date and, if called for by any Terms Agreement, on
the corresponding Settlement Date, the relevant Agents shall have received:

            (i) An opinion, dated as of such date, of Latham & Watkins, outside
      counsel for the Operating Partnership and the Guarantor, to the effect
      that:

                  (A) the Operating Partnership has been duly formed and is a
            limited partnership in good standing under the Delaware Revised
            Uniform Limited Partnership Act, with partnership power and
            authority to own,

                                       19
<PAGE>

            lease and operate its properties, to conduct its business as
            described in the Prospectus and to enter into and perform its
            obligations under this Agreement, the Notes, the Indenture, the
            Calculation Agency Agreement and any applicable Written Terms
            Agreement in the form attached as Exhibit A to this Agreement. Based
            solely on certificates of public officials, counsel confirms that
            the Operating Partnership is qualified to do business in the
            following States: _____________;

                  (B) based solely on certificates of public officials, counsel
            confirms that the Guarantor is qualified to do business in the
            following states: _____________;

                  (C) each Subsidiary has been duly formed and is a limited
            partnership, corporation or limited liability company in good
            standing under the applicable laws of its jurisdiction, with
            partnership, corporate or other power and authority to own, lease
            and operate its properties and conduct its business as described in
            a certificate provided to us by such Subsidiary, and, based solely
            on certificates of public officials, is qualified to do business in
            the following states: _________________;

                  (D) the issuance and sale of the Notes by the Operating
            Partnership and the issuance of the Guarantees by the Guarantor
            pursuant to this Agreement, the Indenture and any applicable Written
            Terms Agreement in the form attached as Exhibit A to this Agreement
            and the execution and delivery by the Operating Partnership and the
            Guarantor of, and the performance on or prior to the date of such
            opinion by the Operating Partnership and the Guarantor of their
            respective obligations under, this Agreement, the Notes, the
            Guarantees, the Indenture, the Calculation Agency Agreement and any
            applicable Written Terms Agreement in the form attached as Exhibit A
            to this Agreement and the consummation of the transactions
            contemplated thereby, will not result in (i) the violation by the
            Operating Partnership of its certificate of limited partnership, the
            Sixth Amended and Restated Agreement of Limited Partnership of the
            Operating Partnership dated as of April 17, 2002 or the Revised
            Uniform Limited Partnership Act of the State of Delaware or (ii) the
            violation by the Operating Partnership or the Guarantor of any
            federal, New York or California statute, rule or regulation known to
            such counsel to be applicable to the Operating Partnership or the
            Guarantor (other than federal or state securities laws, which are
            specifically addressed elsewhere herein) or (iii) in the breach or
            default under any of the Material Agreements; it being understood,
            however, that counsel need express no opinion with respect to the
            Credit Agreement dated as of September 27, 1999 among AMB
            Institutional Alliance Fund I, L.P., AMB Institutional Alliance REIT
            I, Inc., the lenders and issuing bank party thereto, BT Realty
            Resources, Inc. and The Chase Manhattan Bank, the Revolving Credit
            Agreement dated as of May 24, 2000 among the Operating Partnership
            and the banks listed therein (the "Revolving Credit

                                       20
<PAGE>

            Agreement"), the Guaranty of Payment made as of May 24, 2000 between
            the Guarantor and JP Morgan Chase Bank (formerly Morgan Guaranty
            Trust Company of New York), as administrative agent for the banks
            listed on the signature page of the Revolving Credit Agreement or
            the Revolving Credit Agreement dated as of August 23, 2001, among
            AMB Institutional Alliance Fund II, L.P., AMB Institutional Alliance
            REIT II, Inc., the banks and financial institutions listed therein,
            Bank of America, N.A., as Administrative Agent, Dresdner Bank, AG,
            as Syndication Agent, and Bank One, N.A., as Documentation Agent. To
            the best of counsel's knowledge, no consent, approval, authorization
            or order of, or filing with, any federal, New York or California
            court or governmental agency or body or under the Revised Uniform
            Limited Partnership Act of the State of Delaware is required for the
            consummation of the issuance and sale of the Notes by the Operating
            Partnership or the issuance of the Guarantees by the Guarantor
            pursuant to this Agreement, the Indenture and any applicable Written
            Terms Agreement in the form attached as Exhibit A to this Agreement
            and the execution and delivery by the Operating Partnership and the
            Guarantor of, and the performance on or prior to the date hereof by
            the Operating Partnership and the Guarantor of their respective
            obligations under, the Distribution Agreement, the Notes, the
            Guarantees, the Indenture, the Calculation Agency Agreement and any
            applicable Written Terms Agreement in the form attached as Exhibit A
            to this Agreement and the consummation of the transactions
            contemplated hereby and thereby, except such as have been obtained
            under the Act and such as may be required under the Act or under
            state securities laws in connection with the issuance and sale of
            the Notes.

                  No opinion is expressed in this paragraph as to the
            application of Section 548 of the Federal Bankruptcy Code and
            comparable provisions of state law, antifraud laws, or antitrust or
            trade regulation laws or ERISA.

                  (E) assuming due authorization by the Guarantor on its own
            behalf and in its capacity as the general partner of the Operating
            Partnership, this Agreement has been duly authorized, executed and
            delivered by the Operating Partnership;

                  (F) assuming due authorization by the Guarantor on its own
            behalf and in its capacity as the general partner of the Operating
            Partnership, when the terms of an applicable Written Terms Agreement
            are determined by the Guarantor's Board of Directors, the
            Medium-Term Note Committee of the Guarantor's Board of Directors or
            an authorized officer of the Guarantor, and when such Written Terms
            Agreement has been executed by a duly authorized officer of the
            Guarantor, in its capacity as general partner Operating Partnership,
            and delivered to the other party thereto by a duly authorized
            officer of the Guarantor on its own behalf and in its capacity as
            general partner of the Operating Partnership, any such

                                       21
<PAGE>

            Written Terms Agreement will have been duly authorized, executed and
            delivered by the Operating Partnership;

                  (G) the Indenture has been duly qualified under the Trust
            Indenture Act and (assuming due authorization by the Guarantor on
            its own behalf and in its capacity as general partner of the
            Operating Partnership) has been duly authorized, executed and
            delivered by the Operating Partnership and (assuming due
            authorization, execution and delivery by the Trustee) is the legally
            valid and binding agreement of the Operating Partnership and the
            Guarantor, enforceable against the Operating Partnership and the
            Guarantor in accordance with its terms;

                  (H) assuming due authorization by the Guarantor on its own
            behalf and in its capacity as the general partner of the Operating
            Partnership, when the remaining terms of the Notes are determined by
            the Guarantor's Board of Directors, the Medium-Term Note Committee
            of the Guarantor's Board of Directors or an authorized officer of
            the Guarantor, and when executed and authenticated in accordance
            with the terms of the Indenture and delivered to and paid for by the
            purchasers thereof in accordance with the terms of this Agreement
            and any applicable Written Terms Agreement in the form attached as
            Exhibit A to the Distribution Agreement, the Notes will have been
            duly authorized, executed and delivered by, and will be legally
            valid and binding obligations of the Operating Partnership,
            enforceable against the Operating Partnership in accordance with
            their terms and entitled to the benefits of the Indenture;

                  (I) assuming due authorization by the Guarantor, when the
            remaining terms of the Notes are determined by the Guarantor's Board
            of Directors, the Medium Term Note Committee of the Guarantor's
            Board of Directors or an authorized officer of the Guarantor, and
            when executed in accordance with the terms of the Indenture and upon
            due execution, authentication and delivery of the Notes and payment
            therefor, the Guarantees will be legally valid and binding
            obligations of the Guarantor, enforceable against the Guarantor in
            accordance with their terms and entitled to the benefits of the
            Indenture;

                  (J) the statements in the Prospectus under the captions
            "Description of Notes" and "Plan of Distribution," insofar as they
            purport to describe or summarize certain provisions of the
            agreements, statutes or regulations referred to therein, are
            accurate descriptions or summaries in all material respects;

                  (K) the statements in the Prospectus under the caption
            "Certain Federal Income Tax Considerations," insofar as they purport
            to describe or summarize certain provisions of the agreements,
            statutes or regulations referred to therein, are accurate
            descriptions or summaries in all material respects;

                                       22
<PAGE>

                  (L) neither the Operating Partnership, the Guarantor nor any
            Subsidiary is, and after giving effect to the offering and sale of
            the Notes and the application of the proceeds thereof as described
            in the Prospectus, neither the Operating Partnership, the Guarantor
            nor any Subsidiary will be, an "investment company" within the
            meaning of the Investment Company Act of 1940, as amended; and

                  (M) the Registration Statement, as of the date it was declared
            effective, and the Prospectus, as of its date and the date of the
            opinion, complied as to form in all material respects with the
            requirements for registration statements on Form S-3 under the Act,
            the Trust Indenture Act and the rules and regulations of the
            Commission thereunder; it being understood, however, that counsel
            need express no opinion with respect to the financial statements,
            schedules, or other financial data included in, incorporated by
            reference in, or omitted from, the Registration Statement, the
            Prospectus or the Incorporated Documents, with respect to the Form
            T-1 or with respect to the compliance as to form with the Securities
            Exchange Act of 1934, as amended, and the rules and regulations
            thereunder, of the Incorporated Documents. In passing upon the
            compliance as to form of the Registration Statement and the
            Prospectus, counsel may have assume that the statements made and
            incorporated by reference therein are correct and complete.

      In addition, such counsel shall state it has participated in conferences
with officers and other representatives of the Operating Partnership and the
Guarantor, representatives of the independent public accountants for the
Operating Partnership and the Guarantor, and the Agents representatives, at
which the contents of the Registration Statement and the Prospectus and related
matters were discussed and, although counsel is not passing upon, and does not
assume any responsibility for, the accuracy, completeness or fairness of the
statements contained or incorporated by reference in the Registration Statement
and the Prospectus (except as specifically stated in paragraphs (J) and (K)
above) or the Incorporated Documents and have not made any independent check or
verification thereof, during the course of such participation, no facts came to
such counsel's attention that caused it to believe that the Registration
Statement, including the Incorporated Documents, at the time it became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus (including the
Incorporated Documents), as of its date and the date hereof, contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; it being understood
that such counsel need express no belief with respect to the financial
statements, schedules, or other financial data included or incorporated by
reference in, or omitted from, the Registration Statement or the Prospectus or
with respect to the Form T-1.

                                       23
<PAGE>

      (ii) An opinion, dated as of such date, of Tamra D. Browne, General
Counsel to the Guarantor, to the effect that:

            (A) the Guarantor is the sole general partner of the Operating
      Partnership;

            (B) assuming the due authorization by the Guarantor in its capacity
      as the sole general partner of the Operating Partnership, the Units held
      by the Guarantor are as set forth in the Prospectus and have been duly
      authorized and validly issued. The Units owned by the Guarantor are owned
      of record directly by the Guarantor and, to the best of such counsel's
      knowledge, are free and clear of all liens and encumbrances;

            (C) the issuance and sale of the Notes by the Operating Partnership
      and the issuance of the Guarantees by the Guarantor pursuant to this
      Agreement, the Indenture and any applicable Written Terms Agreement in the
      form attached as Exhibit A to this Agreement and the execution and
      delivery by the Operating Partnership and the Guarantor of, and the
      performance by the Company on or prior to the date hereof of its
      obligations under, this Agreement, the Notes, the Guarantees, the
      Indenture, the Calculation Agency Agreement and any applicable Written
      Terms Agreement in the form attached as Exhibit A hereto and the
      consummation of the transactions contemplated thereby, will not result in
      a breach or default under (i) the Revolving Credit Agreement, (ii) the
      Revolving Credit Agreement dated as of August 23, 2001, among AMB
      Institutional Alliance Fund II, L.P., AMB Institutional Alliance REIT II,
      Inc., the banks and financial institutions listed therein, Bank of
      America, N.A., as Administrative Agent, Dresdner Bank, AG, as Syndication
      Agent, and Bank One, N.A., as Documentation Agent (the "Alliance Fund II
      Credit Agreement") or (iii) the Guaranty of Payment made as of May 24,
      2000 between the Guarantor and JPMorgan Chase Bank (formerly Morgan
      Guaranty Trust Company of New York), as administrative agent for the banks
      listed on the signature page of the Revolving Credit Agreement (the
      "Guaranty of Payment").;

            (D) each of the Incorporated Documents complied as to form in all
      material respects with the requirements of the Exchange Act and the rules
      and regulations thereunder; it being understood, however, that counsel
      expresses no opinion with respect to the financial statements, schedules
      and other financial data included in the Incorporated Documents; and

            (E) to the best of counsel's knowledge, there are no legal or
      governmental proceedings required to be described in the Registration
      Statement or the Prospectus that are not so described and there are no
      contracts or other documents of a character required to be described in
      the Registration Statement or Prospectus, to be filed as exhibits to the
      Registration Statement or to be filed under the Exchange Act, if upon such
      filing they would be incorporated by reference therein that are not
      described or filed as required.

      (iii) An opinion, dated as of such date, of Ballard Spahr Andrews &
Ingersoll, LLP, special Maryland counsel for the Guarantor, to the effect that:

                                       24
<PAGE>

            (A) the Guarantor has been duly incorporated, is validly existing as
      a corporation in good standing under the laws of the State of Maryland,
      has the corporate power and authority to own its properties and to conduct
      its business as described in the Prospectus and to enter into and perform
      its obligations under this Agreement, the Guarantees, the Indenture and
      any applicable Written Terms Agreement delivered in accordance with the
      terms of this Agreement and the Indenture;

            (B) the issuance of the Notes in accordance with the terms of this
      Agreement and the Indenture has been duly authorized by the Guarantor in
      its capacity as general partner of the Operating Partnership pursuant to
      all necessary corporate action required under the Charter and Bylaws of
      the Guarantor and the Maryland General Corporation Law (the "MGCL"); and
      when the remaining terms of the issuance and sale of the Notes are
      determined in accordance with the terms of this Agreement and the
      Indenture, by the Board of Directors or the Medium Term Note Committee of
      the Board of Directors of the Guarantor, or by an authorized officer of
      the Guarantor, on behalf of the Guarantor as general partner of the
      Operating Partnership, and such Notes, each with an executed Guarantee
      endorsed thereon, are executed and delivered by a duly authorized officer
      of the Guarantor, and are authenticated, issued and delivered against
      payment therefor in accordance with the terms of the Indenture and this
      Agreement, the Notes will have been duly executed, and, to the best of
      such counsel's knowledge, delivered by the Guarantor in its capacity as
      general partner of the Operating Partnership;

            (C) the execution and delivery by the Guarantor, in its individual
      capacity and in its capacity as general partner of the Operating
      Partnership, of this Agreement have been duly authorized by all necessary
      corporate action required under the Charter and Bylaws of the Guarantor
      and the MGCL; and this Agreement has been duly executed and, to the best
      of such counsel's knowledge, delivered by the Guarantor in its individual
      capacity and its capacity as general partner of the Operating Partnership;

            (D) the execution and delivery in accordance with the terms of this
      Agreement and the Indenture by the Guarantor, in its individual capacity
      and in its capacity as general partner of the Operating Partnership, of
      any applicable Written Terms Agreement have been duly authorized by all
      necessary corporate action required under the Charter and Bylaws of the
      Guarantor and the MGCL; and when the remaining terms of the issuance and
      sale of the Notes are determined in accordance with the terms of this
      Agreement and the Indenture by the Board of Directors or the Medium Term
      Note Committee of the Board of Directors of the Guarantor, or by an
      authorized officer of the Guarantor, on behalf of the Guarantor as general
      partner of the Operating Partnership, and such Notes, each with an
      executed Guarantee endorsed thereon, are

                                       25
<PAGE>

      authenticated, issued and delivered against payment therefor in accordance
      with the terms of the Indenture and this Agreement, any applicable Written
      Terms Agreement executed and delivered on or before a Settlement Date will
      have been duly executed and, to the best of counsel's knowledge, delivered
      by the Guarantor in its individual capacity and in its capacity as the
      general partner of the Operating Partnership;

            (E) the execution and delivery by the Guarantor, in its individual
      capacity and in its capacity as general partner of the Operating
      Partnership, of the Indenture, have been duly authorized by all necessary
      corporate action required under the Charter and Bylaws of the Guarantor
      and the MGCL; and the Indenture has been duly executed, and, to the best
      of such counsel's knowledge, delivered by the Guarantor, in its individual
      capacity and in its capacity as the general partner of the Operating
      Partnership;

            (F) the execution and delivery by the Guarantor of the Guarantees in
      accordance with the terms of this Agreement and the Indenture have been
      duly authorized by all necessary corporate action required under the
      Charter and Bylaws of the Guarantor and the MGCL; and when the remaining
      terms of the issuance and sale of the Notes are determined in accordance
      with the terms of this Agreement and the Indenture, by the Board of
      Directors or the Medium Term Note Committee of the Board of Directors of
      the Guarantor, or by an authorized officer of the Guarantor, on behalf of
      the Guarantor as general partner of the Operating Partnership, and such
      Notes, each with an executed Guarantee endorsed thereon, are
      authenticated, issued and delivered against payment therefor in accordance
      with the terms of the Indenture and this Agreement, such Guarantees will
      have been duly executed, and, to the best of such counsel's knowledge,
      delivered by the Guarantor, in its individual capacity;

            (G) the execution and delivery by the Guarantor of, and the
      performance by the Guarantor of its obligations under, this Agreement, the
      Guarantees, the Indenture and any applicable Written Terms Agreement, and
      the consummation of the transactions contemplated thereby, in each case in
      accordance with the terms of this Agreement and the Indenture (i) will not
      contravene any provision of the MGCL, (ii) will not result in any
      violation of the provisions of the Charter or Bylaws of the Guarantor, and
      (iii) will not, to such counsel's knowledge, result in any violation of
      any order, rule, regulation or decree of any court or governmental agency
      or authority of the State of Maryland issued under or pursuant to the MGCL
      and applicable to the properties, assets or businesses owned directly or
      indirectly by the Guarantor;

            (H) no consent, approval, authorization, order of or qualification
      with any court or governmental agency or authority of the

                                       26
<PAGE>

      State of Maryland is required to be obtained under the MGCL by the
      Guarantor, the Operating Partnership or any Subsidiary organized under the
      laws of the State of Maryland, in connection with the offer, issuance or
      sale of the Notes, together with the corresponding Guarantees, in
      accordance with this Agreement and the Indenture, except for such as have
      been obtained; and

            (I) the information in the Registration Statement under Item 15 to
      the extent that it constitutes matters of Maryland law or a summary of the
      provisions of the Charter of the Guarantor has been reviewed by us and is
      correct in all material respects.

      (iv) An opinion, dated as of such date, of Gibson, Dunn & Crutcher LLP,
counsel for the Agents, in form and substance satisfactory to the Agents.

            The opinions of Latham & Watkins, Counsel to the Guarantor and
      Ballard Spahr Andrews & Ingersoll described in paragraphs (i), (ii) and
      (iii) above shall be rendered to the Agents at the request of the
      Operating Partnership and the Guarantor and shall so state therein.

      (c) On the Commencement Date and, if called for by any Terms Agreement, on
the corresponding Settlement Date, the relevant Agents shall have received a
certificate, dated the Commencement Date or such Settlement Date, as the case
may be, in form and substance reasonably satisfactory to such Agents and signed
by an executive officer of the Guarantor, on behalf of the Guarantor and on
behalf of the Guarantor as General Partner of the Operating Partnership, to the
effect set forth in Sections 4(a)(i) and 4(a)(iii) and to the effect that the
representations and warranties of the Operating Partnership and the Guarantor
contained in this Distribution Agreement are true and correct as of such date
and that the Company has complied in all material respects with all of the
agreements and satisfied all of the conditions on its part to be performed or
satisfied on or before such date.

      The officers signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.

      (d) On the Commencement Date and, if called for by any Terms Agreement, on
the corresponding Settlement Date, the relevant Agents shall have received from
the Company's independent public accountants, a letter or letters, dated the
Commencement Date or such Settlement Date, as the case may be, in form and
substance satisfactory to such Agents containing statements and information of
the type ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial information
contained in or incorporated by reference into the Prospectus, as then amended
or supplemented.

      (e) On the Commencement Date and on each Settlement Date, the Company
shall have furnished to the relevant Agents such appropriate further
information, certificates and documents as they may reasonably request.

                                       27
<PAGE>

5. ADDITIONAL AGREEMENTS OF THE OPERATING PARTNERSHIP AND THE GUARANTOR.

      (a) Each time the Registration Statement or Prospectus is amended or
supplemented (including the filing of documents which are incorporated by
reference in the Registration Statement or Prospectus but excluding (i)
amendments, supplements or the incorporation by reference of documents relating
to the terms of a particular issue of the Notes or an offering of securities
other than the Notes, (ii) pricing supplements, (iii) amendments or supplements
providing solely for a change in the interest rates, redemption provisions,
amortization schedules, maturities or similar changes with respect to the Notes,
(iv) the filing by the Guarantor of a proxy statement for its annual meeting of
shareholders, (v) the filing by the Operating Partnership or the Guarantor of a
Current Report on Form 8-K, unless in the Agents' reasonable judgment, the
information contained in such report is of such a character that an officer's
certificate should be furnished and the Agents so specify in writing, or (vi)
amendments or supplements reflecting a change the Agents and the Operating
Partnership and the Guarantor deem to be immaterial) or if specified in a Terms
Agreement, the Operating Partnership and the Guarantor will deliver or cause to
be delivered as soon as reasonably practicable to each Agent a certificate
signed by an executive officer of the Guarantor, on behalf of the Guarantor and
on behalf of the Guarantor as general partner of the Operating Partnership,
dated the date of such amendment, supplement or filing of such incorporated
document, or the date of delivery specified pursuant to a Terms Agreement, as
the case may be, in form reasonably satisfactory to the Agents, to the effect
that the statements contained in the certificate referred to in Section 4(c)
hereof are true and correct as of the time of such amendment, supplement or
filing or specified delivery (except that such statements shall be deemed to
relate to the Registration Statement and the Prospectus as amended and
supplemented to the time of delivery of such certificate) or, in lieu of such
certificate, a certificate signed by an executive officer of the Guarantor, on
behalf of the Guarantor and on behalf of the Guarantor as general partner of the
Operating Partnership, dated the date of such amendment, supplement or filing or
specified delivery, as the case may be, in form reasonably satisfactory to the
Agents, of the same tenor as the certificate referred to in Section 4(c)
modified as necessary to relate to the Registration Statement and the Prospectus
as amended or supplemented to the date of such amendment, supplement or filing
or specified delivery.

      (b) Each time the Operating Partnership and the Guarantor furnish a
certificate pursuant to Section 5(a) (excluding the filing of documents which
are incorporated by reference in the Registration Statement or Prospectus as a
result of the filing by the Operating Partnership or the Guarantor of a
Quarterly Report on Form 10-Q, unless any Agent shall otherwise request in
writing, and excluding the filing of documents which are incorporated by
reference in the Registration Statement or Prospectus as a result of the filing
by the Operating Partnership or the Guarantor of a Current Report on Form 8-K)
or if specified in a Terms Agreement, the Operating Partnership and the
Guarantor will furnish or cause to be furnished as soon as reasonably
practicable to each Agent written opinions of independent and corporate counsel
for the Operating Partnership and the Guarantor. Any such opinions shall be
dated the date of such amendment, supplement or filing, or the date of delivery
specified pursuant to a Terms Agreement, as the case may be, shall be in a form
satisfactory to the Agents and

                                       28
<PAGE>

shall be of the same tenor as the opinions referred to in Sections 4(b)(i), (ii)
and (iii), but modified as necessary to relate to the Registration Statement and
the Prospectus as amended and supplemented to the time of delivery of such
opinions. In lieu of such opinions, counsel last furnishing such an opinion to
an Agent may furnish to each Agent a letter to the effect that such Agent may
rely on such last opinion to the same extent as though it were dated the date of
such letter (except that statements in such last opinion will be deemed to
relate to the Registration Statement and the Prospectus as amended or
supplemented to the time of delivery of such letter).

      (c) Each time the Registration Statement or the Prospectus is amended or
supplemented to set forth amended or supplemental financial information or such
amended or supplemental information is incorporated by reference in the
Prospectus or if specified in a Terms Agreement, the Operating Partnership and
Guarantor shall cause its independent public accountants to as soon as
reasonably practicable furnish each Agent with a letter, dated the date of such
amendment, supplement, or filing or the date of delivery specified pursuant to a
Terms Agreement, as the case may be, in form satisfactory to the Agents, of the
same tenor as the letter referred to in Section 4(d), with regard to the amended
or supplemental financial information included or incorporated by reference in
the Registration Statement or the Prospectus as amended or supplemented to the
date of such letter.

6. INDEMNITY AND CONTRIBUTION.

      (a) The Operating Partnership and the Guarantor jointly and severally
agree to indemnify and hold harmless each Agent and each person, if any, who
controls any Agent within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) arising out of or caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, or the Prospectus (as amended or
supplemented ), or arising out of or caused by any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information relating
to any Agent furnished to the Operating Partnership and the Guarantor in writing
by such Agent expressly for use therein and set forth in Section 1(b) hereof.

      (b) Each Agent agrees, severally and not jointly, to indemnify and hold
harmless the Operating Partnership and the Guarantor, the Guarantor's directors
and the officers who sign the Registration Statement and each person, if any,
who controls the Operating Partnership or the Guarantor within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act to the
same extent as the foregoing indemnities from the Operating Partnership and the
Guarantor to such Agent, but only with reference to information relating to such
Agent furnished to the Operating Partnership or the Guarantor in writing by such
Agent expressly for use in the

                                       29
<PAGE>

Registration Statement, the Prospectus or any amendments or supplements thereto,
as set forth in Section 1(b) hereof.

      (c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either Section 6(a) or 6(b) above, such person (the
"INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
Indemnifying Party, upon request of the Indemnified Party, shall retain counsel
reasonably satisfactory to the Indemnified Party to represent the Indemnified
Party and any others the Indemnifying Party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any Indemnified Party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the Indemnifying Party and the Indemnified Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Party
shall not, in respect of the legal expenses of any Indemnified Party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by the Agents, in the case of parties indemnified pursuant
to Section 6(a), and by the Guarantor, in the case of parties indemnified
pursuant to Section 6(b). The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify the Indemnified Party from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an Indemnified Party shall have requested
an Indemnifying Party in writing to reimburse the Indemnified Party for fees and
expenses of counsel as contemplated by the second and third sentences of this
paragraph, the Indemnifying Party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 60 days after receipt by such Indemnifying
Party of the aforesaid request and (ii) such Indemnifying Party shall not have
reimbursed the Indemnified Party in accordance with such request prior to the
date of such settlement. No Indemnifying Party shall, without the prior written
consent of each Indemnified Party, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Party is or could have
been a party and indemnity could have been sought hereunder by such Indemnified
Party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such proceeding.

      (d) To the extent the indemnification provided for in Section 6(a) or 6(b)
is unavailable to an Indemnified Party or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying Party
under such paragraph, in lieu of indemnifying such Indemnified Party thereunder,
shall contribute to

                                       30
<PAGE>

the amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the Operating Partnership and the
Guarantor on the one hand and the Agents on the other hand from the offering of
the Notes to which such losses, claims damages or liabilities relates or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Operating
Partnership and the Guarantor on the one hand and of the Agents on the other
hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Operating Partnership and
the Guarantor on the one hand and the Agents on the other hand in connection
with such offering of the Notes shall be deemed to be in the same respective
proportions as the total net proceeds from such offering of the Notes (before
deducting expenses) received by the Operating Partnership or the Guarantor bear
to the total discounts and commissions received by the Agents in respect
thereof. The relative fault of the Operating Partnership and the Guarantor on
the one hand and the Agents on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Operating Partnership and the Guarantor
or by the Agents and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Agents' respective obligations to contribute pursuant to this Section 6 are
several in the proportion that the principal amount of the Notes the sale of
which by or through such Agent gave rise to such losses, claims, damages or
liabilities bears to the aggregate principal amount of the Notes the sale of
which by or through any Agent gave rise to such losses, claims, damages or
liabilities, and not joint.

      (e) The Operating Partnership and the Guarantor and the Agents agree that
it would not be just or equitable if contribution pursuant to this Section 6
were determined by pro rata allocation (even if the Agents were treated as one
entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 6(d). The amount
paid or payable by an Indemnified Party as a result of the losses, claims,
damages and liabilities referred to in Section 6(d) shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 6, no Agent shall be required to contribute any amount in excess of the
amount by which the total price at which the Notes referred to in Section 6(d)
that were offered and sold to the public through such Agent exceeds the amount
of any damages that such Agent has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The remedies provided
for in this Section 6 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any Indemnified Party at law or in
equity.

                                       31
<PAGE>
            (f) The indemnity and contribution provisions contained in this
      Section 6 and the representations, warranties and other statements of the
      Company contained in this Distribution Agreement or any Terms Agreement
      shall remain operative and in full force and effect regardless of (i) any
      termination of this Distribution Agreement or any such Terms Agreement,
      (ii) any investigation made by or on behalf of any Agent or any person
      controlling any Agent or by or on behalf of the Company, the Guarantor's
      officers or directors or any person controlling the Operating Partnership
      or the Guarantor and (iii) acceptance of and payment for any of the Notes.

      7. POSITION OF THE AGENTS. In acting under this Distribution Agreement and
in connection with the sale of any Notes by the Operating Partnership (other
than Notes sold to an Agent pursuant to a Terms Agreement), each Agent is acting
solely as agent of the Operating Partnership and does not assume any obligation
towards or relationship of agency or trust with any purchaser of Notes. An Agent
shall use its reasonable best efforts to assist the Operating Partnership in
obtaining performance by each purchaser whose offer to purchase Notes has been
solicited by such Agent and accepted by the Operating Partnership, but such
Agent shall not have any liability to the Operating Partnership or the Company
in the event any such purchase is not consummated for any reason. If the
Operating Partnership shall default in its obligations to deliver Notes to a
purchaser whose offer it has accepted, the Operating Partnership shall hold the
relevant Agent harmless against any loss, claim, damage or liability arising
from or as a result of such default and shall, in particular, pay to such Agent
the commission it would have received had such sale been consummated.

      8. TERMINATION. This Distribution Agreement may be terminated at any time
by the Operating Partnership or, as to any Agent, by the Operating Partnership
or such Agent upon the giving of written notice of such termination to the other
parties hereto, but without prejudice to any rights, obligations or liabilities
of any party hereto accrued or incurred prior to such termination. In the event
of such termination with respect to any Agent, this Agreement shall remain in
full force and effect with respect to any Agent as to which such termination has
not occurred. The termination of this Distribution Agreement shall not require
termination of any Terms Agreement, and the termination of any such Terms
Agreement shall not require termination of this Distribution Agreement. If this
Distribution Agreement is terminated, the provisions of the third paragraph of
Section 2(a), Section 2(e), the last sentence of Section 3(b) and Sections 3(c),
3(h), 6, 7, 9, 10 and 13 hereof shall survive; provided that if at the time of
termination an offer to purchase Notes has been accepted by the Operating
Partnership but the time of delivery to the purchaser or its agent of such Notes
has not occurred, the provisions of Sections 1, 2(b), 2(c), 3(a), 3(d), 3(e),
3(f), 3(g), 3(i), and 5 hereof shall also survive until such delivery has been
made.

      9. NOTICES. All communications hereunder will be in writing and effective
only on receipt, and, with respect to any party hereto, will be mailed,
delivered or telefaxed and confirmed as follows:

      to Morgan Stanley at:              1585 Broadway,
                                         New York, New York, 10036
                                         Attention: Manager, Credit Department
                                         Telefax number: 212-761-0780

                                       32
<PAGE>
      with a copy to:                    1585 Broadway,
                                         New York, New York, 10036
                                         Attention: COPS, Manager
                                         Telefax number: 212-761-0780

      to A.G. Edwards & Sons, Inc. at:   One North Jefferson
                                         St. Louis, MO  63103
                                         Attention: Brian Hansen
                                         Telefax number: (314) 955-4775

      to Banc of America Securities
         LLC at:                         NC1-007-08-17
                                         100 North Tryon Street
                                         Charlotte, NC  28255
                                         Attention: Medium-Term Note Desk
                                         Telefax number: (704) 388-9939

      to Bear, Stearns & Co. Inc. at:    245 Park Avenue
                                         New York, NY  10167
                                         Attention: Daniel Blood
                                         Telefax number: (212) 272-8217

      to Commerzbank Capital
         Markets Corp. at:               2 World Financial Center, 34th Floor
                                         New York, NY  10281-1050
                                         Attention: David Schwarz
                                         Telefax number: (212) 266-7656

      to First Union Securities,
         Inc. at:                        One First Union Center
                                         301 South College Street
                                         Charlotte, NC  28288-5604
                                         Attention: Daniel Sullivan
                                         Telefax number: (704) 383-6205

      to J.P. Morgan Securities Inc. at: 270 Park Avenue
                                         7th Floor
                                         New York, NY  10017
                                         Attention: Transaction Execution Group
                                         Telefax number: (212) 834-6702

      to Lehman Brothers Inc. at:        745 Seventh Avenue,
                                         3rd Floor
                                         New York, NY  10019
                                         Attention: Fixed Income Syndicate,
                                           MTN Desk
                                         Telefax number: (212) 526-0943

      to PNC Capital Markets, Inc. at:   249 Fifth Avenue, 26th Floor
                                         Pittsburgh, PA 15219

                                       33
<PAGE>
                                         Attention: Robert W. Thomas
                                         Telefax number: (212) 705-2014

      if to an Agent, with a copy to:    Gibson, Dunn & Crutcher LLP
                                         One Montgomery Street
                                         31st Floor
                                         San Francisco, CA 94104
                                         Attention: Douglas D. Smith, Esq.
                                         Telefax number:  (415) 986-5309

      to the Company at:                 Pier 1, Bay 1
                                         San Francisco, California 94111
                                         Attention: General Counsel
                                         Telefax number: (415) 394-9000

      with a copy to:  Latham & Watkins  505 Montgomery St. Suite 1900
                                         San Francisco, California 94111
                                         Attention:  Laura L. Gabriel and
                                         Tracy M. Abels
                                         Telefax number: (415) 395-8095

      10. SUCCESSORS. This Distribution Agreement and any Terms Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective successors and the officers, directors and controlling persons
referred to in Section 6 and the purchasers of Notes (to the extent expressly
provided in Section 4), and no other person will have any right or obligation
hereunder.

      11. AMENDMENTS. This Distribution Agreement may be amended or supplemented
if, but only if, such amendment or supplement is in writing and is signed by the
Operating Partnership, the Guarantor and each Agent; provided that the Operating
Partnership may from time to time amend this Distribution Agreement to add as a
party hereto one or more additional firms registered under the Exchange Act
without prior notice to or the consent of any Agent or the signature of any
Agent on any such amendment, whereupon each such firm shall become an Agent
hereunder on the same terms and conditions as the other Agents that are parties
hereto. The Operating Partnership shall notify the Agents of any such amendment
to add one or more additional firms on or before the Settlement Date to which
such amendment relates.

      12. COUNTERPARTS. This Distribution Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

      13. APPLICABLE LAW. This Distribution Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.

      14. HEADINGS. The headings of the sections of this Distribution Agreement
have been inserted for convenience of reference only and shall not be deemed a
part of this Distribution Agreement.

                                       34
<PAGE>
                            [Signature Page Follows]

                                       35
<PAGE>
      If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement between the
Company and you.

                                         Very truly yours,

                                         AMB PROPERTY L.P.

                                         By:  AMB Property Corporation,
                                              its General Partner

                                              By: /s/ Michael A Coke
                                                 -------------------------------
                                                 Name:
                                                 Title:

                                         AMB PROPERTY CORPORATION

                                         By:   /s/ Michael A Coke
                                              ----------------------------------
                                              Name:
                                              Title:

                   [Signature page to Distribution Agreement]
<PAGE>
The foregoing Distribution Agreement is
hereby confirmed and accepted as of the
date first above written.

MORGAN STANLEY & CO. INCORPORATED

By: /s/ Michael Fusco
   --------------------------------------
   Name:  Michael Fusco
   Title: Executive Director

A.G. EDWARDS & SONS, INC.

By: /s/ James E. Hodapp V.P.
   --------------------------------------
   Name:  James E. Hodapp
   Title: Vice President - Debt Syndicate

BANC OF AMERICA SECURITIES LLC

By: /s/ Lily Chang
   --------------------------------------
   Name:  Lily Chang
   Title: Principal

BEAR, STEARNS & CO. INC.

By: /s/ Timothy A. O'Neill
   --------------------------------------
   Name:  Timothy A. O'Neill
   Title: Senior Managing Director

                   [Signature page to Distribution Agreement]
<PAGE>
COMMERZBANK CAPITAL MARKETS CORP.

By: /s/ Steven B. Willis
   --------------------------------------
   Name:  Steven B. Willis
   Title: Head of North America Debt Capital Markets

FIRST UNION SECURITIES, INC.

By: /s/ William Ingram
   --------------------------------------
   Name:  William Ingram
   Title: Managing Director

J.P. MORGAN SECURITIES INC.

By: /s/ Jose C. Padilla
   --------------------------------------
   Name:  Jose C. Padilla
   Title: Vice President

LEHMAN BROTHERS INC.

By: /s/ Martin Goldberg
   --------------------------------------
   Name:  Martin Goldberg
   Title: Senior Vice President

PNC CAPITAL MARKETS, INC.

By: /s/ Robert W. Thomas
   --------------------------------------
   Name:  Robert W. Thomas
   Title: Managing Director

                   [Signature page to Distribution Agreement]
<PAGE>
                                                                      SCHEDULE I

                                  SUBSIDIARIES

MATERIAL SUBSIDIARIES OF THE OPERATING PARTNERSHIP

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

Long Gate, LLC, a Delaware limited liability company

MATERIAL SUBSIDIARIES OF THE GUARANTOR

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

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

Long Gate, LLC, a Delaware limited liability company
<PAGE>
                                                                     SCHEDULE II

                                     AGENTS

Morgan Stanley & Co. Incorporated

A.G. Edwards & Sons, Inc.

Banc of America Securities LLC

Bear, Stearns & Co. Inc.

Commerzbank Capital Markets Corp.

First Union Securities, Inc.

J.P. Morgan Securities Inc.

Lehman Brothers Inc.

PNC Capital Markets, Inc.
<PAGE>
                                                                    SCHEDULE III

                                 JOINT VENTURES
<PAGE>
                                                                       EXHIBIT A

                               AMB PROPERTY, L.P.

                           SERIES B MEDIUM-TERM NOTES

                                 TERMS AGREEMENT

                                                                          [Date]

AMB PROPERTY, L.P.
Pier 1, Bay 1
San Francisco, California 94556

Attention: General Counsel

      Re:   Distribution Agreement dated May 7, 2002 (the "DISTRIBUTION
            AGREEMENT")

      We agree to purchase your Series B Medium-Term Notes having the following
      terms:

<TABLE>
<CAPTION>
ALL NOTES:
<S>                                                                <C>
Principal Amount:                                                  Settlement Date and Time
                                                                   (Original Issue Date):

Specified Currency:                                                Maturity Date:

Principal Financial Center:                                        Trade Date:

Form:                                                              Agent's Commission or Discount:

Exchange Rate Agent:                                               Net Proceeds to Issuer:

Interest Payment Dates:                                            Authorized Denomination:

Redemption:                                                        Regular Record Dates:
  Redemption Commencement Date:
  Initial Redemption Percentage:
  Annual Redemption Percentage Reduction:

Discount Note:                                                     Repayment:
  Issue Price:                                                       Optional Repayment Date(s):
  Total Amount of OID:                                               Repayment Price:
  Yield to Maturity:
  Initial Accrual Period:
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FIXED RATE NOTES:                                                 FLOATING RATE NOTES:
<S>                                                               <C>
Interest Rate:                                                    Initial Interest Rate:
Other/Additional Terms:                                           Calculation Agent:
                                                                  Interest Rate Basis:
                                                                  Index Maturity:
                                                                  Interest Reset Frequency:
                                                                  Initial Interest Reset Date:
                                                                  Interest Reset Date(s):
                                                                  Interest Determination Date(s):
                                                                  Maximum Interest Rate:
                                                                  Minimum Interest Rate:
                                                                  Spread:
                                                                  Spread Multiplier:
                                                                  Interest Category:
                                                                  Other/Additional Terms:
</TABLE>

      The provisions of Sections 1, 2(b), 2(c), 3 through 6, and 9 through 13 of
the Distribution Agreement and the related definitions are incorporated by
reference herein and shall be deemed to have the same force and effect as if set
forth in full herein.

      This Terms Agreement may be terminated at any time any party upon the
giving of written notice of such termination to the other parties hereto, but
without prejudice to any rights, obligations or liabilities of any party hereto
accrued or incurred prior to such termination. The termination of the
Distribution Agreement shall not require termination of this Terms Agreement,
and the termination of this Terms Agreement shall not require termination of the
Distribution Agreement. This Agreement is also subject to termination on the
terms incorporated by reference herein. If this Agreement is terminated, the
provisions of Sections 3(h), 6, 9, 10 and 13 of the Distribution Agreement shall
survive for the purposes of this Agreement.

                               Exhibit A - Page 2
<PAGE>
      The following information, opinions, certificates, letters and documents
referred to in Section 4 of the Distribution Agreement will be required:
________________

                                         [NAME OF RELEVANT AGENT(S)]

                                         By:
                                            ------------------------------------
                                            Name:
                                            Title:

Accepted:

AMB PROPERTY, L.P.

By:    AMB Property Corporation,
       its General Partner

       By:
          -------------------------------
          Name:
          Title:

                               Exhibit A - Page 3
<PAGE>
                                                                       EXHIBIT B

                                AMB PROPERTY L.P.
                           SERIES B MEDIUM-TERM NOTES
                            ADMINISTRATIVE PROCEDURES

      Explained below are the administrative procedures and specific terms of
the offering of Series B Medium-Term Notes (the "NOTES"), on a continuous basis
by AMB Property L.P. (the "OPERATING PARTNERSHIP") pursuant to the Distribution
Agreement, dated as of May 7, 2002 (the "DISTRIBUTION AGREEMENT") among the
Operating Partnership, AMB Property Corporation, a Maryland corporation, the
sole general partner of the Operating Partnership and guarantor of the Notes
(the "GUARANTOR") and Morgan Stanley & Co. Incorporated, A.G. Edwards & Sons,
Inc., Banc of America Securities LLC, Bear, Stearns & Co. Inc., Commerzbank
Capital Markets Corp., First Union Securities, Inc., J.P. Morgan Securities
Inc., Lehman Brothers Inc. and PNC Capital Markets, Inc., and each other agent
set forth on Schedule II to the Distribution Agreement (the "AGENTS"). The Notes
will be issued under an Indenture and the First Supplemental Indenture, the
Second Supplemental Indenture and the Third Supplemental Indenture thereto, each
dated as of June 30, 1998, the Fourth Supplemental Indenture, dated as of August
15, 2000 and the Fifth Supplemental Indenture dated as of May 7, 2002
(collectively, the "INDENTURE"), and each by and among the Operating
Partnership, the Guarantor, and State Street Bank and Trust Company of
California, N.A., as Trustee (the "TRUSTEE"). In the Distribution Agreement, the
Agents have agreed to use reasonable best efforts to solicit purchases of the
Notes, and the administrative procedures explained below will govern the
issuance and settlement of any Notes sold through an Agent, as agent of the
Operating Partnership. An Agent, as principal, may also purchase Notes for its
own account, and if requested by such Agent, the Operating Partnership and such
Agent will enter into a terms agreement (a "TERMS AGREEMENT"), as contemplated
by the Distribution Agreement. The administrative procedures explained below
will govern the issuance and settlement of any Notes purchased by an Agent, as
principal, unless otherwise specified in the applicable Terms Agreement.

      The Trustee will initially be the Registrar, Calculation Agent,
Authenticating Agent, Exchange Rate Agent and Paying Agent for the Notes and
will perform the duties specified herein. The Operating Partnership may from
time to time name other or additional Registrars, Calculation Agents,
Authenticating Agents, Exchange Rate Agents and Paying Agents. Each Note will be
represented by either a Global Security (as defined below) delivered to the
Trustee, as agent for The Depository Trust Company ("DTC"), and recorded in the
book-entry system maintained by DTC (a "BOOK-ENTRY NOTE") or a certificate
delivered to the holder thereof or a person designated by such holder (a
"CERTIFICATED NOTE"). Except as set forth in the Indenture, an owner of a
Book-Entry Note will not be entitled to receive a Certificated Note.

      Book-Entry Notes, which may be payable only in U.S. dollars, will be
issued in accordance with the administrative procedures set forth in Part I
hereof as they may subsequently be amended as the result of changes in DTC's
operating procedures. Certificated Notes will be issued in accordance with the
administrative procedures set forth in Part II hereof. Unless otherwise defined
in the Indenture, the Notes or any prospectus supplement relating to the Notes,
<PAGE>
capitalized terms used herein but not defined herein shall have the meanings
given to them in the Distribution Agreement.

      Unless otherwise specified by the Operating Partnership, the Agents are to
communicate with the Chief Financial Officer regarding offers to purchase Notes
and the related settlement details.

PART I: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES

      In connection with the qualification of the Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Trustee will perform
the custodial, document control and administrative functions described below, in
accordance with its respective obligations under a Letter of Representations
from the Operating Partnership, the Guarantor and the Trustee to DTC, dated as
of August 15, 2000, and a Medium-Term Note Certificate Agreement between the
Trustee and DTC, dated August 21, 1989 (the "MTN CERTIFICATE AGREEMENT"), and
its obligations as a participant in DTC, including DTC's Same-Day Funds
Settlement System ("SDFS").

Issuance:         On any date of settlement (as defined under "SETTLEMENT"
                  below) for one or more Book-Entry Notes, the Operating
                  Partnership will issue a single global security in fully
                  registered form without coupons (a "GLOBAL SECURITY")
                  representing up to U.S. $400,000,000 principal amount of all
                  such Notes that have the same Original Issue Date, Maturity
                  Date and other terms. Each Global Security will be dated and
                  issued as of the date of its authentication by the Trustee.
                  Each Global Security will bear an "INTEREST ACCRUAL DATE,"
                  which will be (i) with respect to an original Global Security
                  (or any portion thereof), its original issuance date and (ii)
                  with respect to any Global Security (or any portion thereof)
                  issued subsequently upon exchange of a Global Security, or in
                  lieu of a destroyed, lost or stolen Global Security, the most
                  recent Interest Payment Date to which interest has been paid
                  or duly provided for on the predecessor Global Security (or if
                  no such payment or provision has been made, the original
                  issuance date of the predecessor Global Security), regardless
                  of the date of authentication of such subsequently issued
                  Global Security. Book-Entry Notes may be payable only in U.S.
                  dollars. No Global Security will represent any Certificated
                  Note.

Denominations:    Book-Entry Notes will be issued in principal amounts of U.S.
                  $1,000 or any amount in excess thereof that is an integral
                  multiple of U.S. $1,000. Global Securities will be denominated
                  in principal amounts not in excess of U.S. $400,000,000. If
                  one or more Book-Entry Notes having an aggregate principal
                  amount in excess of $400,000,000 would, but for the preceding
                  sentence, be represented by a single Global Security, then one
                  Global Security will be issued to represent each U.S.
                  $400,000,000 principal amount of such Book-Entry Note or Notes
                  and an additional Global Security will be issued to represent
                  any remaining principal amount of such Book-Entry Note or
                  Notes. In such a case, each of the Global Securities
                  representing such Book-Entry Note or Notes shall be assigned
                  the same CUSIP number.

                               Exhibit B - Page 2
<PAGE>
Preparation of
Pricing
Supplement:       If any offer to purchase a Book-Entry Note is accepted by or
                  on behalf of the Operating Partnership, the Operating
                  Partnership will prepare a pricing supplement (a "PRICING
                  SUPPLEMENT") reflecting the terms of such Note. The Operating
                  Partnership (i) will arrange to file such Pricing Supplement
                  with the Commission in accordance with the applicable
                  paragraph of Rule 424(b) under the Act and (ii) will, as soon
                  as possible and in any event not later than the date on which
                  such Pricing Supplement is filed with the Commission, deliver
                  the number of copies of such Pricing Supplement to the
                  relevant Agent as such Agent shall request.

                  In each instance that a Pricing Supplement is prepared, the
                  relevant Agent will affix the Pricing Supplement to
                  Prospectuses prior to their use. Outdated Pricing Supplements,
                  and the Prospectuses to which they are attached (other than
                  those retained for files), will be destroyed.

Settlement:       The receipt by the Operating Partnership of immediately
                  available funds in payment for a Book-Entry Note and the
                  authentication and issuance of the Global Security
                  representing such Note shall constitute "settlement" with
                  respect to such Note. All offers accepted by the Operating
                  Partnership will be settled on the third Business Day next
                  succeeding the date of acceptance pursuant to the timetable
                  for settlement set forth below, unless the Operating
                  Partnership and the purchaser agree to settlement on another
                  day, which shall be no earlier than the next Business Day.

Settlement        Settlement Procedures with regard to each Book-Entry Note sold
Procedures:       by the Operating Partnership to or through an Agent (unless
                  otherwise specified pursuant to a Terms Agreement) shall be as
                  follows:

                  A.    The relevant Agent will advise the Operating Partnership
                        by telephone that such Note is a Book-Entry Note and of
                        the following settlement information:

                        1.    Principal amount.

                        2.    Settlement date and time (Original Issue Date).

                        3.    Specified Currency and Principal Financial Center.

                        4.    Maturity Date.

                        5.    Trade Date.

                        6.    Exchange Rate Agent (if other than State Street
                              Bank & Trust Company of California N.A).

                               Exhibit B - Page 3
<PAGE>
                        7.    Agent's commission or discount (if any) determined
                              as provided in the Distribution Agreement.

                        8.    Net Proceeds to Issuer.

                        9.    Authorized Denomination (if other than $1,000 or
                              integral multiples thereof).

                        10.   Interest Payment Date(s).

                        11.   Regular Record Dates.

                        12.   Redemption or repayment provisions (if any).

                        13.   Whether the Note is an Original Issue Discount
                              Note (an "OID NOTE"), and if it is an OID Note,
                              the total amount of OID, the yield to maturity,
                              the initial accrual period OID.

                        14.   In the case of a Fixed Rate Note:

                              (a)   the Interest Rate.

                        15.   In the case of a Floating Rate Note:

                              (a)   the Initial Interest Rate (if known at such
                                    time).

                              (b)   Calculation Agent (if other than State
                                    Street Bank & Trust Company of California,
                                    N.A).

                              (c)   Interest Rate Basis which may include:

                                    -     CD Rate

                                    -     Commercial Paper Rate

                                    -     CMT Rate

                                    -     EURIBOR

                                    -     Federal Funds Rate

                                    -     LIBOR

                                    -     Prime Rate

                                    -     Treasury Rate

                                    -     Other

                              (d)   Index Maturity.

                              (e)   Interest Reset Frequency.

                              (f)   Maximum Interest Rate.

                              (g)   Minimum Interest Rate.

                               Exhibit B - Page 4
<PAGE>
                              (h)   Initial Interest Reset Date.

                              (i)   Interest Reset Date(s).

                              (j)   Interest Determinations Date.

                              (k)   Spread and/or Spread Multiplier (if any).

                              (l)   whether the Note is:

                                    -     a Regular Floating Rate Note

                                    -     a Floating Rate/Fixed Rate Note (in
                                          which case the fixed rate
                                          commencement date and the fixed
                                          interest rate shall be specified)
                                          or

                                    -     an Inverse Floating Rate Note (in
                                          which case the fixed interest rate
                                          shall be specified).

                        16.   Any other applicable terms including the
                              applicability of an Addendum or Other Additional
                              Provisions.

B.    The Operating Partnership will advise the Trustee by telephone or
      electronic transmission (confirmed in writing at any time on the same
      date) of the information set forth in Settlement Procedure "A" above. The
      Trustee will then assign a CUSIP number to the Global Security
      representing such Note and will notify the Operating Partnership and the
      relevant Agent of such CUSIP number by telephone as soon as practicable.

C.    The Trustee will enter a pending deposit message through DTC's Participant
      Terminal System, providing the following settlement information to DTC,
      the relevant Agent and Standard & Poor's Corporation:

      1.    The information set forth in Settlement Procedure "A".

      2.    The Initial Interest Payment Date for such note, the number of days
            by which such date succeeds the related DTC Record Date (which in
            the case of Floating Rate Notes which reset daily or weekly, shall
            be the date five calendar days immediately preceding the applicable
            Interest Payment Date and, in the case of other Notes, shall be the
            Record Date as defined in the Note) and, if known, the amount of
            interest payable on such Initial Interest Payment Date.

      3.    The CUSIP number of the Global Security representing such Note.

      4.    Whether such Global Security will represent any other Book-Entry
            Note (to the extent known at such time).

      5.    The number of participant accounts to be maintained by DTC on behalf
            of the relevant Agent and the Trustee.

D.    The Trustee will complete and authenticate the Global Security
      representing such Note.

                               Exhibit B - Page 5
<PAGE>
E.    DTC will credit such note to the Trustee's participant account at DTC.

F.    The Trustee will enter an SDFS deliver order through DTC's participant
      Terminal System instructing DTC to (i) debit such Note to the Trustee's
      participant account and credit such Note to the relevant Agent's
      participant account and (ii) debit such Agent's settlement account and
      credit the Trustee's settlement account for an amount equal to the price
      of such Note less such Agent's commission (if any). The entry of such a
      deliver order shall constitute a representation and warranty by the
      Trustee to DTC that (a) the Global Security representing such Book-Entry
      Note has been issued and authenticated and (b) the Trustee is holding such
      Global Security pursuant to the MTN Certificate Agreement.

G.    Unless the relevant Agent is the end purchaser of such Note, such Agent
      will enter an SDFS deliver order through DTC's Participant Terminal System
      instructing DTC (i) to debit such Note to such Agent's participant account
      and credit such Note to the participant accounts of the Participants with
      respect to such Note and (ii) to debit the settlement accounts of such
      Participants and credit the settlement account of such Agent for an amount
      equal to the price of such Note.

H.    Transfers of funds in accordance with SDFS deliver orders described in
      Settlement Procedures "F" and "G" will be settled in accordance with SDFS
      operating procedures in effect on the settlement date.

I.    The Trustee will credit to the account of the Operating Partnership
      maintained at Bank of America, Dallas, Texas, ABA #111000012, Account #
      3750785562, Account Name: AMB Property, LP, or such other account as the
      Operating Partnership may from time to time direct, in immediately
      available funds the amount transferred to the Trustee in accordance with
      Settlement Procedure "F".

J.    Unless the relevant Agent is the end purchaser of such Note, such Agent
      will confirm the purchase of such note to the purchaser either by
      transmitting to the Participants with respect to such Note a confirmation
      order or orders through DTC's institutional delivery system or by mailing
      a written confirmation to such purchaser.

K.    Monthly, the Trustee will send to the Operating Partnership, a statement
      setting forth the principal amount of Notes outstanding as of that date
      under the Indenture and setting forth a brief description of any sales of
      which the Operating Partnership has advised the Trustee that have not yet
      been settled.

Settlement             For Sales by the Operating Partnership of Book-Entry
Procedures             Notes to or through an Agent (unless otherwise specified
Timetable:             pursuant to a Terms Agreement) for settlement on the
                       first Business Day after the sale date, Settlement
                       Procedures "A" through "J" set forth above shall be
                       completed as soon as possible but not later than the
                       respective times in New York City set forth below:

                               Exhibit B - Page 6
<PAGE>
<TABLE>
<CAPTION>
Settlement
Procedure                     Time
---------                     ----
<S>                           <C>
A                             11:00 A.M. on sale date
B                             12:00 Noon on sale date
C                             2:00 P.M. on sale date
D                             9:00 A.M. on settlement date
E                             10:00 A.M. on settlement date
F-G                           2:00 P.M. on settlement date
H                             4:45 P.M. on settlement date
I-J                           5:00 P.M. on settlement date
</TABLE>

                        If a sale is to be settled more than one (1) Business
                        Day after the sale date, Settlement Procedures "A", "B"
                        and "C" shall be completed as soon as practicable but no
                        later than 11:00 A.M., 12:00 Noon and 2:00 P.M.,
                        respectively, on the first Business Day after the sale
                        date. If the Initial Interest Rate for a Floating Rate
                        Book-Entry Note has not been determined at the time that
                        Settlement procedure "A" is completed, Settlement
                        Procedures "B" and "C" shall be completed as soon as
                        such rate has been determined but no later than 12:00
                        Noon and 2:00 P.M., respectively, on the first Business
                        Day before the settlement date. Settlement Procedure "H"
                        is subject to extension in accordance with any extension
                        of Fedwire closing deadlines and in the other events
                        specified in the SDFS operating procedures in effect on
                        the settlement date.

                        If settlement of a Book-Entry Note is rescheduled or
                        canceled, the Trustee, after receiving notice from the
                        Operating Partnership or the relevant Agent, will
                        deliver to DTC, through DTC's Participant Terminal
                        System, a cancellation message to such effect by no
                        later than 2:00 P.M. on the Business Day immediately
                        proceeding the scheduled settlement date.

                        If the Trustee fails to enter an SDFS deliver order with
                        respect to a Book-Entry Note pursuant to Settlement
                        Procedure "F", the Trustee may deliver to DTC, through
                        DTC's Participant Terminal System, as soon as
                        practicable a withdrawal message instructing DTC to
                        debit such Note to the Trustee's participant account,
                        provided that the Trustee's participant account contains
                        a principal amount of the Global Security representing
                        such Note that is at least equal to the principal amount
                        to be debited. If a withdrawal message is processed with
                        respect to all the Book-Entry Notes represented by a
                        Global Security, the Trustee will mark such Global
                        Security "canceled," make appropriate entries in the
                        Trustee's records and send such canceled Global Security
                        to the Operating Partnership. The CUSIP number assigned
                        to such Global Security shall, in accordance with the
                        procedures of the CUSIP Service Bureau of Standard &
                        Poor's Corporation, be canceled and not immediately
                        reassigned. If a withdrawal message is processed with
                        respect to one or more, but not all, of the Book-Entry
                        Notes represented by a Global Security, the Trustee will
                        exchange such Global Security for two Global Securities,
                        one of which shall represent such Book-Entry Note or
                        Notes and shall be canceled immediately after issuance
                        and the other of which shall represent the remaining
                        Book-Entry Notes previously represented by the

                               Exhibit B - Page 7
<PAGE>
                        surrendered Global Security and shall bear the CUSIP
                        number of the surrendered Global Security.

                        If the purchase price for any Book-Entry Note is not
                        timely paid to the Participants with respect to such
                        Note by the beneficial purchaser thereof (or a person,
                        including an indirect participant in DTC, acting on
                        behalf of such purchaser), such Participants and, in
                        turn, the relevant Agent may enter SDFS deliver orders
                        through DTC's Participant Terminal System reversing the
                        orders entered pursuant to Settlement Procedures "F" and
                        "C", respectively. Thereafter, the Trustee will deliver
                        the withdrawal message and take the related actions
                        described in the preceding paragraph.

                        Notwithstanding the foregoing, upon any failure to
                        settle with respect to a Book-Entry Note, DTC may take
                        any actions in accordance with its SDFS operating
                        procedures then in effect.

                        In the event of a failure to settle with respect to one
                        or more, but not all, of the Book-Entry Notes to have
                        been represented by a Global Security, the Trustee will
                        provide, in accordance with Settlement procedures "D"
                        and "F", for the authentication and issuance of a Global
                        Security representing the Book-Entry Notes to be
                        represented by such Global Security and will make
                        appropriate entries in its records.

                               Exhibit B - Page 8
<PAGE>
PART II: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES

      The Trustee will serve as Registrar in connection with the Certificated
Notes.

Issuance:               Each Certificated Note will be dated and issued as of
                        the date of its authentication by the Trustee. Each
                        Certificated Note will bear an Original Issue Date,
                        which will be (i) with respect to an original
                        Certificated Note (or any portion thereof), its original
                        issuance date (which will be the settlement date) and
                        (ii) with respect to any Certificated Note (or portion
                        thereof) issued subsequently upon transfer or exchange
                        of a Certificated Note or in lieu of a destroyed, lost
                        or stolen Certificated Note, the original issuance date
                        of the predecessor Certificated Note, regardless of the
                        date of authentication of such subsequently issued
                        Certificated Note.

Preparation             If any offer to purchase a Certificated Note is accepted
of Pricing              by or on behalf of of the Operating Partnership, the
Supplement:             Operating Partnership will prepare a Pricing Supplement
                        reflecting the terms of such Note. The Operating
                        Partnership (i) will arrange to file such Pricing
                        Supplement with the Commission in accordance with the
                        applicable paragraph of Rule 424(b) under the Act and
                        (ii) will, as soon as possible and in any event not
                        later than the date on which such Pricing Supplement is
                        filed with the Commission, deliver the number of copies
                        of such Pricing Supplement to the relevant Agent as such
                        Agent shall request.

                        In each instance that a Pricing Supplement is prepared,
                        the relevant Agent will affix the Pricing Supplement to
                        Prospectuses prior to their use. Outdated Pricing
                        Supplements, and the Prospectuses to which they are
                        attached (other than those retained for files), will be
                        destroyed.

Settlement:             The receipt by the Operating Partnership of immediately
                        available funds in exchange for an authenticated
                        Certificated Note delivered to the relevant Agent and
                        such Agent's delivery of such Note against receipt of
                        immediately available funds shall constitute
                        "settlement" with respect to such Note. All offers
                        accepted by the Operating Partnership will be settled on
                        the third Business Day next succeeding the date of
                        acceptance pursuant to the timetable for settlement set
                        forth below, unless the Operating Partnership and the
                        purchaser agree to settlement on another date, which
                        date shall be no earlier than the next Business Day.

Settlement              Settlement Procedures with regard to each Certificated
Procedures:             Note sold by the Operating Partnership to or through an
                        Agent (unless otherwise specified pursuant to a Terms
                        Agreement) shall be as follows:

                        A.    The relevant Agent will advise the Operating
                              Partnership by telephone that such Note is a
                              Certificated Note and of the following settlement
                              information:

                               Exhibit B - Page 9
<PAGE>
      1.    Name in which such Note is to be registered ("REGISTERED HOLDER").

      2.    Address of the Registered Holder and address for payment of
            principal and interest.

      3.    Taxpayer identification number of the Registered Holder (if
            available).

      4.    Principal amount.

      5.    Settlement date and time (Original Issue Date).

      6.    Specified Currency and Principal Financial Center.

      7.    Maturity Date.

      8.    Trade Date.

      9.    Exchange Rate Agent (if other than State Street Bank & Trust Company
            of California, N.A).

      10.   Agent's commission or discount (if any) determined as provided in
            the Distribution Agreement.

      11.   Authorized Denomination (if other than $1,000 or integral multiples
            thereof).

      12.   Interest Payment Date(s).

      13.   Regular Record Dates

      14.   Redemption or repayment provisions (if any).

      15.   Whether the Note is an Original Issue Discount Note (an "OID NOTE"),
            and if it is an OID Note, the total amount of OID, the yield to
            maturity, the initial accrual period OID.

      16.   In the case of a Fixed Rate Note:

            (a)   the Interest Rate.

      17    In the case of a Floating Rate Note:

            (a)   the Initial Interest Rate (if known at such time).

            (b)   Calculation Agent (if other than State Street Bank & Trust
                  Company of California, N.A).

            (c)   Interest Rate Basis which may include:

                  -     CD Rate

                               Exhibit B - Page 10
<PAGE>
                  -     Commercial Paper Rate

                  -     CMT Rate

                  -     EURIBOR

                  -     Federal Funds Rate

                  -     LIBOR

                  -     Prime Rate

                  -     Treasury Rate

                  -     Other

            (d)   Index Maturity.

            (e)   Interest Reset Frequency.

            (f)   Maximum Interest Rate.

            (g)   Minimum Interest Rate.

            (h)   Initial Interest Reset Date.

            (i)   Interest Reset Date(s).

            (j)   Interest Determinations Date.

            (k)   Spread and/or Spread Multiplier (if any).

            (l)   whether the Note is:

                  -     a Regular Floating Rate Note

                  -     a Floating Rate/Fixed Rate Note (in which case the fixed
                        rate commencement date and the fixed interest rate shall
                        be specified) or

                  -     an Inverse Floating Rate Note (in which case the fixed
                        interest rate shall be specified).

            (m)   Any other applicable terms including the applicability of an
                  Addendum or Other/Additional Provisions.

B.    The Operating Partnership will advise the Trustee by telephone or
      electronic transmission (confirmed in writing at any time on the same
      date) of the information set forth in Settlement Procedure "A" above.

C.    The Operating Partnership will have delivered to the Trustee a pre-printed
      four-ply packet for such Note, which packet will contain the following
      documents in forms that have been approved by the Operating Partnership,
      the relevant Agent and the Trustee:

      1.    Note with customer confirmation.

                               Exhibit B - Page 11
<PAGE>
      2.    Stub One - For the Trustee.

      3.    Stub Two - For the relevant Agent.

      4.    Stub Three - For the Operating Partnership.

D.    The Trustee will complete such Note and authenticate such Note and deliver
      it (with the confirmation) and Stubs One and Two to the relevant Agent,
      and such Agent will acknowledge receipt of the Note by stamping or
      otherwise marking Stub One and returning it to the Trustee. Such delivery
      will be made only against such acknowledgment of receipt and evidence that
      instructions have been given by such Agent for payment to the account of
      the Operating Partnership at Bank of America, Dallas, Texas, ABA
      #111000012, Account # 3750785562, Account Name: AMB Property, LP, or to
      such other account as the Operating Partnership shall have specified to
      such Agent and the Trustee, in immediately available funds, of an amount
      equal to the price of such Note less such Agent's commission (if any). In
      the event that the instructions given by such Agent for payment to the
      account of the Operating Partnership are revoked, the Operating
      Partnership will as promptly as possible wire transfer to the account of
      such Agent an amount of immediately available funds equal to the amount of
      such payment made.

E.    Unless the relevant Agent is the end purchaser of such Note, such Agent
      will deliver such Note (with confirmation) to the customer against payment
      in immediately available funds. Such Agent will obtain the acknowledgment
      of receipt of such Note by retaining Stub Two.

F.    The Trustee will send Stub Three to the Operating Partnership by
      first-class mail. Monthly, the Trustee will also send to the Operating
      Partnership a statement setting forth the principal amount of the Notes
      outstanding as of that date under the Indenture and setting forth a brief
      description of any sales of which the Operating Partnership has advised
      the Trustee that have not yet been settled.

Settlement        For sales by the Operating Partnership of Certificated Notes
Procedures        to or through an Agent (unless otherwise specified pursuant to
Timetable:        a Terms Agreement), Settlement Procedures "A" through "F" set
                  forth above shall be completed on or before the respective
                  times in New York City set forth below:

<TABLE>
<CAPTION>
Settlement
Procedure                     Time
---------                     ----
<S>                           <C>
A                             2:00 P.M. on day before settlement date
B                             3:00 P.M. on day before settlement date
C-D                           2:15 P.M. on settlement date
E                             3:00 P.M. on settlement date
F                             5:00 P.M. on settlement date
</TABLE>

Failure to        If a purchaser fails to accept delivery of and make payment
Settle:           for any Certificated Note, the relevant Agent will notify the
                  Operating Partnership

                               Exhibit B - Page 12
<PAGE>
                  and the Trustee by telephone and return such Note to the
                  Trustee. Upon receipt of such notice, the Operating
                  Partnership will immediately wire transfer to the account of
                  such Agent an amount equal to the amount credited to the
                  account of the Operating Partnership in accordance with
                  Settlement Procedure D. Such wire transfer will be made on the
                  settlement date, if possible, and in any event not later than
                  the Business Day following the settlement date. If the failure
                  shall have occurred for any reason other than a default by
                  such Agent in the performance of its obligations hereunder and
                  under the Distribution Agreement, then the Operating
                  Partnership will reimburse such Agent or the Trustee, as
                  appropriate, on an equitable basis for its loss of the use of
                  the funds during the period when they were credited to the
                  account of the Operating Partnership. Immediately upon receipt
                  of the Certificated Note in respect of which such failure
                  occurred, the Trustee will mark such Note "cancelled," make
                  appropriate entries in the Trustee's records and send such
                  Note to the Operating Partnership.

                               Exhibit B - Page 13exv10w37

 

Exhibit 10.37

Severance Agreement

          This Agreement is entered into as of August 28, 2003 (the “Effective
Date”), by and between      (the “Employee”) and Advanced Fibre
Communications, Inc., a Delaware corporation (the “Company”).

          WHEREAS, it is expected that the Company from time to time will consider
the possibility of a Change in Control (as defined below). The Board of
Directors of the Company (the “Board”) recognizes that such a possibility may
create concerns about job security, impair productivity and be a distraction to
the Employee to consider alternative employment opportunities;

          WHEREAS, the Board believes that it is in the best interests of the
Company and its stockholders to provide the Employee with an incentive to
continue employment and to maximize the value of the Company upon a Change in
Control for the benefit of its stockholders; and

          WHEREAS, in recognition that the Employee’s services have been fundamental
to the Company’s development and in order to provide the Employee with enhanced
financial security and sufficient incentive to remain with the Company,
notwithstanding the possibility of a Change in Control, the Board believes that
it is imperative to provide the Employee with certain severance benefits upon
the Employee’s termination of employment in connection with a Change in
Control;

          NOW, THEREFORE, in consideration of the mutual covenants herein contained
and the continued employment of the Employee by the Company, the parties agree
as follows:

          1. Severance Benefits.

          (a) Cash Severance. If, at any time within 18 months after a Change in
Control, either (i) the Company terminates the Employee’s employment for any
reason other than Cause; or (ii) the Employee resigns all positions with the
Company for Good Reason, then the Company shall immediately make a lump sum
severance payment to the Employee in an amount equal to 300% of the sum of the
following:

               (i) The Employee’s Annual Base Salary; plus

               (ii) The Employee’s Target Bonus.

          (b) Employee Benefits. If Subsection (a) above applies, the Employee and
the Employee’s dependents shall remain eligible to participate in all of the
Company’s group insurance and other employee benefit plans for a period of 36
months, as if the Employee were still actively employed by the Company. If the
Company, after using its best efforts to maintain the Employee’s coverage,
determines in good faith that coverage under the Company’s group insurance and
other employee benefit plans cannot be continued, then the Company, at its own
expense, shall obtain equivalent individual coverage for the Employee and the
Employee’s dependents. If the Employee becomes eligible for comparable group
insurance coverage in connection with new employment, the coverage under this
Subsection (b) shall terminate (other

- 1 -

 

than coverage that must be continued under COBRA). The coverage provided
under this Subsection (b) shall run concurrently with and shall be offset
against any continuation coverage under COBRA.

          (c) Termination Prior to Change in Control. Notwithstanding the foregoing,
if the Employee is terminated by the Company for any reason other than Cause in
the 12 months preceding a Change in Control and if the Employee can reasonably
demonstrate that such termination either (i) was at the request of a third
party who has taken steps which are reasonably anticipated to result in a
Change in Control; or (ii) otherwise arose in connection with or in
anticipation of a Change in Control, then the Employee will be entitled to the
severance benefits described above.

          (d) Release of Claims. As a condition to the receipt of the severance
benefits described above, the Employee shall be required to execute a release
of all claims arising out of the Employee’s employment or the termination
thereof including, but not limited to, any claim of discrimination under state
or federal law.

          (e) No Mitigation. The Employee will not be required to mitigate the
amount of payments under this Agreement (whether by seeking new employment or
in any other manner), nor will any such payment be reduced by any earnings that
the Employee may receive from any other source.

          2. Definitions.

          (a) “Annual Base Salary.” For all purposes of this Agreement, “Annual Base
Salary” shall mean the highest rate of annual base salary in effect at any time
during the 12-month period immediately preceding the Change in Control.

          (b) “Cause.” For all purposes of this Agreement, “Cause” shall mean that
the Employee has been terminated for “cause” by majority vote of the Board
(excluding the Employee) as a result of the occurrence of one of the following
events provided that such event is materially or potentially materially
injurious to the operations, financial condition or business reputation of the
Company and that results from a willful act or omission by the Employee:

		
	 	     (i) The commission of an act of fraud, embezzlement or dishonesty by
the Employee, directly related to the performance of duties for the
Company;

		
	 	     (ii) An unauthorized use or disclosure by the Employee of
confidential information or trade secrets of the Company; or

		
	 	     (iii) The Employee’s conviction of, or plea of “guilty” or “no
contest” to, a felony under the laws of the United States or any state
thereof.

          No act, or failure to act, by the Employee shall be considered “willful”
unless committed without good faith and without a reasonable belief that the
act or omission was in the Company’s best interest.

- 2 -

 

          (c) “Change in Control.” For all purposes of this Agreement, a “Change in
Control” shall have occurred:

		
	 	     (i) Upon consummation of a reorganization, merger or consolidation
(a “Business Combination”), in each case, unless, following such Business
Combination:

		
	 	     (A) the individuals and entities who were the beneficial
owners, respectively, of the then outstanding shares of Common
Stock of the Company (the “Outstanding Common Stock”) and the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Voting
Securities”) immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as
a result of such transaction owns the Company either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination, of the Outstanding Common Stock and Outstanding Voting
Securities, as the case may be; and

		
	 	     (B) no Person (as defined in subparagraph (iii) below)
(excluding any corporation resulting from such Business Combination
or any employee benefit plan (or related trust) sponsored or
maintained by the Company or such other corporation resulting from
such Business Combination) beneficially owns, directly or
indirectly, 30% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then
outstanding voting securities of such corporation, except to the
extent that such ownership of Outstanding Common Stock or
Outstanding Voting Securities existed prior to the Business
Combination; and

		
	 	     (C) at least a majority of the members of the board of
directors of the corporation resulting from such Business
Combination were members of the Board at the time of the execution
of the initial agreement, or of the action of the Board, providing
for such Business Combination; or

		
	 	     (ii) If individuals who, as of the Effective Date, constitute the
Board (the “Incumbent Board”) cease for any reason to constitute at least
a majority of the Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination
for election by the Company’s stockholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of (A) an actual or
threatened election contest with respect to the election or removal of
directors; (B) an actual or threatened solicitation of proxies or

- 3 -

 

		
	 	consents; or (C) any other actual or threatened action by, or on
behalf of, any Person other than the Board; or

		
	 	     (iii) Upon the acquisition after the Effective Date by any
individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of
either (A) the then Outstanding Common Stock or (B) the combined voting
power of the Outstanding Voting Securities; provided, however, that the
following acquisitions shall not be deemed to be covered by this
subparagraph (iii): (x) any acquisition of Outstanding Common Stock or
Outstanding Voting Securities by the Company, (y) any acquisition of
Outstanding Common Stock or Outstanding Voting Securities by any employee
benefit plan (or related trust) sponsored or maintained by the Company or
(z) any acquisition of Outstanding Common Stock or Outstanding Voting
Securities by any corporation pursuant to a transaction which complies
with clauses (A), (B) and (C) of subparagraph (i) above; or

		
	 	     (iv) The consummation of the sale of all or substantially all of the
assets of the Company or approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company.

          (d) “Good Reason.” For all purposes of this Agreement, “Good Reason” shall
mean that the Employee has not been terminated for Cause and elects to resign
after one or more of the following events:

		
	 	     (i) A reduction of the Employee’s Annual Base Salary by more than
10%;

		
	 	     (ii) A reduction in the Employee’s level of compensation (including
Annual Base Salary, Target Bonus, fringe benefits and participation in
any corporate-performance based bonus or incentive programs) by more than
10%;

		
	 	     (iii) The failure to provide the Employee with employee benefit
plans, programs and practices (including equity compensation plans) that
are at least substantially similar in the aggregate (in terms of benefit
levels and reward opportunities) to the employee benefit plans, programs,
policies and practices in effect immediately prior to the Change in
Control;

		
	 	     (iv) The diminution or reduction of the Employee’s title, authority,
position, duties or responsibilities;

		
	 	     (v) The Employee, at any time after the Company has been subject to
a Change in Control, is assigned to any position other than the position
of Chief Executive Officer of a corporation whose equity securities are
regularly traded on a national securities exchange or the Nasdaq National
Market;

		
	 	     (vi) The relocation by the Company of the Employee’s principal place
of employment resulting in an increase of a minimum of an additional 50
miles in the

- 4 -

 

		
	 	Employee’s commute from his or her residence (immediately before the
Change in Control) to the Employee’s principal place of employment (with
such commuting distance calculated based on the shortest distance using
commonly traveled routes), provided that a requirement that the Employee
work at a location or locations other than the Employee’s principal place
of employment shall not be deemed a relocation of the Employee’s
principal place of employment unless the Employee is permanently required
to work at such other location or locations for more than 10 days per
month and, provided further, that in no event shall there be deemed to be
a relocation of the Employee’s principal place of employment as a result
of required business travel to an extent substantially consistent with
the Employee’s business travel obligations prior to the Change in
Control; or

		
	 	     (vii) The failure of the Company to obtain the assumption of this
Agreement by any successors contemplated in Section 4(a) below.

          (e) “Target Bonus.” For all purposes of this Agreement, “Target Bonus”
shall mean the Employee’s target bonus under the Company’s annual bonus
program, or any comparable bonus under any predecessor or successor plan for
the year prior to the year in which the Change in Control occurs.

          3. Limitation on Parachute Payments

          (a) Application of this Section. In the event that payments and other
benefits under this Agreement (the “Agreement Payments”) and payments and
benefits otherwise provided to the Employee under any other plan or arrangement
(“Total Payments”) would constitute “parachute payments” within the meaning of
section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and
would be subject to the excise tax imposed by section 4999 of the Code (the
“Excise Tax”), then the Agreement Payments shall be either:

               (i) delivered in full; or

               (ii) delivered to the extent that maximizes the value of the
Agreement Payments without causing any portion of the Total Payments to
be subject to the Excise Tax (the “Reduced Amount”),

whichever of the foregoing amounts, taking into account the effect of all
federal, state and local income taxes, employment taxes and excise taxes
applicable to the Employee (including the Excise Tax), results in the receipt
by the Employee, on an after-tax basis, of the greatest amount of Agreement
Payments. The foregoing determination shall be made by the independent auditors
most recently selected by the Board (the “Auditors”).

          (b) Reduction of Payments. If the Auditors determine that the Reduced
Amount results in the greatest amount of Agreement Payments to the Employee
under Subsection (a) above, then the Company shall promptly give the Employee
notice to that effect and a copy of the detailed calculation thereof and of the
Reduced Amount, and the Employee may then elect which and how much of the
Agreement Payments shall be reduced and shall advise the Company in writing of
the election within 10 days of receipt of notice. If no such election is made
by the Employee within such 10-day period, then the Company may elect which

- 5 -

 

and how much of the Agreement Payments shall be reduced and shall notify
the Employee promptly of such election. All determinations made by the Auditors
under this Section 3 shall be binding upon the Company and the Employee and
shall be made within 60 days of the date when a Payment becomes payable or
transferable. As promptly as practicable following such determination and the
elections hereunder, the Company shall pay or transfer to or for the benefit of
the Employee such Agreement Payments as are then due to the Employee and shall
promptly pay or transfer to or for the benefit of the Employee in the future
such Agreement Payments as become due to the Employee.

          (c) Overpayments and Underpayments. As a result of uncertainty in the
application of section 280G of the Code at the time of an initial determination
by the Auditors hereunder, it is possible that Agreement Payments will have
been made by the Company which should not have been made (an “Overpayment”) or
that additional Agreement Payments which will not have been made by the Company
could have been made (an “Underpayment”), consistent in each case with the
calculation of the Reduced Amount hereunder. In the event that the Auditors,
based upon the assertion of a deficiency by the Internal Revenue Service
against the Company or the Employee that the Auditors believe has a high
probability of success, determine that an Overpayment has been made, such
Overpayment shall be treated for all purposes as a loan to the Employee that
the Employee shall repay to the Company, together with interest at the
applicable federal rate provided in section 7872(f)(2) of the Code; provided,
however, that no amount shall be payable by the Employee to the Company if and
to the extent that such payment would not reduce the amount that is subject to
taxation under section 4999 of the Code. In the event that the Auditors
determine that an Underpayment has occurred, such Underpayment shall promptly
be paid or transferred by the Company to or for the benefit of the Employee,
together with interest at the applicable federal rate provided in section
7872(f)(2) of the Code.

          4. Successors.

          (a) Company’s Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company’s business and/or assets
shall assume the Company’s obligations under this Agreement and agree to
expressly perform the Company’s obligations under this Agreement in the same
manner and to the same extent as the Company would be required to perform such
obligations in the absence of a succession. For all purposes under this
Agreement, the term “Company” shall include any successor to the Company’s
business and/or assets which executes and delivers the assumption agreement
described in this Subsection (a) or which becomes bound by the terms of this
Agreement by operation of law.

          (b) Employee’s Successors. This Agreement and all rights of the Employee
hereunder shall inure to the benefit of, and be enforceable by, the Employee’s
personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.

          5. Arbitration.

          (a) Scope of Arbitration Requirement. The parties hereby waive their
rights to a trial before a judge or jury and agree to arbitrate before a
neutral arbitrator any and all

- 6 -

 

claims or disputes arising out of this Agreement and any and all claims
arising from or relating to the Employee’s employment, including (but not
limited to) claims against any current or former employee, director or agent of
the Company, claims of wrongful termination, retaliation, discrimination,
harassment, breach of contract, breach of the covenant of good faith and fair
dealing, defamation, invasion of privacy, fraud, misrepresentation,
constructive discharge or failure to provide a leave of absence, or claims
regarding commissions, stock options or bonuses, infliction of emotional
distress or unfair business practices.

          (b) Procedure. The arbitrator’s decision shall be written and shall
include the findings of fact and law that support the decision. The
arbitrator’s decision shall be final and binding on both parties, except to the
extent applicable law allows for judicial review of arbitration awards. The
arbitrator may award any remedies that would otherwise be available to the
parties if they were to bring the dispute in court. The arbitration shall be
conducted in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association; provided, however
that the arbitrator shall allow the discovery authorized by the California
Arbitration Act or the discovery that the arbitrator deems necessary for the
parties to vindicate their respective claims or defenses. The arbitration
shall take place in Petaluma, California, or, at the Employee’s option, the
county in which the Employee primarily worked with the Company at the time when
the arbitrable dispute or claim first arose.

          (c) Costs. The Company shall bear all costs of arbitration, including the
arbitrator’s fees.

          (d) Applicability. This Section 5 shall not apply to (i) workers’
compensation or unemployment insurance claims or (ii) claims concerning the
validity, infringement or enforceability of any trade secret, patent right,
copyright or any other trade secret or intellectual property held or sought by
either the Employee or the Company.

          6. Miscellaneous Provisions.

          (a) No Set-off. There shall be no right of setoff or counterclaim, with
respect to any claim, debt or obligation, against payments to the Employee
under this Agreement.

          (b) Legal Fees. The Company agrees to pay as incurred, to the full extent
permitted by law, all legal fees and expenses which the Employee may reasonably
incur as a result of any contest (regardless of the outcome thereof) by the
Company, the Employee or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by the Employee about
the amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the applicable Federal rate provided for in
section 7872(f)(2)(A) of the Code.

          (c) Notices. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail,
return receipt requested and postage prepaid. In the case of the Employee,
mailed notices shall be addressed to the Employee at the home address that the
Employee most recently communicated to the Company in writing.

- 7 -

 

In the case of the Company, mailed notices shall be addressed to its
corporate headquarters, and all notices shall be directed to the attention of
its Secretary.

          (d) Modifications and Waivers. No provision of this Agreement shall be
modified, waived or discharged unless the modification, waiver or discharge is
agreed to in writing and signed by the Employee and by an authorized officer of
the Company (other than the Employee). No waiver by either party of any breach
of, or of compliance with, any condition or provision of this Agreement by the
other party shall be considered a waiver of any other condition or provision or
of the same condition or provision at another time.

          (e) Whole Agreement. No other agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof.

          (f) Withholding Taxes. All payments made under this Agreement shall be
subject to reduction to reflect taxes or other charges required to be withheld
by law.

          (g) Choice of Law and Severability. This Agreement shall be interpreted
in accordance with the laws of the State of California (except their provisions
governing the choice of law). If any provision of this Agreement becomes or is
deemed invalid, illegal or unenforceable in any applicable jurisdiction by
reason of the scope, extent or duration of its coverage, then such provision
shall be deemed amended to the minimum extent necessary to conform to
applicable law so as to be valid and enforceable or, if such provision cannot
be so amended without materially altering the intention of the parties, then
such provision shall be stricken and the remainder of this Agreement shall
continue in full force and effect. If any provision of this Agreement is
rendered illegal by any present or future statute, law, ordinance or regulation
(collectively the “Law”), then such provision shall be curtailed or limited
only to the minimum extent necessary to bring such provision into compliance
with the Law. All the other terms and provisions of this Agreement shall
continue in full force and effect without impairment or limitation.

          (h) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.

	 	 	 
	 	 	
Employee
	 	 	 
	 	 	

	 	 	
Advanced Fibre Communications, Inc.

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By
	 	 	

	 	 	 
	 	 	
Its

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